I’m pretty appalled by some of the comments here. If someone scams people it doesn’t matter how complex the scam was or how stupid the victim was. It is a crime. We aren’t talking about robbing a convenience store here. 40 billion dollars - people’s life savings were completely put up in flames in the name of “innovation”. This is out of control. The reason these sentences need to happen is because retail investors need to be properly informed of the risks, and if leaders of crypto companies continue to say it’s stable and safe they should be prosecuted when it turns out not to be the case.
I think people are missing that this is a money crime. In other words, the ROI from the crime is obvious, as opposed to something like murdering due to mental unhealth.
Then it's just a risk reward calculation - if the possible upside of a crime is $100B with a small chance of eventually being convicted and sentenced to a couple of years in prison, then it's up to each individual to decide whether it's worth taking the chance. I suspect there will be at least one person that does - but once the possible downside is 100 years, then maybe not. A lower value than that may also be fine, but it's all just an expected value calculation in the end.
This is why punitive penalties are needed - both to prevent the same person from recommitting but others from copying. And with money crimes, given the size of the potential upside, it is natural to need a large potential downside to compensate.
It's somewhat unfortunate that the penalty for a mental health crime like murder is actually in comparison meaningless - generally the perpetrators are not going to be making the ROI calculation either way...
There’s some discussion here about whether Luna/UST was a crime given that everybody know how it worked, is it a crime to be dumb / massively fail at business, etc.
There’s a myriad of actual fraud allegations against Do Kwon, including IIRC:
* UST depegged and had to get bailed out sometime well before the mega collapse, however Do Kwon misrepresented the repegging as proof that the mechanism worked as opposed to requiring bailouts
* Allegations along the lines of lying/hiding terraform labs or some related entity selling luna into the pump
* Allegations of misuse / embezzlement of funds (I think related to the above bullet)
I don't know, I think that he has blood on his hands. People literally jumped out of buildings because of this scam. The 100 years thing is kind of sensational... just say 'for life.'
I think it's extremely sad what happened to that person, but we shouldn't be handing out sentences to people based on the actions/mental-health of other people they don't control.
There was just a story out about a person taking their life after a chatbot told them to. We wouldn't/shouldn't be charging the creators of that chatbot should we?
And I agree, the "100 years" is sensational, but still, to be locked up for the remainder of your natural life over stealing money just seems wrong to me. Everyone makes mistakes.
My grandmother died from stroke after she let some people in to give them water and they stole her money (even though it wasn't much money, maybe 1 month of pension, and we could support her if she needed it).
People feel significantly more emotional distress from losing money (especially from stealing) than not getting / earning it.
The amount of harm caused by these people is inconceivable.
The whole notion of incarceration is kind of weird. It doesn't give anybody their money back. It failed to scare this guy off from doing it. In a lot of cases it'll cost more than the criminal actually stole.
There isn't any way to be "fair" in sentencing, because it's hard to compare harms. This guy stole a lot of money, and therefore "deserves" a lot of prison time -- to the degree that that means anything at all, and I'm not sure it does.
Much of it seems to be inspired by some sort of karmic sense of balancing the books. People want to see punishment, and have decided that "keeping him living in an unpleasant, lonely place" is a retribution that is cruel enough but not too cruel.
We could completely reconsider the idea of what "punishment" is all about, but I don't know if any of the alternatives are really all that much better. There's no way this guy could ever really make restitution. I doubt there's a decent way to put him to "work", if his main life skill is about ripping people off. Nobody should ever trust him again, even if we put a bunch of effort into instilling some kind of moral code.
So... I don't like any of the alternatives. The crime is done and no good thing is going to come of it. Following the law is probably the least-worst option. And there's no way to change the law that would be widely agreed to be less-worse.
More a philosophical question on whether jail is for punishment or rehabilitation.
Clearly the impact and scale of this crime was large and far reaching, and negatively impacted society more than most murders would have. Thus from a punishment perspective, sentencing should be harsher than lesser crimes.
From a rehabilitation perspective... is the offender likely to commit a similar crime again? What harm does he possess to society going forward? In most of these kind of white collar crime cases, I'd guess the answer is "not much risk". Reputation being tarnished is enough to prevent similar scale fraud a second time. Though of course could operate through proxies/hidden channels. I'd be interested to see the recidivism rate for different types of white collar crime.
Some people believe more in punishment, some in rehabilitation. If you look at it strictly mathematically/economically... the "best" outcome for society is likely to optimize for minimizing future negative externalities... so the people who pose little future threat should get shorter sentences. And this is somewhat how it works in practice in many cases (sentencing differentials for white collar/rich vs blue collar/poor).
I feel like the punishment or rehabilitation dichotomy is looking at the wrong question.
When your code breaks you don't blame the user. You figure out the problem was. Why did that guy want to commit this crime? Why was it possible?
As far as I'm concerned we should just let him go, or look at some kind of "restorative justice" program even though it can never begin to repay people. I see zero reason for him, or anyone, to spend time simply rotting. But they point to much bigger issues where jail is no solution at all.
If there’s no jail there’s more incentive to commit crime, which is also not good.
I don’t think the length of the sentence materially alters the incentive structure, but there definitely needs to be repercussions for people who break the law/harm others
"Jail" is a relatively recent concept, dating only to the 18th century or so. A lot of history existed without jail as a punishment. It was considered the less-barbaric alternative to other punishments.
It's still pretty barbaric. And we know it's not much of a deterrent, since the jails are full to bursting.
I'm hardly an expert, and the experts disagree on the approach. But I think it's important to reconsider our notion that "jail" is the viable approach.
i mean, fraud like this can cause people to kill themselves. So it really depends on whether you believe 100 years in a cell for "murder" is justifiable.
Calling large-scale fraud "non-violent" is needlessly pedantic, considering the vast harm that it causes.
>"I have never laid a finger on anyone in my life, Mr Pump. I may be–– all the things you know I am, but I am not a killer! I have never so much as drawn a sword!"
>"No, you have not. But you have stolen, embezzled, defrauded and swindled without discrimination, Mr Lipvig. You have ruined businesses and destroyed jobs. When banks fail, it is seldom bankers who starve. Your actions have taken money from those who had little enough to begin with. In a myriad small ways you have hastened the deaths of many. You do not know them. You did not see them bleed. But you snatched bread from their mouths and tore clothes from their backs. For sport, Mr Lipvig. For sport. For the joy of the game.
Going Postal was not one of Terry Pratchett's stronger books, but it's a good point nevertheless.
When news articles say "faces 100 years in prison", they are often talking about the maximum possible sentence for all the charges. Such sentences are rarely imposed.
We hang an admiral every few decades to encourage the others.
And in this case, the others need a lot of encouragement. Crypto grift is bigger than ever.
And maybe I'm a big softie, but I feel a lot less sympathetic for someone stealing billions from retail investors (Stupid as many of them are), than I am for someone stealing hundreds of dollars from a store to feed their meth fix. This guy didn't 'need' to steal in any sense of the word.
> for (non-violently) stealing money is draconian..
It isn't even non-violently stealing money like breaking into your house when you are on vacation, or hacking a bank or something like that. People just willingly bought a shitcoin which then went to 0.
Giving life or effective life to non-violent actors sends a clear message to criminals that they're just as well off to violently resist arrest, as their life is forfeit anyway. Seems like a poorly thought out policy for the enforcers.
There is no messaging problem here. There is no overlap between the type of person who creates elaborate crypto scams and the 80 IQ no impulse control types who violently resist arrest.
I would agree with you if it the loss was smaller. But he wiped out $40 billion, and it was no accident. He made a lot of malicious and negligent decisions that led up to the bubble and the demise.
The financial risk was never Do Kwon's. He socialized that risk to every dumb fucker he swindled. The criminal risk was always his, he just hoped he could disappear or talk his way out of it.
> Smart money and retail both hit. Jump, 3AC, VCs, and small investors alike wiped out all the same from the same flawed idea.
I beg to differ, there was no ‘smart money’ invested in Luna. A 15% yield is an enormous red flag and anyone who put money into it is stupid as hell in my book.
To recap: if someone is offering a yield that is 1300 basis points above the risk-free rate, it’s a scam.
I see banks offering $150-200 on $10,000 in new money deposited for 90 days, which works out to 6% - 8% APR. It’s also a fixed dollar amount and limited in size.
