It this real? Is he really THAT stupid?
His defense against "you took user deposits and gambled the money" is "No, I took user deposits, loaned them to myself and then gambled the money".
I mean this is like nested layers of stupidity. You'd be stupid to do this, you'd be stupid to think it's not a major crime, you'd be stupid to think that this was in any way acts as a defense of your crime and you'd be stupid to actually tell people that this is what you did thinking that it's a defense for the crime you committed.
Guy literally though that Ponzi schemes would be legal if only the perpetrators on the way to court wrote on a document "I hereby lend myself all the money I misappropriated"?
> Lawyers tell Axios the main criminal risk Bankman-Fried faces is an indictment on charges of fraud — one of the more common charges in white-collar prosecutions. But to convict, prosecutors must prove beyond a reasonable doubt that someone had knowledge or intent to commit fraud, which can be tricky, they say.
> That’s why the defense against such charges typically centers on something like, "It wasn't fraud, I was just really bad at my job."
> "Typically, in a fraud case, the person at the top argues that he was inattentive, delegated to others, and wasn’t focused on the details," Mariotti tells Axios. "The point is to argue that he was sloppy or inattentive, not a fraudster."
He made tweets at the end of September when there were huge movements of FTT from Alameda to FTX where he lied and tried to downplay them as "wallet rotation". I posted about that here: https://news.ycombinator.com/item?id=33568688.
There is a paper/tweet trail a mile long that SBF was trying to cover up malfeasance that pretty clearly shows mens rea in my opinion.
The notion that someone that made it through MIT physics, worked for several years at Jane Street, and actively cultivated the persona of a genius can't understand that making a million tokens, selling one of them to yourself for a dollar, and then calling yourself a millionaire is nonsense, is frankly preposterous.
And then there's also the question of actual deposits, which would still have to be sent to somewhere - intentionally - and given as those were represented, afaik, as deposits and not buying shares in a high-risk hedge fund, that alone constitutes separate fraud, regardless of how he tried to cover it up afterwards.
If I tell you "if you give me $1000 I'll keep them safe and return them to you anytime you want" and then I take these money and go gambling to Vegas, I can't say "I was just not paying attention, sorry". I knew I promised to keep them for you and gambled with them instead.
You’re right, it is preposterous, which is why this is narcissism and not stupidity. The first rule of any fraudster is to never admit the fraud, no matter how obvious. Never apologize for anything, never admit wrongdoing of any kind, and try to deflect and diffuse blame diffuse blame to as many people as possible.
There's a segment of smart people who go through a lot of hoops to make themselves look stupid. Because for one reason or another being stupid is advantageous. Here, apparently, it's a defense against fraud.
>The point is to argue that he was sloppy or inattentive, not a fraudster.
If that's going to be his strategy there's still a lot of laughs to have at his expense.
If only it were that easy, "oh I didn't knew I was crossing the border with a hundred pounds of cocaine in my car", like, how come they never thought of THAT? LOL
Is that not a valid defense? It's my understanding it's not uncommon for criminals to plant stuff on a marks car and then secretly grab it after it crosses the border. Possession of something should require your intent to control/keep it or at least knowledge it exists.
It is not - drug possession is a strict liability crime for that reason.
That said if it is some random retired couple with zero idea what is going on and 10 kilos of coke in their spare tire, as long as they co-operate, most gov’ts wouldn’t prosecute them.
There's an important nuance there which is that they don't have to prove that the person knew the actions they were taking were illegal, just that they intended to take those actions. As an example:
Knowingly driving a car someone else stole is illegal, even if you don't actually know it's a crime to drive a car someone else stole (after all you didn't steal it, maybe you bought it from the person).
Driving a car that was stolen that you didn't know was stolen is not illegal.
Specifically, FTX had a margin pool facility. Clients could specify the assets (not just dollars, but also Bitcoin, tether etc) that they wanted to lend in their wallet. Along with APR. It was strictly opt in.
The system also reported small amounts ($400m) last time I checked.
Removing the audit trail and reporting from accounts probably turns this into theft according to the definition of the intention to permanently deprive, which forethought hence mens rea is satisfied by plural compounding acts of concealment.
OK, but "I loaned it to myself" is a deliberate step. So the defense is "I took user deposits, loaned them to myself and then gambled the money, and I did not know that that constituted fraud or embezzlement." That seems unlikely to fly.
Hell, to this day she still (publicly) claims that they were thiiiiiiis close and all the naysayers who lead to this point are "hurting humanity" far more than they are hurting her.
A large class (but not all!) of crime requires ‘mens rea’ or a guilty mind.
If you can plausibly convince everyone, for instance, that you legitimately thought that the car you got into and drove away was your car, then you didn’t commit car theft.
Good luck with that 99.9% of the time of course.
This is in comparison to strict liability crimes, like drug possession or statutory rape that don’t require knowledge or intent.
Fraud requires that you knew you were lying (essentially), or should have known, to be fraud.
You can’t accidentally commit fraud.
Near as I can tell, SBF would have to somehow convince everyone he had been brain dead while collecting billions of dollars to pull that off here, but hey - defense attorneys have to try something I guess?
I'm no legal expert, but surely this requirement of mens rea doesn't actually require the defendant to know the specific law that they are violating. Surely it just requires that the defendant knows the basic facts of their actions that cause their actions to qualify as illegal under the law. In other words, if it's illegal to loan user deposits to yourself and gamble the money, and he knew that he was loaning user deposits to himself and gambling the money, then doesn't that count as mens rea even if he didn't know that it was illegal?
It doesn’t requiring knowing what you’re doing is against some law.
It requires knowing what you’re doing (which is against a law).
If what you did is very different from what you thought you were doing because of a legitimate mistake of fact (aka you thought it was your car, but it was not), then you’re not guilty of the crime, because you didn’t realize what you were doing was the thing that was a crime.
It’s roughy why not guilty by reason of insanity is a legitimate defense in some cases.
If someone is so insane they can’t understand what they were actually doing, or the thing they legitimately thought they were doing isn’t a crime, they weren’t committing the crime. That does mean they are probably such a danger to themselves or others they need to be locked up somewhere though.
As with the car defense, it is a very difficult thing to prove in most cases, and for good reasons
> like, "oh FTX doesn't have a bank account, I guess people can wire to Alameda's to get money on FTX"
> ..3 years later..
> 'oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that and so it was never delivered to FTX'
I'm not trying to defend his actions him and I think he should be prosecuted to the fullest extent of the law, but honestly, I kind of get what he's saying. I've worked at enough start ups where everything is always chaos and speed and scrappiness are valued above all else, that I feel like I've seen this multiple times. It's like, someone makes a dumb choice and everyone goes, "we'll that's not great, but it's working and it's not that bad, so I don't want to make it my problem" and eventually that dumb decision is just how things are. Eventually, new people join the company and don't realize things aren't this way intentionally and eventually one of them adds another dumb decision on top of that and the same cycle plays out again.
After a few years, you end up with multiple of your processes or parts of your infrastructure based on these chains of bad choices and the one of them collapses. When you're close to the problem, each of the decisions on their own don't look too bad, but when you step back and summarize it in one sentence, it's clear how fucked up things are.
It's funny because he smugly spends the start of this article arguing about how pointless regulators are, but I feel like if there was actually regulation in the space, there's a good chance they would have slowed things down enough to catch these bad decision chains.
If they could afford to hire an on-staff performance coach, they probably could and should have hired an on-staff accountant to manage literally billions of dollars rather than having the CEO put things in a spreadsheet.
Agreed. He absolutely could have caught this if he had cared to, but my guess is he was too caught up in the "move fast and break things" mindset to really give a shit and that's why I fully support him going to jail for this.
I don't think he intentionally lost peoples' money, but I think he was intentionally reckless and for that reason he should be prosecuted.
IIRC during some of the interviews with Madoff, he didn’t “intentionally” lose peoples money either. Fraud like this is often many little “well, I just need to $x and everything will be OK”.
> 'oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that and so it was never delivered to FTX'
SBF's claim is that FTX customers sent money to Alameda and nobody remembered to categorize it as FTX client money.
This is about as believable as my 11yo saying he didn't realize he had to pay for the $50 worth of Pokemon cards he took from Wawa. (This was after he originally claimed the cards were a gift from a friend at camp -- a friend whom he could neither name nor describe to us.)
It’s a financial exchange. These guys think they are so smart, they don’t even need an accountant.
I’m still trying to understand why investors would entrust their money with them. Why did the press fawn all over him? He talked a big game, but so have literally hundreds of others!
I have worked in plenty of fast-moving and chaotic environments, and while I can see some stuff slipping through the cracks, it is hard to see something so core to your business getting this bad without realizing it.
Like, if you are releasing financial documents and a large entry is "HIDDEN POORLY INTERNALLY LABELED ACCOUNT.", it is hard to explain that without getting into outright malice or negligence so extreme that it is difficult to differentiate from malice. Even rudimentary reviews of their finances would have highlighted stuff like this, and they clearly had money to pay people to help them do it.
Yes, I get what you're saying. At our old startup we didn't setup a bank account either, why bother, we just had investors deposit the money into our CEOs trading account, seemed easier that way.
You're laughing, but I was an early employee at a start up run by 20-somethings that's now grown into a company worth over a billion dollars and there were plenty of WTF moments like that until they started hiring adults.
No one was doing things like that intentionally, but as the company started to grow, so did peoples' egos and they people begin to confuse being reckless with being innovative.
Maybe it's just me being cynical. Maybe benefit of hindsight. Maybe a little of both. And talking with my partner, who is working towards a CPA and absolutely loves forensic accounting.
"Careful accounting" doesn't in any way mean "doing the right thing financially", though it is certainly meant to imply that.
"Careful accounting" is "hiding where the bodies/cash is buried".
Market makers on stock exchanges are allowed to naked short with abandon (more leverage than retail). Almeda was a market maker on an exchange that allowed 100x leverage to retail. leverage on margin is a loan. The shocking part is they took on so much leverage and lost, not that they were extended margin like any other market maker or even market participant on ftx.
Really not so different from archilego/ hwang or London metals exchange fiasco or gilt fiasco or oil going negative or cds fiasco or LTCM.
Even if he gets convicted of anything non-trivial, how does he actually stay in jail for very long? Call me cynical or a conspiracy theorist or whatever, but a guy who's rubbed shoulders with the "elite" and who probably has at least a billion dollars in crypto stashed away can probably figure out who to bribe to walk out the jail's back door and take a private flight to a country who won't send him back.
> I was trying to make sense of what, behind the PR and the charitable donations and the lobbying, Bankman-Fried actually believes about what’s right and what’s wrong — and especially the ethics of what he did and the industry he worked in.
This seems like a weird thing to worry about right now, I imagine my question would be "hey, where'd all the deposits go?" Like, I'm sure it's all interesting in a psychological and sociological way, but "what does SBF really believe" feels like it should take a back seat to what did he do. That's much more interesting! It's easy for someone like SBF to just say stuff about what's going on in his head, whether it's true or not. But, we're talking about real (and, okay, a lot of fake) money here.
There's this weird assumption in a lot of reporting that a rich person must have interesting things to say, or beliefs that are worth getting to the bottom of. Sometimes that's true, but sometimes they're just not very interesting people. Which is fine! Lots of people aren't very interesting, but really rich people get to be treated as interesting even if they're actually boring.
You can't text a fraudster in the bahamas and say "Hey, why are you so shit". You have to text "Hey, you're a precious flower with a special story" and then they tell you why they're shit. There's very clearly a level where SBF feels safe to talk honestly, in a self-incriminating way to a friend, where that friend is actually a reporter working for Vox.
Oh absolutely, it's just weird when that tone leaks into the text of the article. A sort of winking style that expects the reader to read between the lines, which is fine as far as it goes! But imagine beginning an article about Bernie Madoff in the weeks after his Ponzi's collapse pretending that you just wanted to learn more about his ethical principles.
It’s an earnest attempt at staying as unbiased as possible. If you go into an interview believing one thing and structuring all of you questions with that supposition you are far more likely to get the answer you want as oppose to whatever the reality is.
I'm not complaining about the interview technique- which clearly worked great here!- just the framing. I guess it's a nitpick really considering the rest of the content of the piece.
I think its more akin to asking a religious leader who turns out to be a con artist what his true beliefs are. SBF's beliefs were integral to his success and the only reason some like me had every heard of him. Madoff actually did raise a lot of money by appealing to Judaism (hence the large investment by Brandeis) and I'm sure Jewish publications covered that angle of it right after it happened.
A lot of people (including myself) had listened to him talk (on Sam Harris, on Odd Lots, on Conversations with Tyler) because of his interesting beliefs. I had no idea who CZ was until this week because I am not interested in the minutiae of crypto. But SBF leveraged his image for this.
Ultimately it seemed the amount of actual money of other people he lost was a few billion? Which is extremely awful but less interesting than the media landscape which lead to it, imo, especially if you are not a finance reporter.
> I imagine my question would be "hey, where'd all the deposits go?"
But we know where they went. To Alameda Research. Then Alameda Research sent them somewhere else. The money isn't coming back, and Alameda Research's collateral of FTT tokens is worthless. So that's that, its done.
Its actually quite a simple story here. FTX lent the money to someone else (even if Alameda Research is also owned by SBF), and that other group lost the money.
> FTX lent the money to someone else (even if Alameda Research is also owned by SBF), and that other group lost the money
One minor clarification: "lent" should be "stole". If I can't pay my mortgage, I'm not allowed to go break in to my neighbor's house to steal some cash that I'll "borrow" in the hopes of paying back later.
FTX's Ts&Cs we're very clear - customer deposits were not FTX's to lend.
This is a simple, straightforward case of fraud and theft. No additional "crypto-specific regulations" are needed to reach that conclusion.
> One minor clarification: "lent" should be "stole"
Not a lawyer, but I think the correct term is "embezzled".
> The crime of embezzlement is defined as the fraudulent appropriation of property of another by someone who has been entrusted with its possession. Unlike theft where the property is taken unlawfully, in embezzlement the property comes lawfully into the possession of the embezzler who then fraudulently or unlawfully appropriates it. The key aspect of embezzlement is the fiduciary relationship that exists between the embezzler and the victim of the embezzlement as embezzlement requires that the property be appropriated by a person who was entrusted with its possession. A senior executive who uses company funds to pay for his personal yacht is guilty of embezzlement even if he intended to return the funds or had the means to do so.
Not to mention, he literally tweeted a week ago that "We don't invest client assets (even in Treasuries)." FTX is not bank. It's not supposed to be susceptible to a bank run.
This entire line of tweets makes no sense. SBF is a lying fraud that deserves prison.
If Alameda really lost billions or tens in billions in trades, who was on the other side to collect the money? To random people who sold BTC at $64K and then all the way down?
Or were the losing trades a way to syphon billions somewhere else?
Seen the amount involved, the policital donations, the articles in the media portraying the guy as an altruistic genius and seen that tether/USDT/Bitfinex/Deltec are also in the Bahamas, it looks like, maybe, fucking maybe, it's time for actual journalism, actual research, actual congress hearings (at least one is coming in december btw), etc. about what's going on.
Do you really believe it's just a few trades gone wrong?
> Its actually quite a simple story here. FTX lent the money to someone else (even if Alameda Research is also owned by SBF), and that other group lost the money.
For a start you're forgetting the part where FTX was also pumping and then dumping tokens on their customers. Some tokens they created themselves. They're also somehow tied to hundreds of million of USDs getting frozen by authorities, where FTX then quickly raised money. That's fraud, too.
It's much more than "simple". There's serious shit going on.
Your hypothesis is a small cabal of insiders at FTX/Alameda purposely blew up the hedge fund and exchange to siphon off billions (hiding it in the losses) to enrich themselves while simultaneously making themselves some of the most hated people in the world, and also rolling the dice on going to prison for decades.
As I said yesterday, there's a guy (Irving Picard, AFAICR) who's clawed back most of the money that Bernie Madoff stole from his clients. In that case, Bernie took one person's deposits and gave the money to the previous sucker, so Irving unwound all that.
In this case, apparently some people's money was fraudulently given to charities, so do they have to give it back? And what if they can't?
There's a job almost no one would want to undertake.
It makes a lot of sense given the nature of SBF’s charitable donations and the purported rationale(s) behind them. Kelsey Piper is pretty deeply associated with the EA movement, which is heavily interested in picking the right ways to deploy money to solve the world’s problems, and much of SBF’s charitable giving was too.
> In 2018, Vox launched Future Perfect, with the goal of covering the most critical issues of the day through the lens of effective altruism. In this talk, Kelsey Piper discusses how the project worked out, her experience as a Vox staff writer, and her thoughts on the key challenges of EA-focused journalism.
I just commented in this thread about how this story magically keeps getting worse, and then it got worse...
Piper's journalistic duty was to disclose her ties to EA much more fully in that piece, or recuse herself from writing it. I'm curious about the ties that she and other prominent Bay Area EAs have to SBF as well. Everyone is in a rush to distance themselves from they guy who bankrolled them.
And to be clear, Piper and Ellison go way way back. I think there is a very good chance that SBF did not know that that chat was on the record. So Piper may have failed to disclose in two directions, to both her source and her audience.
There's a disclosure that SBF actually gave Vox money as part of a journalism grant. This business of billionaires buying journalists outright by calling payments philanthropic grants is way out of control. It's bad enough when Gates does it.
It does seem like the (some now erstwhile) EA billionaires supposed that buying professional, high-tier take-havers/explanatory-journalists was going to be an effective way to mainline their ideology. SBF had his eye on Matt Yglesias, for example.
FTX loaned money to Alameda, the crypto hedge-fund made a series of bets and probably put some cash in illiquid assets too, but mostly irresponsible bets. Crypto market collapsed, bets that were worth billions with a decent liquidity now became worth millions with not so much liquidity.
They turned to their most harsh competitor hoping for a bailout kinda like how Microsoft saved Apple in the 90s . All that didn't happen, it was the the straw that broke the camel's back.
That's about it, when you are leveraged adverse market events can literally put any company out of business, no matter how giant it is. Chapter 11 is not the end of the world for old companies making real stuff that people will always want (say General Motors or Hertz), but in crypto where everything is about reputation there is no way FTX will ever be heard of ever again.
In the case of the crypto market adverse events of massive proportions repeat themselves every 5 years or so. It happened this year , together with inflation. It was due, at some point the chickens had to come home to roost.....whatever the fuck that means lol.
> FTX loaned money to Alameda ... [it was a bad bet] ... That's about it
He took money from an exchange, client money, and without permission used their money ("t" "h" "e" "i" "r" " " "m" "o" "n" "e" "y" -- channeling the genius' tweets here) and put it in his own company, the "hedge fund" called Alameda.
So that is fraud and not a bad bet.
A 'good bet' is that an organization (which merely includes FSB) who due to circumstances was exposed red handed in fraud involving billions of dollars and famous people, which then benefits from "f" "r" "e" "e" PR by established media, starting with "The New York Times", is a protected outfit of some sort, and that the playful sociopaths in FTX/Almada know it full well.
We have a lot of info on where the money went: A stadium name deal, F1 sponsorship, penthouse in a Bahamas resort, political donations, several DeFi ponzis that fell apart, acquisitions of BS companies, and similarly, bailing out numerous failed crypto projects over several years.
With such a large sum gone, the tougher question is "where didn't he piss the money away?"
We haven't seen as much commentary from him post-incident to reconcile who he appeared to be before the collapse, with who he apparently is. I think that angle is actually pretty interesting, but ultimately he sounds like just another deranged sociopath. No surprise there. Still interesting.
Alameda got long on crypto, crypto crash, billions lost. Funds from FTX was covering Alameda's losses. My guess there, was never a distinct point in which money was moved from FTX to Almeda. I felt they always ran both as two hands belonging to the same body.
yeah i find it hilarious how all these articles are trying to get to his inner philosophical self. But, at least based on this particular exchange, it seems that he was just trying to make a buck or two, and treated everything else as PR/BS.
I saw these screenshots on Twitter and I thought they were fake until I read the article. The rest of the messages from him are pretty terrible as well.
I thought he just fucked up, but no. He was wilfully unethical and maintains he did nothing wrong: "Sometimes life creeps up on you".
And the thing he regrets most is filing for Chapter 11 bankruptcy...
What a cruel fucking joke for all the people who invested with/in FTX.
The ethics discussion along with the FTX/Alameda discussion is such a fascinating juxtaposition for me. It makes the article so much more interesting in my view.
On the one hand, you’ve got this ethics discussion, which in context happened previously, about the ethics of running an immoral business to do good things. Then an ethical discussion about how that answer was BS and all that really matters is perception, and how perception doesn’t mirror reality.
And here I’m trying to reflect on these topics. How do I feel about these things, how would I answer?
Then the next part begins soon after with “messy accounting.”
I view it the way I’d view Michelangelo’s David if it were displayed at a local county fair.
No, it is wrong to think it is a "mass" phenomena. A very small group of people around the planet are involved here.
What is happening is what happens in all long running systems where the generational selection process becomes ineffective due to (typically) nepotism, hedonism, and corruption. What was once, if arguably ethically challenged, but competent elite gives way to an openly corrupt and incompetent set. Healthy systems check this phenomena -- it happens in all power entities historically -- and correct it. When they fail to correct it, they suddenly collapse.
Yep. It's a spectrum. At one end you have normal companies, in the middle you have pseudo-companies like Uber or Lyft or perhaps even Twitter where they're just indirectly guzzling printed money for decades after it's laundered through several different intermediaries, and then at the end you have FTX which is a fully fraudulent non-business. Where does all the crazy money come from? Ultimately from the central banks.
He doesn't say he thinks it is okay to act unethically, he says that in general acting unethically doesn't matter the way he previously said it did because public perception is shaped more by winning than it is by whether the winner was ethical or unethical.
Elsewhere in the DMs he says "I didn't want to do sketchy stuff [...] and I didn't mean to" and "it as never the intention".
None of this reads like bombshell level "Wow this guy is terrible". He comes across as maybe terrible or maybe someone who played a little too fast and loose with an explosively growing business of which he lost control.
> He comes across as maybe terrible or maybe someone who played a little too fast and loose with an explosively growing business of which he lost control.
Same type of statement would be like... They came across as maybe terrible or maybe someone who just had a few too many drinks and then lost control of a new sports car that they were not familiar with and accidentally drove into a crowd of people.
Yes and that's a great analogy because it's possible that your person driving the new sports car did not intentionally get drunk and drive into a crowd of people.
Most people wouldn't call that driver a sociopath who intentionally murdered a crowd of people, they'd say "wow, that person made a couple of really poor decisions and they really messed up and ended up ruining a lot of lives".
You do realize that states recognize ignoring the risk means that person was intentional and they are convicted of murder? Anything can be seen as a poor choice. By your logic Hitler made really poor decisions and ended up ruining a lot of lives.
It's possible for SBF to be both guilty of a variety of crimes and also not an intentionally terrible human.
I don't know if he is or isn't a sociopath who lied to everyone while stealing billions. I just find the "wow, this guy is a monster" outrage interesting as the source DMs here don't really uphold that portrayal.
You could argue there’s no such thing as a “terrible person”, we are all at the mercy of our sensory inputs and the innate properties of our neurons. In order to keep society functional we need to enforce boundaries on human behavior, and in some cases label people as untrustworthy and possibly lock them up to stop them from doing more damage. If “terrible person” is the wrong label, we could pick a different one.
The next bit of that exchange is: "each individual decision seemed fine and I didn't realize how big their sum was until the end".
That's a classic "ends justify the means" slippery slope.
And even if he didn't want or mean to, he was more than happy to engage in that kind of behaviour if needed.
Someone like that is absolutely a terrible person in my book. I would not trust or be friends with someone who has that attitude. He is more concerned with "winning" than behaving ethically.
Imagine if you were an FTX employee, customer or investor who was in the dark. Would you really just chalk this up to playing "a little too fast and loose with an explosively growing business"? Would you be happy to work with SBF again? I know I wouldn't.
"each individual decision seemed fine and I didn't realize how big their sum was until the end"
This reads to me as "I was viewing all these situations in isolation instead of looking at the full system" not your reading which seems to be more "I thought I could get away with each individual thing".
To your last point, Parker Conrad was dragged through the mud and shunned everywhere when Zenefits imploded but he came right back with Rippling and is a tech darling now.
They are effectively the same reading to me. He's the CEO. It's his job to understand the whole system. Whether he looked at things in isolation, or thought he could get away with each one he was still reckless.
From a quick reading of what happened with Zenefits (Was not keeping track of tech back then), it seems bad but not as bad as FTX.
I'm also not saying that everyone would not want to work with someone like that again. I'm sure some (Most?) people would, but for me it would take lot to convince me they're not going to repeat that behaviour.
Most non-sociopaths would experience a huge amount of shame/stress from stealing billions of dollars from trusting people and losing it. SBF shows none of that.
Are you f'ing kidding me, taking this at face value?
Note in other tweets he said he was trying to "raise capital". The man is likely going to prison for years, he is either delusional or trying to promote his delusions to pretend the he didn't know what he was doing was wrong.
Looks like pretty classic desperation, which is an expected response to this situation for plenty of personality types that aren't indicative of anti-social personality disorder.
My issue is only using the half of the source that backs up the assessment (of sociopathy) and ignoring the other half that contradicts it. That is not fair, balanced or even good guessing, its just seeing what you want to see in the data by excluding what doesn't support your theory.
Are you responding to me, the original poster who was claiming sociopathy, or responding to the world in general?
All I was doing is pointing out that if person A claims person B is lying about their motivations and good deeds and actually causing harm because they are a sociopath, saying person A can’t claim that doesn’t make much sense.
I have no particularly strong opinion in if anyone is or is not a sociopath. I’m just pointing out that lying about your intentions and good deeds while causing harm is a pretty textbook element of ASPD. It’s certainly not unique to ASPD of course!
Do you have specific elements of sociopathy you think can’t apply?
Or more just pointing out all of this is bullshit speculation anyway because no one can diagnose someone off a couple of tweets in the middle of a scandal anyway?
hn_throwaway is the user that wants to use this as a source to prove SBF's sociopathy but then mocks another user for taking anything he says in the same source at face value. That's why I'm commenting, because that looks to me like a double-standard.
For HIS life, meaning he’s likely to go to prison if he fails to make his depositors whole. He doesn’t care about his customers which is why he embezzled the money, didn’t do any accounting, created a backdoor in the finance software, and tried to keep the charade going for as long as he could.
I don't interpret it that way. I interpret this as "the most important thing is getting myself out of this jam - because otherwise I'm going to prison and my life is fucked."
How can you think he "just fucked up", and not unethical? He was selling magic beans. He was going "this thing I just made up, I declare it with billions".
I understand what you're getting at (Though this is not really about printing FTT in particular). What I'm trying to verbalize is that before, I gave him the benefit of the doubt in regards to intention.
He mentions that he didn't mean to do sketchy things, but he was definitely more than willing to engage in unethical behaviour.
Previously, I did not think he was being brazenly unethical. Now, I have the impression he will do anything it takes to "win".
The guy is likely a psychopath. I mean just compare: https://en.wikipedia.org/wiki/Antisocial_personality_disorde... and see how many boxes he checks. When a high-skilled evil psychopath gets going, he (or she) usually leaves a trail of people asking themselves "how could we not see it for so long?!".
This Mario person is a charlatan who recently deleted the entire contents of his web site because it was publicly advertising that his career is the sale of fake engagement to pump shitcoins
It's so weird, I had seen that profile a few days ago. Everything about him screams charlatan. The profile images, the "thoughtful" pose, his "I'm getting interviewed", "I'm a speaker" and his "I have an audience watching me dance", it just screams it. Then I went to his website and it ups the volume to 11. He even has a corny motto "Do good - Do it consistently - Be patient".
I'm sure lots of people fall for it and think he's legit. Is that just an age thing or are some people just that gullible and when you have global reach via Twitter and Instagram, you'll find them all?
- he lent his own hedge fund $8b collateralized by tokens he controlled issuance of (FTT, SRM, MAPS, OXY). At full size, the liquidation price of these tokens was 0 (he also purchased billions worth of FTT off the market when he could print them himself for free?).
- Sensing alameda was insolvent and customer funds were misappropriated, customers withdrew until they ran out of liquidity.
- Withdrawals were suspended
- Citing Bahamian authorities requests to unfreeze assets of bahamian residents, withdrawals were opened back up for bahamian residents. Hundreds of millions were withdrawn. Bahamian authorities have since made statements that no such requests were made (so this was just insiders stealing even more).
- Approx $500m of assets were drained from FTX wallets at the same time as FTX databse records were cleared (obviously not a hack, just insiders stealing even more).
- SBF goes on twitter to make new one-letter tweets while simultaneously deleting incriminating tweets so as to not trigger deletion bots picking up that he deleted said tweets.
Ongoing theft and destruction of evidence out in the open after stealing 10 billion dollars from over 1 million depositors. SBF has still not been arrested. This all but confirms the wildest of conspiracy theories.
> - SBF goes on twitter to make new one-letter tweets while simultaneously deleting incriminating tweets so as to not trigger deletion bots picking up that he deleted said tweets.
This part seems to have been mostly speculation. He deleted 118 tweets & retweets, so his one letter tweets did little to cover his tracks[1]. I have no idea why he did the one-letter thing. Maybe to get attention?
I dont think he didnt delete any tweets. The counts were off because people like Tom Brady and other famous people associated him where deleting re-tweets.
You kind of went off the rails there in the final sentence. Are you saying that any of this adds credence to the silly idea that Democrats are beholden to SBF campaign money?
It’s a silly idea that being the second largest donor to a political party in the US buys you special favors? Why else would anyone give that kind of money to politicians without expecting something in return?
I'd expect that the something in return buys you a king's seat at the regulatory table, not quite a get-out-of-jail-scott-free-for-stealing-billions card.
I'm sure that in a few years, once the courts get everything sorted out, we'll learn which of our prejudices is closer to reality. As of today, though, we're both just speculating.
Bingo, and the line from electoral politics -> regulation is straight, legal, and requires one step. While filtering political donations through judicial + investigative bodies with egads of separate oversight & career employees & little to no electoral influence would be impossible to manage. Not for 28 million, you would have to buy a loooooot of people off and get extremely lucky. That’s why it doesn’t happen. The get out of jail free card, that is.
Donations buy you access, not specific outcomes. Just the ability to get a hearing for whatever kinda-reasonable-ish parts of the stuff you want there might be is really, really valuable.
And yes, both are corrupt, but one is business as usual and the other is a serious federal crime that prudent members of congress avoid.
"This tax credit gets extended" is an outcome. "30 minutes with the Member and their chief of staff to discuss the vital importance of this tax credit to industry X" is not an outcome. You can problematize and subvert any scheme of categorization if you like, so go wild if it makes you happy, but honestly who has the time?
Sorry but the "wildest conspiracy theory" is that Democrats sent money to Ukraine, Ukraine deposited the money at FTX, and SBF donated the money to Democratic congressional campaigns. Nothing about what we know today lends any credence to that theory.
That some guy with access to a lot of cash tried to buy influence is not a "conspiracy theory" because it is unilateral. And, if that's what he was trying to do, it seems like a really poor strategy since you cannot really buy influence over law enforcement that way.
> Nothing about what we know today lends any credence to that theory.
I'm personally much more interested in the billions or the tens of billions that disappeared (in the bank account of tether/Deltec?) than in the petty amount that went to the democrats but... It's a fact that media were posting articles explaining how crypto was helping Ukraine (and there was a government ran website in Ukraine accepting crypto donation).
SBF's very mom was running a political fundraising thinggy.
It's also a fact that at least one US congressman is saying Gary Gensler was allegedly working hand in hand with FTX to allow SBF/FTX regulatory capture of crypto exchanges.
I'm not saying they did: I'm saying a US congressman says he has records indicating that.
These are facts. Now did these donations to Ukraine found their way back to FTX? (and if that's the case there's at least some truth to the conspiracy for it's a fact that SBF was donating stolen money to her mommy's fundraise)
I think it's a bit early to dismiss with the back of the hand the information people are digging out.
The one thing that seems certain is that if we were to depend on the journalists from the New York Times to investigate on that we wouldn't go very far.
The usual angle is also going to be used for sure: "The wildest conspiracy theories are false, hence nobody besides SBF did anything wrong".
People are trying to connect the dots. And with 130 companies, blinded journalists, a political party receiving $40m in donation, etc. there are certainly dots that do need connecting.
Congress hearings in december for a start. Should be interesting (even if I don't have high hopes).
I could see Ukraine donations that hadn't been withdrawn getting caught up in all of this, but I'm highly doubtful there was some weird shell game going on. Not because it wasn't possible, but because it wasn't necessary. SBF was openly throwing cash around to buy political and media influence. There wasn't any need to skim government cash when he could use ~$8b of customer's deposits as his slush fund.
I've heard a lot of wild conspiracy theories, but that one is new to me. To be fair, I do not believe the conspiracy theories, just that the inaction we're seeing is feeding credibility to the people peddling them.
I think that donating money one time buys you a photo. I think donating every cycle and especially anticipated into the future buys you access - which is correlated but not the same as outcomes.
> Why else would anyone give that kind of money to politicians without expecting something in return?
Because they think the candidates they support will make the world better either personally for you or in a more general sense? Oil companies give money to manchin because they know he agrees with them and if he wins will fight for their legislation, whether they funded him or not.
> Oil companies give money to manchin because they know he agrees with them and if he wins will fight for their legislation, whether they funded him or not.
Neither they or you know that. And nobody but you assumes that Manchin fights for his beliefs, rather than for what benefits him personally. And no, I'm not assuming the opposite. I instead choose not to fantasize about his internal states, or speculate about what he would do if an industry that has always supported him ceased to support him.
>Why else would anyone give that kind of money to politicians without expecting something in return?
There's a polite theory it is done for altruistic reasons to make the country a better place for all and that it is the exercise of free speech and you are also free to give Trump, Biden, Pelosi & McConnell vast amounts of cash.
It’s unclear to me how that affects anything? If anything it lends credence to the idea that he was making these donations solely for special favors and not for altruistic reasons.
Not just the democrats. Republicans, Bahamian officials, members of the media, regulators, etc. The most recent New York Times piece did not mention fraud or criminality a single time, painting SBF as someone who simply got in over his head.
OMG. "The dog ate my homework" would have been a better excuse.
> like, "oh FTX doesn't have a bank account, I guess people can wire to Alameda's to get money on FTX"
> ....3 years later...
> 'oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that and so it was never delivered to FTX'
So they "basically" forgot about $8B not transferred to FTX.
But somehow FTX customers saw the funds deposited in their accounts, otherwise they would have complained.
Since more than one thing can be true at the same time, why not a combination of a) total lack of internal controls, understanding of basic accounting and book keeoing, b) total lack of competence when it comes to manage these amounts of money and c) actively defrauding customers by stealing their deposits?
It doesn't make sense and could all be lies, but to try to interpret it: they saw that the money arrived in the "poorly labelled account" and increased the customer's balance. But in some sense, the money never got to FTX and was still with Alameda. Or alternatively, FTX and Alameda commingled funds using the "poorly labelled account" and it was used for whatever payments either company needed to make, like withdrawals. This lack of separation means the balances were never really backed and it was a Ponzi all along.
Not seeing much remorse here, but what can you expect from a guy that gambled with billions of dollars worth of people's savings. Don't buy that he didn't realize what they were doing until it was too late. He admits in this interview to lying about previous public positions, so wouldn't trust anything he says here either.
I just hope crypto learns from this and normalizes Proof of Reserves
At this point, I'm not sure who is honestly considering investing in a crypto exchange. I'm not sure there's a "feature" they could implement to make me consider placing my money there. I'm not sure why crypto people don't see the writing on the wall that the events of the last 6 months all but guarantee an exodus from the space - or at least from the weird exchange model, which seems to completely do away with everything good about crypto and replace it with facsimiles of traditional finance concepts.
Proof of reserves only proves (for the sake of the argument let's assume it's an actual proof) the exchange has some amount of reserves, which is mostly meaningless. The quantity of interest is the share of deposits that are backed with reserves, not the absolute amount of reserves.
I don't know, it looks like a half-baked idea, like everything surrounding crypto-currencies. Someone probably came up with this proof of reserves idea, and everybody else said yeah let's do this, because it sounded like it does what they wanted to do, except it doesn't.
Yeah, the original Proof of Reserves proposals (and this is probably a decade ago, on the bitcointalk forum) was a merkle scheme IIRC in which each user could verify that their amounts were added into the proven total.
Most people seem to be just using "prove you hold some amount" which is a very poor cousin. However, it is pretty clear that FTX would have failed even that, so maybe we should lower our expectations?
What about you just keep custody of your own damn coins? Isn't that the point of cryptocurrency, that it's like cash except you don't have to physically carry it.
I'm very critical of SBF and what went on here, but let's not over sentimentalise this, they gambled billions of dollars of peoples deposits, not savings. Which clearly is a crime, but you don't store your savings on a crypto exchange, BTC arguably the most reliable of the crypto-currencies is down 70% in the last year. Moves that happen once in a lifetime in real markets happened multiple times in crypto. No one reasonable has their savings in crypto exchanges.
> but you don't store your savings on a crypto exchange... No one reasonable has their savings in crypto exchanges.
Many, many, many people have absolutely bought into the crypto dream, put their savings on an exchange and absolutely ended up entirely destitute. There are swathes of evidence of exactly this.
It can be hard to tell. On one hand, as a longtime observer of spaces like r/wsb and various crypto/opensea spinoff communities, people will very seriously gamble and lose vast quantities of money (and, to be fair, sometimes win vast quantities) in risky bets that they don't understand, and then post about it on the internet as if they didn't understand what the term "betting your life's savings" meant. On the other hand, I find enough schaudenfreude in reading such posts that I can see exactly why and how someone would fabricate such a story merely for their own amusement. It's a good heuristic to take anything with a grain of salt, including this half-baked explanation from SBF on exactly what went down with FTX.
The Ontario Teacher's Pension Plan lost around a $100M because of FTX. It isn't that unbelievable that other individuals also put a significant amount of their savings into crypto. The trust for FTX was there.
It was a stupid decision, but at least from their PoV, it was only a stupid decision in hindsight.
He's being honest here, and we should listen to him.
Point 1: Most personalities are shams. Ethics/politics among the powerful is a lie/shibboleth.
Instinctively you know this to be true, but hope in a great savior is deeply ingrained.
Point 2: Regulators make things worse. They are actively working against our interests.
He would know best; they created him. Again, we want to believe in the great savior myth, but they are just people: lazy, corruptible, political, etc.
Point 3: Chapter 11 made things worse.
He's probably right about this too. He's saying that he would have the power to pay back depositors first. Chapter 11 only gives him legal protection, and puts depositors last. They will liquidate everything to USD, pay a 10% commission for a horrible rate, and then pay the lawyers, then the counterparties, then the investors, and then a tiny fraction back to depositors, years down the road. Another MTGOX/BITFINEX.
As a reference, the Irving Picard recovered $9.3B from Madoff and paid only $5.4B to depositors. The rest evaporated in liquidation expenses and legal fees of $700M. The legal fees for Lehman Brothers liquidation was $1.6B. The people running the show now are not your great saviors; they are incompetent, greedy, and morally disconnected.
IANAL, but they may have structured their investment as senior debt, and depositors may have some other funny legal status. Also Alameda has to be dissolved before FTX, so technically FTX depositors are a creditor to Alameda while the Alameda investors are depositors, and typically Chapter 11 discharges debts. Also, Alameda is under Bahamian law, and so is FTX, and US courts will only get what's left.
Did you know that Madoff didn't charge fees? His crime was faking the numbers, but the way he made money is, much like SBF, through leverage of managing that money.
I don't know much about it, but until the lawyers got involved, the only losses were the made-up gains. Then they took $4B in real money.
>Disclosure: This August, Bankman-Fried’s philanthropic family foundation, Building a Stronger Future, awarded Vox’s Future Perfect a grant for a 2023 reporting project. That project is now on pause.
Well there's a sense of contrition there, so that's good.
However there's no reasonable excuse. You can't be like "aw man, I wish we'd been more organized". A big piece of this is on the investors. All those depositors would have been saying "Hey Sequoia and OTPP are in there, they must have checked things are sound". Was that foolish of them, to assume reputable investors had done their due diligence? You're between a rock and a hard place when you answer this. Either they should have all done their own DD, basically not invested because who can do DD as a little guy, or large investors are not responsible for what everyone else thinks they did, which is a rather major indictment of how our financial system works.
But back to SBF's explanation. It's just juvenile, basically the same as "mommy, you didn't make me clean my room and now I slipped and hurt myself". Whatever the laws are, when someone trusts you with their money, you are responsible for certain basic things like knowing where that money is. All the money in the world and they didn't think to hire an accountant and a risk manager. Or perhaps they did and those people quietly left, we'll never know.
About the regulators, it's quite the about-turn. He goes from saying it's a good thing (which was why CZ got pissed at him?) to saying it was just PR, and that regs basically don't work anywhere. I think this is also a juvenile view. You can make the case that it often leads to unintended consequences, and that it often causes problems, but you can't sweep all regulations in all sectors into the bin, there's just too much evidence that it sometimes does work. In fact you could say that the very reinvention of finance as crypto ought to motivate participants to look at what problems were found in the financial world that were addressed by regulation. Glass-Steagal, deposit insurance, central banking, there's a lot to read about.
Fascinated to read that you thought he came across as contrite. My reading was the opposite - that he was nihilistic, narcissistic and utterly devoid of contrition. Specifically: there seems almost no recognition of his own agency - it’s all just bad stuff that happened to him.
Agreed, I can't say I was exactly surprised at the lack of contrition, but then again, he made it clear at the end that his entire life revolves around the now-impossible goal of raising $8b in the next 2 weeks. Introspection, I guess, will come after that. I'm guessing that he's still experiencing some denial about the loss of his own status, freedom, and opportunities in life that will come with all of this. As much as everyone hates this guy right now, it's definitely pitiable and interesting to get a snapshot of a huckster mid-downfall, where he hasn't yet realized how much the foundation underneath him has fallen away. Then again, no one knows whatever happened to Do Kwon. Maybe it's not too late for SBF to make a break for it.
> Well there's a sense of contrition there, so that's good.
Sigh. So this is how confidence men and politicians and scammers can make good livings.
He just said that all the good-sounding things he said in the past about ethics and doing the right thing was "this dumb game we woke westerners play where we say all the right shiboleths and so everyone likes us".
>Bankman-Fried says his No. 1 priority now is to try to raise $8 billion to make account holders whole.
So, basically start up a new Ponzi. Because that's exactly what raising money from new investors to pay off existing investors is. Note he did NOT say "generate $8B in profit".
At this point he needs to STFU, stop posting on social media, stop giving interviews in the media, and do whatever his lawyers tell him to.
Well you see, he wants to take those $8B and put them in a box, then start printing box-tokens that he can lend to his trading arm, then he can build a market for those box tokens giving them intrinsic value, while he siphons the 8B$ off to ... wait, how he's going to make his users whole? Well you see he just needs to raise 16B$ and put them in a box...
No, this part isn't a ponzi. He has a lot of crypto and he wants someone to buy it all for $8 billion, so he can return that $8 billion to his customers. He says it's worth $9 billion down from $14 billion two weeks ago, so it's a great deal. Now, I would say it's worth far less, maybe hundreds of millions.
This part is "if I firesale all the crypto, can I get enough fiat to pay back my customers so that there's no case for me going to jail because no one lost money, just got stressed out."
I am not sure. If I owe $8B and I raise $8B and then give it to the people whom are owed $8B, what exactly am I giving the investors? Basically he has an $8B hole and let's say everything else nets to zero (e.g. assets - liabilities = -$8B.) No one in their right mind would give $8B to get what is otherwise worth nothing. This is a non-starter, especially now that the brand is also completely tarnished.
He claims he owes $8B and has $9B in crypto/investments that is just hard to sell right now. That is, he claims assets - liabilities = 1B, but assets_that_can_be_sold_on_the_open_market_before_bankruptcy - liabilities = -8B. If that were true, then someone giving him $8B in cash for the assets, liquidating the assets for $9B (making $1B) over time and all his depositors getting their cash is good for everyone.
This isn't "invest in FTX". This is "buy everything at my going out of business sale for one transaction and make money"
Now, I don't think his assets are worth $9B. But if someone out there with the ability to raise $8B thinks so, we'll find out soon.
And you are also correct that what he likely is greatly over stating the value of the assets he is holding, which is funny money tokens like FTT, SRM, etc which he is artificially inflating.
I don't think this is an earnest attempt to help his victims. He must know how ridiculous it is to ask for someone to repay his victims losses with nothing to offer in return. Feels like a legal strategy to mitigate criminal and civil consequences.
This is just classic. "OH I'm a crook? Well everyone's a crook!". No Sam. You're a crook, and we're not really intersted in taking moral lessons.It just reads like the lowest effort teenage coping mechanisms. And you know what? Andreesen will fund his next venture. Because it's about class, not returns.
Oh my god, I upvoted you before reading the DMs. I... wow, yeah, they need duct tape.
EDIT: Okay I just cannot get over this, obviously I'm exaggerating but it's pretty much "I didn't want to do bad stuff because that would be bad, and then after I had personally done all of the bad things, I realized that I had, in fact, done something very bad."
The "lament about how corrupt the system is and that we are forced to partake in it" excuse has been popular in recent years, not surprised he's going for it. Let's see how that plays out
SBF, his foundation and his family are well connected politically. NYT already did a bizarro puff piece on him, now Vox does this (which apparently directly received FTX foundation money).
It’s absurd as he is essentially a well connected criminal.
edit I do want to correct one thing - this is not a puff piece like the NYT one, actually it implicates him.
Maybe you’re right. Actually wrote this before reading the article (typical!) and the article is not friendly to him at all, weirdly he seems to confess his activity. This is super weird because my impression is his father is a lawyer, so is it possible he actually doesn’t think / knows he won’t be convicted of anything?
> Not sure what what the people pushing this narrative aren’t understanding
They are clouded by anger and frustration, I’d wager, many folks lost money in this fraud. Some maybe caught up in the mob mentality and excitement around taking SBF down.
Anything short of absolute demonization is not good enough when you’re mad, I suppose.
I didn't lose anything, maybe I had 10$ in dust on FTX. But yeah I'm pretty mad and I'm even more mad because I believe CZ/Binance are also a super shady time bomb.
> Not sure what what the people pushing this narrative aren’t understanding.
From the other day, it seems, they're angry that the NYT isn't saying, in exact words, "SBF is a massive criminal who committed massive fraud".
And when you respond and say "That's because their lawyers understand the concept of defamation", they say "well, then they just need to talk to people and have them say it so everyone knows he's a criminal and committed fraud".
How is this a puff piece? Just posting these chat transcripts is damaging to his reputation and probably his chances in court. He does not come off looking good here.
His father is a lawyer so I’m confused about his behaviour. Does he think this will help him somehow, to appear like he’s terribly sorry about what happened ? Surely his behaviour is criminal?
>I actually posted before I read the article (typical!)
I'm not sure whether you're saying "I did something bad, repeatedly, but it's ok because I'm admitting it" (while arguing someone else who did something bad shouldn't be let off the hook for admitting they did something bad), or whether instead you're taking pride in routinely acting in a way that subtracts value from the community (while arguing someone else who acted in ways detrimental to the community should receive harsher judgements than you feel he's received).
Either reading suggests an opportunity for productive self reflection.
Posting criticisms of articles you haven't read isn't the scale of damage that SBF caused, but the belief that "I'm not intending to cause harm so the harm I'm causing isn't real" appears to be at the root of both sets of outcomes. The impact of SBF's actions was higher simply because one day he found himself holding a larger lever than most of us have the occasion to hold. It's good to be in practice, should that day come.
It's so weird to me how these ideas become widespread so quickly and accepted as fact. I read the NYT piece and it was fine, the interviewer mostly let SBF talk.
Did your father work with legislators to try to pass laws?
“When I went to California to try to fight into it, I thought, ‘Well, there’s only 120 legislators. I’ll talk to them all one on one,'” Bankman said. “I found that in order to do it, I had to hire a lobbyist because I just couldn’t handle the details or get the meetings. In Congress, when I went there, now there’s 500 plus, and what I found everywhere I went is that Intuit had already preceded me. They’d already met every representative I was going to meet.”
Did your mother create a political fundraising organization?
“In 2018, the secretive Stanford-connected Democratic fundraising group Mind the Gap (MTG) funneled over $20 million toward competitive U.S. House of Representative elections and get-out-the-vote (GOTV) organizations. In 2020, MTG wants to increase that number to $140 million.
“MTG is led by Barbara Fried, the William W. and Gertrude H. Saunders Professor of Law; Paul Brest, an emeritus professor of law and director of the Law and Policy Lab; and Graham Gottlieb, a Stanford research affiliate. Of the three, Gottlieb has the most direct policy experience, having formerly served in junior roles in former President Barack Obama’s 2012 reelection campaign and in Obama’s White House.”
> Bankman-Fried has maintained that FTX has never invested the deposits of crypto account holders on the exchange. I pressed him on that point via Twitter, and while he continued to insist that FTX did not directly use account money in this way, he said that Alameda — which he also owns — had borrowed far more money from FTX’s balance sheet for investments than he had realized, which ultimately left FTX vulnerable to the crypto equivalent of a bank run.
> Why didn’t Bankman-Fried realize what was happening until it was too late? “Sometimes life creeps up on you,” he said.
This is the central issue of the case. There aren't many paths for an exchange to experience a run unless it's acting like a fractional reserve bank.
So here's an admission that Alameda borrowed from the FTX balance sheet. There's also a denial that FTX invested deposits. There's no way for both statements to be true.
It's somehow even worse given that according to SBF, they didn't even loan all the deposits. Something like $8B of them were being deposited to Alameda directly from users without their knowledge.
tfw you forget the old friend you're dming on twitter about your life problems is now working as a reporter for vox and is going to post your whole dm thread as an article
I'd never heard of the guy until now so maybe it's obvious but you do wonder in these situations, he must have realised that the questions were leading to an article but did he expect the transcript to be published verbatim?
The obvious conclusion here is that SBF is just a cynical but skilled manipulator. But then why send these DMs at all - surely a skilled manipulator would know better, or could at least present himself in a positive light?
Maybe all those stimulants have taken their toll. Or he's totally given up.
> surely a skilled manipulator would know better, or could at least present himself in a positive light?
My bet is that he lost his back country. He was until recently the front-person for a hugely successful enterprise who donated money extremely broadly. Back then he could have yelled "I run a goddamn ponzi scheme" into the loudspeaker of huge credible news outlets and they would have edited to "Master genius is going to revolutionize everything through revolutionary crypto". He's speaking into the same loudspeaker because he still thinks the message that got through back then was due to his skills as a communicator and not because... they where all on the receiving end of the cash flow he was throwing around every which direction. But obviously anyone who was receiving money back and writing favorable about him back then will do their best to distance themselves now.
Case in point, quote from article:
(Disclosure: This August, Bankman-Fried’s philanthropic family foundation, Building a Stronger Future, awarded Vox’s Future Perfect a grant for a 2023 reporting project. That project is now on pause.)
Which basically says they where on the payroll. Obviously they aren't going to pay the money back. You have to wonder what great articles about SBF they would have printed in a completely unbiased fashion if not for the implosion.
Great take. Off topic, but I really love the post-history vibes from this guy, elon, even trump a bit. There's something beautiful about living in public, and not hiding your flaws. No PR or corpo speak or defensible positions, just rawdogging life. And not even behind the 7-11 dumpster, right out there in broad daylight.
I just saw an explanation for this on twitter. Basically, suppose SBF actually believes in effective altruism, his brand of it at least, and that he is a skilled manipulator. First premise seems iffy, but the second pretty sound, but let us run with it to see where it goes.
Why would skilled manipulator effective altruist SBF do this? He made a big gamble using customer funds to try and keep his business running. This is kind of like his coinflip thought experiment where he would risk the world to gain a second world. His gamble blows up and he loses everything. What's the most effective thing he can do now? Fall on his own sword, discredit himself as an evil charlatan, in an attempt to try and save face for the philosophy he actually believes in.
"No, I'm not really an effective altruist. I'm actually just evil and dumb. Hehe."
I would assign very low probability to this - but it is an explanation that explains, to some extent, his actions here.
Somewhat unrelated to this article, but could someone clear up a point of confusion for me?
There are people blaming the CTFC and Congress and the Democrats that SBF donated to for not regulating this.
But was FTX (the Bahamian entity) even under their purview?
AFAIK, you weren't even allowed to access FTX from a USA IP address, you had to use a VPN. You could access FTX US which was a different thing and offered a much smaller subset of the products FTX did (and that business seems solvent?)
Like what jurisdiction does the USA have over a crypto exchange elsewhere? I know anything that touches a US dollar can be tried in a Manhattan court and maybe he gets convicted of a crime and extradited here. But like Japanese banks touch US dollars as well, but the USA doesn't get to regulate them, right?
I'm super surprised at how open and off-the-cuff he's being here. Did he not put together that the DMs might get published? Is this just the power of good rapport? Is he trying to be strategic here in some way?
We don't know how much money he paid to the person he's talking to. We only know that he _did_ pay money to the person he's talking to, since it's added as a disclaimer in the article. Also it would be silly of Vox to leave that disclaimer out as it' was publicized earlier so they can't run from it.
He's thinking he's chatting with an accomplish who's going to help him spin some positive PR to help his last ditch fund raising.
But in fact he's chatting with someone who's desperate to distance themselves from a person they received money from, so as not to end up looking like they got paid for biased coverage, which lets be honest is what most likely happened.
This is further evidence that he was thinking of this in terms of all-or-nothing coin flips. In case you haven't seen it:
COWEN: Okay, but let’s say there’s a game: 51 percent, you double the Earth out somewhere else; 49 percent, it all disappears. Would you play that game? And would you keep on playing that, double or nothing?
BANKMAN-FRIED: With one caveat. Let me give the caveat first, just to be a party pooper, which is, I’m assuming these are noninteracting universes. Is that right? Because to the extent they’re in the same universe, then maybe duplicating doesn’t actually double the value because maybe they would have colonized the other one anyway, eventually.
COWEN: But holding all that constant, you’re actually getting two Earths, but you’re risking a 49 percent chance of it all disappearing.
BANKMAN-FRIED: Again, I feel compelled to say caveats here, like, “How do you really know that’s what’s happening?” Blah, blah, blah, whatever. But that aside, take the pure hypothetical.
COWEN: Then you keep on playing the game. So, what’s the chance we’re left with anything? Don’t I just St. Petersburg paradox you into nonexistence?
BANKMAN-FRIED: Well, not necessarily. Maybe you St. Petersburg paradox into an enormously valuable existence. That’s the other option.
(See the first paragraph of https://www.lesswrong.com/posts/BZ6XaCwN4QGgH9CxF/the-kelly-... for the outline of an explanation of why his reasoning was not applicable to most real-life scenarios. This is pretty subtle; >95% of the explanations on the Internet I've seen over the past week as to why SBF is "obviously wrong" don't actually work.)
Maybe I'm speaking too soon, but he does seem ready to accept that he lost this flip. It would obviously be insane to trust with him anything big at this point, but I'm optimistic that he won't fight to the bitter end.
Not quite. The question is defined in a way that the EV of bet is positive, even though repeatedly doing it gets you an arbitrarily high chance of (moral) bankruptcy.
It's not though, it's just guaranteed failure. The only stable state is that you lose everything and you will reach that stable state in about 2 coin flips. If it's always good to flip, you will eventually (and quickly!) reach nothing.
I'm actually somewhat impressed by someone who articulated a stupid logic about how to live life and then actually followed through.
SBF talks about money like a prop trader who thinks that blowing your account is just a thing that happens to everyone in their lifetime, crossed with an extreme Rationalist (of the self-described "Rationalist" community) who thinks everything can be reduced to choosing between Column A and Column B based on which column has more utils.
Quite a lot of Rationalists aren't Utilitarians, for various reasons.
Most of the ones I hang out with seem to agree with my characterisation of Utilitarianism as what happens when philosophers discovered basic arithmetic and then just stopped there. Most recently:
"""I remember in secondary school, with nobody to teach me more than basic trigonometry and algebra, I spent 6 months figuring out what I later learned were the two ways 3D rendering can be done: ray tracing, and turning points in 3D space into points in 2D (screen) space and drawing those as 2D primitives.
Utilitarianism feels like even less than that, to me. It's the foundation of algebra upon which more can be built, saying that utility is a thing that can be combined, but it doesn't really say how to combine utility, and all the weird things that happen in extreme hypotheticals are because it's naively summing the potential utility of unbounded agents."""
Is he wrong? I suspect that even if he does jail time for fraud etc. then he will come out of it famous, and with plenty of deep-pocketed investors lined up to ride another wave. What are the actual consequences to the big guys?
I feel like the next question is, "the tortoise lies there, its belly baking in the hot sun, beating its legs, trying to turn itself over, but it cannot do so without your help. You are not helping. Why?"
The whole point of the paradox is that if you keep playing it’s impossible to end with anything but nothing. Sam laid out no exit point, not sure how he comes to the conclusion that he can end with an enormously valuable existence.
This is not true. The probability of ending up with nothing is only one in the limit. The probability for any finite tries is close to one, but not one. The EV keeps growing exponentially, as the rewards are growing even faster than the probability of ruin.
It is extremely risky and ill-advised, but as SBF said, it’s possible to end up in a very (very!) good position. The crux is that infinity doesn’t exist. You will place the bet at most a finite number of times.
I am 30 years old and I am laughing at anyone who has trusted these kids with anything. His balance sheet shows just how childish and out of depth he and his possie of "execs" are.
SBF is monumentally stupid for sending these messages. Straight up admitting that any "ethics" was for reputation only. And not only that, but saying that the mistake was not doubling down again.
I saw parts of an interview where he openly states,in substance, that a Ponzi scheme is a valid investment, the new way of doing things. I was puzzled and took a mental note to check on how he fares I once in a while.
I had no idea the sums involved were this big, and the operation this much amateurish.
I had, once, in a HN comment a couple of months ago. It said that he was lobbying on some political race, which is something he was doing because he believed in "Effective Altruism". This was presented as a good thing, as though billionaires giving money to politicians was a novel idea. I guess this is the type of person who found him worthy of mention.
> how did anyone serious think this guy was brilliant?
He made a lot of money by bucking norms. Hacker news of all places should recognize that people are drawn to those who project an appearance of improbable success through skill despite a lack of underlying competence (see also: Elon Musk)
I wonder if it's an attempt to disassociate himself with EA. The general consensus on EA forums is anger and shame at how generally good ideas like treating charitable donations as an investment based on impact have been essentially hijacked and longtermism pushed front and center too.
The guy thinks he is smarter than everyone else. And he’s not. He’s certainly not smarter than his lawyers (you’d have to assume right now that he has lawyers). Those lawyers would be telling him to shut the fuck up.
But no, he’s giving interviews to Vox.
All these fawning interviews beforehand. All this assumption that he’s a crypto-messiah. All the true believers.
At this point, crypto is a cult. And the sooner it implodes and/or explodes so we can be done with it, the better off society will be.
Honestly I've been saying lots of bad things about him, but at least he dropped the facade and was a little honest, the thing he said about other exchanges and even traditional finance is true, a bank run on any exchange would cause the same result, do you think Coinbase just won't do fractional reserve? Of course they are... and people experience it at every single market fluctuation where withdrawals get paused for 6 hours at times, and of course traditional finance is even worse, they print trillions, lend them to the government who then gives it to Blackrock to buy company bonds, and Blackrock loves ESG, and even SBF knows that shit is a meme. Then we get to pay interests on that printed loan through taxes, but also through inflation...
But hey like Carlin said, it's a big club and you're not in it.
Now I'm waiting for Effective Ventures Foundation (Centre for Effective Altruism) to voluntarily return all donations made by SBF or FTX share-holders.
If they do not, all their credibility is lost.
This man really has to be protected against himself. It's foolish to incriminate yourself publicly, but there's more to it.
When you watch CT (Crypto Twitter), retail getting wrecked in pump and dumps is an every day event. This one is different though. Some very huge accounts/traders each lost many digits of wealth and given their influence in the community, this doesn't really improve moods.
So when a lynch mob is forming, these statements of smug indifference might not exactly calm things down.
The overwhelming feeling I get from this interview is one of cynicism and nihilism. In his mind it's okay if he did shady things because everyone else does. Everything is broken, everyone is corrupt, everything is shit, so fuck it... basically.
He more or less admits that the effective altruism stuff was a sham.
Anyone with a couple weeks of legal education, never mind the caliber lawyers this guy should be able to afford, would immediately tell him to s t o p t a l k i n g.
The comments here and the entire slant of the story are interesting. None of those messages read without the accompanying article seem particularly damning and they all make sense to some extent. The collapse is terrible, there was mismanagement, etc. but these specific DMs don't really make him seem the monster sociopath other commenters are calling him.
1) He pandered to regulators but doesn't believe regulators (across industries) are able to do any real good
2) He didn't mean to do sketchy stuff, a bunch of small decisions snowballed into a disaster
3) Winning > Ethics when it comes to public perception
4) He didn't have a good handle on what was going on at Alameda and didn't keep the entities separate enough as they grew
5) He lacked visibility into what was going on and missed the complex systems failure mode
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Looking at the "ethics" messages for example, SBF never really says that he thinks it is okay to act unethically.
* He previously said that that people shouldn't do unethical shit because it'll hurt their reputation
* Now (in the DMs) he said: "it's not true really" -> mentions unknown heros and well-known shams -> gives the example of CZ being hated a month ago for being unethical but now CZ is a hero for winning despite being unethical
He never says that being unethical is okay—he says that in the world today, winning influences your public perception more than whether you were ethical or unethical.
I'm surprised that he doesn't blame Caroline Ellison more for what's going on. She ran the hedge fund, she f'ed up, and when she f'ed up she took funds from FTX.
The fact that he is casually giving interviews with no attorney present itself is a huge red flag that he already knows that he has his get out of jail free card.
SBF has used at least one cpu attached to a network on the critical path of his actions. Will this be enough to cause people to be stupid enough to let his powerful and connected family and friends get him off light? People in positions of power seem to get awfully stupid when there's a cpu attached to the network on the critical path.
Madoff, no cpu on the network on the critical path. All understandable and could have been done the same with paper and a filing cabinet.
SBF - so the code actually does (brain shuts down).
Interesting to see if this is so extreme people will keep thinking through the part where they want to stop because "computer"
Even just the mere mention of the involvement of a network attched cpu seems to be able to cause the failure of all forms of critical reasoning in many people. See above.
i had to re-read what you were saying about 5 times before i understood your point, i honestly thought you were some kind of schizophrenic with the way you phrased it and kept repeating the same awkward term
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edit: I'm rate-limited so I can't respond to your other reply. I'm saying that your comment looks like something a crazy person would write and I had a hard time parsing it. this is like a garden-path sentence:
> SBF has used at least one cpu attached to a network on the critical path of his actions. Will this be enough to cause people to be stupid enough to let his powerful and connected family and friends get him off light? People in positions of power seem to get awfully stupid when there's a cpu attached to the network on the critical path.
i thought you were making some kind of paranoid implication about the intel management engine or mind control or something.
and I replied because I thought you should know that what you wrote wasn't clear on the first, second, third, and fourth readings.
I’m not dain, but your choice of language is confusing.
You are attempting to communicate on the internet and you are not being easily understood. It’s your choice if you’d like more people to understand you or not.
You didn't understand and now you do. I guess those who upvoted the original comment also did? It's taken a back and fourth of 5 comments to establish that clearly. BTW I'm not sure using a mental illness as a superfluous pejorative is a useful approach but ymmv.
OP was using "cpu attached to a network" to mean "computer" and "critical path of his actions" as something like "business model".
he's saying that politicians, journalists, regulators, etc, got bamboozled by what was at root a very ordinary fraud, because it was enabled by fancy technology.
that's one of the wildest things I've ever read. So the guy faces criminal investigations and may owe people billions and he DMs a reporter and tells her literally, "yeah most of the ethics stuff I did was PR"..?
I don't pride myself on having a lot of criminal energy or anthing but I don't understand how he even got to this point. Is this his last act of effective altruism for whoever sues him in a court?
Unlike many here, I think he has a point. The entire finance industry is corrupt. People have been trying to make more money by being over leveraged for some time now. Anyone remember 2008? Regulation helps, but not most obviously people find ways to get around that.
It doesn’t, by any means, excuse what he has done. Yet the conversation delivers a very authentic insight into how people at the top of financial institutions with the goal to earn unreasonable amounts of money the get rich people richer actually think and act. For that it’s a great piece.
The entire finance industry isn't corrupt. It might want to be, but then it's tightly monitored and regulated so it can't be this corrupt. "Oops we misplaced over half our customer deposits" is just not a thing that happens in real banking or financial exchanges. In crypto companies though, it's business as usual.
you are regurgitating crypto and libertarian propaganda meant to desensitize you to the corruption of what they are selling. the entire finance industry is not corrupt and this moral equivalence they try to construct to justify their crimes and antisocial behavior is false.
Selegiline metabolizes to the inactive isomer of meth: l-methamphetamine. Which is very much not trucker crank—it’s an over-the-counter decongestant.
Was he on good ol’ non-meth-amphetamine, in the form of Adderall? Sure. But rather a lot of people are on Adderall, and most of them haven’t created a market-shattering boondoggle.
It's surprising that SBF sounds so libertarian suddenly - he was lobbying for government control of crypto just one month ago (which rightfully made him super-unpopular among the OG crypto crowd) https://www.moneyandstate.com/blog/response-to-sbf
He does sound sincere here - no idea what to make of this.
A programmer who helped create Tornado Cash rots in a Dutch jail cell (not charged, might I add) while SBF, Do Kwan, Elizabeth Holmes, and Trevor Milton still remain free. SBF is actually in a $30 million penthouse playing League of Legends. Clown world
What isn't going to happen overnight, justice? A fairer world?
I don't think a fairer world is on its way, I wish it was but the powerful won't be held accountable because people simply don't have the power to hold them accountable. We simply don't live in a just world.
About the programmer in a dutch cell: that is not true, he is in "voorarrest" which is in an arrest house not in a jail cell. Maximum time for that is a 110 days(depending on the complexity of the case).
And yes he is not charged but he has seen a judge who has heard both sides and decided there was a strong enough case to hold him there( which is quite rare i might add and generally only happens for severe cases).
we would laugh at this kind of dissembling gobbledegook if it came from a nonwestern country. the dutch need to charge him with something or release him. 110 days is preposterous.
AFAIK, Milton managed to cash out a lot of money, and even with a conviction, he will have a very comfortable "economic" life irrespective of what he will do next.
One person is a threat to multinational regal order and the other benefits it. That's the difference. Not clown world so much as the world isn't what the 20th century told us it was.
They should all be in prison bud and they’ll get their turn - the wheels of justice grind slow but they grind exceedingly fine. To avoid bringing them in without a charge yet, which is one of your main objections, the authorities are preparing their cases before arrest. And coordinating with many different parties, governments and police forces can take a long time.
There’s no one “international police” and each nation has to coordinate - and acts at its own cadence.
They grind at different speeds depending on who you are. Have the wrong skin color at the wrong time and the wheels of justice will sentence you to execution you on the spot, no evidence, case, or trial necessary.
I'd rather have an FTX scandal than Tornado Cash. I'd rather someone does some fraud than actual funneling of money to terrorists, druglords, gangs, and other problematic organizations.
Encrypted messaging also helps terrorists, child sex abusers, arms dealers, and all manner of crime. It would be 100% safer if all messages were funneled through government servers for scanning.
However, as a society a choice we made was to enable individuals to message secretly with each other over encrypted communications, even if there are significant and documented harms to society.
Tornado Cash did not rob from 1 million retail customers, while FTX did. I think your argument is far too simple.
> It would be 100% safer if all messages were funneled through government servers for scanning.
Uh... what?!
You do know that if you break encryption for gov't you break it for the bad guys as well?...
You do know that there are all kinds of nations that will throw you in prison if you hold the "wrong" opinions, which those opinions become known when they are funneled through the gov't servers?...
You might want to re-read that. The comment was comparing privacy preserving transactions against privacy preserving messages to illustrate the point that both are essential technologies for society.
> I'd rather someone does some fraud than actual funneling of money to terrorists, druglords, gangs, and other problematic organizations.
Considering that Tornado Cash implemented OFAC compliance and they were still banned would suggest to me that this isn't a fair take. Tornado Cash had long since blacklisted known accounts from sanctioned organisations and tried to be overwhelmingly transparent about the fact that the project was focused on providing privacy for normal people and complying with regulations and sanctions to the best of their ability.
One of the major issues with the US in particular is that regulatory and enforcement agencies refuse to establish well defined guidelines that are compatible with digital ledger tech. You can have privacy preservation and regulatory compliance all at once via zero knowledge proofs (as an example solution) however regulatory agencies insist that organisations operate within a system that provides significantly weaker compliance guarantees while also eliminating any means for privacy. Tornado Cash tried to operate within that weaker system to the best of their ability and repeatedly reached out to officials in good faith to properly implement compliance. Despite that they were still sanctioned.
He wasn't arrested for "writing the code", but for direct involvements (and making large sums of profit) for money laundering. Whether he is guilty of that: we'll see what comes up in the trail, but he certainly wasn't arrested "for writing code".
I mean this is like nested layers of stupidity. You'd be stupid to do this, you'd be stupid to think it's not a major crime, you'd be stupid to think that this was in any way acts as a defense of your crime and you'd be stupid to actually tell people that this is what you did thinking that it's a defense for the crime you committed.
Guy literally though that Ponzi schemes would be legal if only the perpetrators on the way to court wrote on a document "I hereby lend myself all the money I misappropriated"?