Guud
Guud
I wonder what his cell is going to look like - swimming pool and playstation included?
Does that changes the scene in any way?
Is Bankman-Fried's Guilty Verdict a Crypto's "Madoff" Moment?
> Mr. Bankman-Fried’s sentencing is set for March 28.
What is the reason that is 4 month away? Clogged up justice system?
Also another potential trial for five other counts in mid march i think.
Citadel took advantage of this situation to "tokenize" stocks and say there were 1 to 1 to perpetuate their fraud. Fake locates, fake margin. Hope Kenny G is next on the list. The whole stock market would benefit from his downfall. Maybe we would get real price discovery.
BTW, no more Adderall for SBF once he is "remanded to the custody of the Attorney General." Once he gets out of US Marshals' custody and is transferred to the BoP, he can kiss Adderall goodbye. Amphetamines of any kind are not allowed by the BoP, unless he is undergoing a surgical procedure which requires its use (don't know of any, but can't say there are none).
don't know why you need adderall in prison even with adhd, not like there are many responsibilities that need executive function.
A reddit post called out SBF as a fraud 2 years ago and no one on the Bitcoin subreddit believed them!
https://www.reddit.com/r/Bitcoin/comments/p1oqqu/the_ceo_of_...
great idea for a trader. scrape anything where people say something like "this is so f* dumb I don't have the time to explain it" as it could be a black swan and call puts against it.
The sheer confidence and contempt of some of those commentators is impressive...
TBF you can accusations of fraud against anyone in space like this. It's like Nostradamus predictions.
Best comment: "If this is true, this would be the worst rugpull ever!"
From this, we can glean two lessons:
1) There's not a lot of weight to put on such criticism because for any success there are also critics. Critics are wrong until and unless they're right. As others have noted, in this case, he wasn't convicted for the thing these critics were claiming he was doing.
2) ... But, it's Bitcoin. Any critic claiming anything Bitcoin related is probably tied to a scam is statistically likely to be correct. ;)
> OP you literally have no idea what you’re talking about. Put your tin foil hat away and stop trying to stir up controversy where there is none.
Some of the replies to that... my god.
these subreddits are/were absolutely full to the brim with bots/adversarial actors. it's obvious after spending any time on them. the incentive to manipulate is just too high, and the ease with which to do it is too low
Exactly. Right now on the subreddit there is a post about how a guy plans to invest 2% of his net worth into bitcoin and most of the comments are mocking him for not investing 90-100%.
There is no such thing as skepticism or critical analysis on these subreddits. Obviously these commenters are already holders and have incentive to convince more people to buy. Like you said, I'm sure there are plenty of bots active in pushing their narrative with no consequences or accountability.
Whether crypto is useful or not, the market manipulation and ponzi-scheme recruiting tactics are too sleazy for me to invest seriously.
I’m sure there’s a Reddit thread for every cryptocurrency company and founder calling them a fraud.
And statistically, they're virtually all correct.
Just like how, statistically, a cancer test strip that always says "not cancer" is virtually always correct.
You're confusing false positives and false negatives
Ok let me make a correction.
It’s always a good blind bet that a singular new company and/or founder will fail their next venture, not just startups in the crypto space, but across every industry. If you know a little bit (insider info) about the space and founders you can probably make better bets, though .
In crypto community everybody is calling everybody a fraud. Probably because in the early days of the Bitcoin and the altcoins, the industry was largely unregulated with a lot of scams going around. But nowadays, governments seem to be catching up.
This is actually one of the reasons why the FTX collapse came as a surprise for most crypto insiders. Everyone assumed that Alameda Research (the trading arm of FTX) was printing money, alas it was losing billions. Sam Trabuco, co-founder of Alameda, who has been surprisingly absent from any trial, was instrumental in creating this illusion of success for Alameda.
The poster accused SBF of front running his customers but comments underneath seem skeptical:
>Clearly OP has no fucking clue what he’s talking about because the videos in question don’t prove he’s front running.
>The Youtube video you linked to (I watched some from the point you linked), appears to be about trading an arb opportunity that existed because of a large sell wall on Binance. Where does it show he's using 'private FTX analytics' to 'front run his customers'?
Shame the Youtube vid of him frontrunning has been removed.
It's still here: https://web.archive.org/web/20221113092101/https://www.youtu...
I don't really think it shows clear evidence of him front-running FTX users. He doesn't even seem to be trading on FTX.
Good find, but worth noting that this is accusing him of front-running when what he actually did was dumber and more criminal: using FTX customer deposits to cover losses on the Alameda side.
>what he actually did
No, what he was charged with was using customer funds.
I'm sure they did all kinds of shady things, including front-running customers.
I mean, if he was doing all kinds of smarter types of fraud, one would think they wouldn't have gone broke.
On what basis are you sure of that?
proven character
also, remember, it was all for the greater good...
It's probably a result of not having complete information and giving benefit of the doubt.
The guy realized SBF was doing weird shit that was probably, if not straight up illegal, at least highly unethical. And front-running was the thing that made the most sense to him at the time.
I imagine SBF's charges are more serious than a front-running charge. The prosecution also may not have had sufficient evidence of front-running to get the charges to stick.
But any exchange in such close company with a hedge fund should always be suspected of front-running. There's an inherent conflict of interest between those two entity types. And I would be surprised if Alameda wasn't front-running FTX customers, given both firm's obvious ethical shortcomings.
> any exchange in such close company with a hedge fund should always be suspected of front-running
Indeed -- I knew several professional traders who used FTX. At the time, their consensus was:
1) "Probably Alameda has an unfair latency advantage, because they are the designated market-maker, and owned+operated by the same people who run the exchange." This could be called 'front-running' depending on how you define the term.
2) "However, SBF probably won't steal all our money because he is well-known, extraditable by USA, and would go to prison."
Needless to say, assumption 2) was incorrect.
Number 2 is half correct.
The premise of 2) is entirely correct, they just underestimated how irrational people can be.
Exactly.
SBF was a sociopath who would (acdg to sworn testimony of his GF) actually go ahead and toss the coin if the outcome was one side results in the world getting twice as good and the other side causes the world to be destroyed, and he DGAF that he was also making the bet for everyone on the planet.
They didn't count on the fact that this mentality would also mean that in real life, he would also do all kinds of risky crimes, and even go to trial instead of taking a plea deal, because there's a non-zero!! chance he could get away with it.
Bad bets all around
Is front-running something you could/would do manually? The prosecution had access to the source code and git history of FTX.
Front-running efficacy can be measured in milliseconds. It's a world where microwave towers sometimes replace fiber lines, to gain a few milliseconds of advantage. That is, when the front-runner isn't "in-house", which Alameda had ample opportunity to be. Alameda and FTX were separate legal entities, but Sam largely headed both. Alameda front-running servers, in theory, could have been running right along side FTX servers, with only inches of network-induced latency.
You can of course front-run manually, depending on the degree of automation in the systems one is front-running, but front-runners will generally want to automate. And to scale the scheme for a realtime system of FTX's volume, Alameda would certainly want to automate it.
I wasn't following the case closely enough, but did the prosecution have access to Alameda source code, or was it only FTX? As long as Alameda had access to FTX order records, any front-running code would likely have resided in Alameda repositories.
> I wasn't following the case closely enough, but did the prosecution have access to Alameda source code, or was it only FTX?
This blog post [0] contains screenshots of git commits that were used as evidence in the trial. It only shows commits to FTX's source code, so I don't know if the prosecution also had access to Alameda's source code.
Given how obviously incriminating those snippets are, I don't think SBF really tried to hide his crimes. I'm not sure then why they would architecture FTX such there are no signs of front-running in their code.
Personally, my guess is that either A) the prosecution found evidence of front-running but thought that the case was air-tight enough already and they didn't want to confuse the jurors or B) Alameda didn't actually do any front-running.
[0]: https://newsletter.mollywhite.net/p/the-fraud-was-in-the-cod...
I really don't understand what's the point of putting him in prison. Wouldn't a lifetime ban on all white-collar work suffice? And being forced to pay anything he makes over a certain threshold to his victims?
It's both cheaper for the state and more humane for him. Do we really, as a society, need revenge? Because that's what this is if he gets more than 10 years in prison.
People go to prison for three-ish reasons: To reform the criminal, to deter crime, and to offer restitution in the form of punishment to the victims of the crime, and arguably to keep society safe.
I feel bad that Sam is going to go away for life, and ideally we'd live in a society where we don't need prison to reform people, but Sam is a case where there is considerable deterrent effect and well as a public protection interest. When someone steals so much from so many and admits no fault, that's not a person who can go to a day program and reform their ways, they need severe consequences to get the to honestly reform.
There's also what the victims say should be done. Just thousands and thousands of people felt pain, and will get a say in the sentencing. If they all forgive, sure, it's okay to give him a light sentence, but the degree of suffering SBF caused is just so profound people will want justice to an un-repentant fraudster who stole their future.
Punishment and revenge are not the sole motivators of incarceration. It also serves as a deterrent.
i don't think he needs to spend a long time in prison but anywhere between 2-5 is appropriate imo. these are not "victimless" crimes
Sure, and we'll just trust that he'll be honest about what jobs he's doing and how much money he's earning. This is one of the lessons from the guy behind fyre festival - even whilst on bail he started another fraud. Yes it would be nice if we could put people on the naughty step when they've done something wrong, but we can't. Sam Bankman-friend is a convicted fraudster, the idea that given the chance of freedom that he'd do anything other than continue to commit fraud is kind of ridiculous.
I certainly don’t like the revenge/punishment philosophy of jail, but I think the system should be fixed for everyone (make it truly about rehab when possible, and about protecting society when not possible), but what you propose would only make an unfair system even more unfair. Why should he get off without jail and someone who breaks into a car and comparatively steals pocket change end up in jail?
Not to mention that someone with his background and upbringing should be even more aware of the difference of what’s right or wrong than other criminals.
I’m against all crime but at least I can kind of understand how someone on the edge of society, with poor or no education, etc. would see crime as a viable option, but someone that literally doesn’t need the money? Let him go with a symbolic punishment? I think that’d be worse.
Part of punishment is to act as deterrent to others.
Punishing the individual is only half of the reason we have prisons. The other half is to dissuade others from doing the same.
Surely we can do better than that, right? Like I imagine for a white-collar rich boy capping his income at $55k+inflation which includes the monetary values of gifts and any income from debt has to be pre-approved [1] would be far far more devastating, less cruel, and less drain on society. And this lasts for x years or until he pays back the damages.
[1] so he could buy a car and house but not skirt the rule by using loans against an asset portfolio to make more "income" for himself.
Why would he bother looking for a job with income over the limit? What would stop him immediately starting another scam? Who would even hire such a guy to begin with?
I'm sure Starbucks would take him. And he might choose to not bother working a better paying job, that's fine. And the threat is that if he starts another scam he gets house arrest then jail in addition.
At some number of 0s, white collar crimes are more damaging to society than violent ones. $10 billion definitely meets that threshold, there has to be a deterrent.
I also have conflicting opinions on this, but the usual reasoning is more about deterrence than revenge. We want others who might try these things to see that they can and do get punished.
Sequoia invested $200M in this guy. Has anyone looked at whether SBF could've done as much damage without that investment? Has anyone looked at if Sequoia did their due diligence? Seems like Sequoia could've seen red flags just from knowing Alameda existed. The potential abuse there was completely obvious.
As I mentioned in another comment, I think it's not accidental that SBF was pumped full of delusions of being a boy genius.
This worked great as a marketing gimmick for sure, as people love the mythos of a revolutionary company run by a tech prodigy.
But it also works when everything falls apart because SBF's delusion driven ego sucked up every morsel of attention and responsibility.
I also wouldn't be surprised if, through various means, many of his investors ultimately walked away with far more money than they started. And nobody bothers asking questions about that because SBF does such a great job of drawing all the attention.
...and they didn't even request a board seat. Meanwhile, I gave up a board seat for a $1m investment.
Silicon valley investors always jump on hype, just remember the dot-com bubble and yea crypto was and still is very hypey although AI, LLMs and generative AI are now taking over the hype. To the next hype train we go.
Baffling. When I hear SBF speak and I analyze his system all I can see is a thoroughly medicore JAG hyping up a bad product that was a spit-and-a-prayer. And yet he was raking it in...I can still remember investors and the general public being appalled at facebook being valued at 11 billion in 2008, after they'd destroyed their competition and taken over "social networking". Something changed in the collective consciousness.
The whole Sequoia thing is so interesting. Here is an excerpt from their (now taken down) profile of SBF, highlighting the moment he convinced them to invest:
> That’s when SBF told Sequoia about the so-called super-app: “I want FTX to be a place where you can do anything you want with your next dollar. You can buy bitcoin. You can send money in whatever currency to any friend anywhere in the world. You can buy a banana. You can do anything you want with your money from inside FTX.”
> Suddenly, the chat window on Sequoia’s side of the Zoom lights up with partners freaking out.
> “I LOVE THIS FOUNDER,” typed one partner.
> “I am a 10 out of 10,” pinged another.
> “YES!!!” exclaimed a third
Like, he’s rambling about how you should buy bananas with Bitcoin. How was this compelling to people who control serious money?
It always struck me as the opposite. If someone running a crypto futures exchange said they wanted people to buy bananas and groceries on their platform that’s be a signal to pass, right?
What else should investors do in the time of ZIRP? This looked like a potentially crazy return, right? That's point of investing like this, right? Pour money into a "winner" and ride the crypto-future-promise-delusion-wave...
It's pretty wild how unhinged they became about pretty much rambling...
> If someone running a crypto futures exchange said they wanted people to buy bananas and groceries on their platform that’s be a signal to pass, right?
Not if you're so silly as to think you can replace the currency people use, plus control completely its medium of exchange, plus be able to trade against those same exchange's participants. It boils down to people trying to rebrand casinos as markets.
The taken down profile for anyone who wants to see just how wild they were about SBF: https://web.archive.org/web/20221027181005/https://www.sequo...
> How was this compelling to people who control serious money?
Access to money, and intelligence, are not positively correlated. Jury is out on whether there is no correlation, or if there is negative correlation. Given the braindead antics of the wealthy over the past 10 years, I'm leaning towards the latter.
Anybody remember that rich dude who built a submarine against every single convention and over the screaming shouting objections of literally every other person alive who's built submarines, who then tried to go to the Titanic and killed himself and four other people?
How about Musk who bought a successful if mid-tier social media site for 44 billion dollars and has cratered it to being worth barely 4?
How about Zuck who renamed his entire damn company in a bid to pivot to the metaverse just in time for that entire house of cards to come crashing down?
Say it with me: Wealth. Tax. Wealth. Tax. Wealth. Tax.
> Like, he’s rambling about how you should buy bananas with Bitcoin. How was this compelling to people who control serious money?
Everyone and their dog was looking for an actually credible, mass-market compatible usage scenario for Bitcoin beyond buying drugs on Silk Road.
coinbro brain. 'everyone' couldn't give a shit about bitcoin, statistically speaking.
Yeah but back in the Bitcoin crazy time it wasn't that unrealistic for "serious money". Mastercard, Visa and AmEx move trillions of dollars a year, capturing even a slice of that marketshare means being in possession of a money printer, which explains the (often absurd) investments into anything crypto.
This whole exchange made me think that there must have been a family or friend connection back to Sequoia.
As a humble poor, if I were running the show over at Sequoia I would have these people out on their asses, but again, I also don't have buckets of money clouding my judgement.
I think the practical business/technical goals are almost irrelevant. It's not that SBF had a brilliant business model in mind. It's that he fit the "look" of a founder that those VCs expected. He was one of them, with the right pedigree and right connections. It's affinity fraud [1].
> It's not that SBF had a brilliant business model in mind
They had the largest crypto exchange right? That's a competitive market. Seems like something was going right.
I agree
-Dresses like a slob
-Went to MIT
-Is from the Valley
-Has ties to Stanford
-Upper class background
Their VC brains didn’t stand a chance of sniffing this out.
The real victims here are all the heroic MIT geniuses with unkempt hair who won't get their shot now.
Why won't they get their shot now? I doubt VCs will change their MO over this.
If Adam Neumann can get another shot, the unkempt MIT geniuses will be fine.
To be fair, FTX had decent traction and Alameda had been successful in the past. I think it's easy to say "pass" on SBF now that we know he's a crook, but there are genuine legitimate exchanges out there that are worth plenty. Coinbase, in the middle of a bear, has a market cap of $20B (it was valued at more than $80B in early 2021).
SBF was just a thief and a gambler, and an incompetent one, at that. I still think Sequoia does have some responsibility here, but I suppose my point is only that hindsight is always 20/20.
This is such a wrong take.
In 2020, FTX was known to offer collateral on huge loans vis FTT, their stabelcoin. Parties backed off bc of this.
The interplay b/t Alameda and FTX was known and parties wouldn’t trade or do broker agreements bc of it.
within crypto, the growth of FTX, although concerning, was frequently discussed as likely inorganic.
The VC and SEC buy-in to FTX was uniquely inept.
>To be fair, FTX had decent traction and Alameda had been successful in the past.
No, they weren't successful. When you leverage up and make (paper) money and later those same investments are wiped out and destroy the comany, you don't get to say you were "successful".
Early Alameda strategy was BTC arbitrage in Asian markets (which is very above-board). They were definitely successful. Once that well dried up (arbitrage is usually an "early bird gets the worm" game), they started gambling on shitcoins, which is where the troubles began.
Crazy thing is that the people who bring about massive change or revolutionary new ideas don't often fit the mould.
Unfortunately the people in power do not care for revolutionary change. They want change that makes them money, not change that fundamentally restructures society. Change that fundamentally restructures society does not need permission from anyone. When the tech is here it will speak for itself, in spite of any of the major resource allocators being blind to those who bring it -- because a part of that change is those resource allocators being made irrelevant. They have held back the human race with their ego, blindness, and total lack of vision.
They will spend $200m+ on a clown like this but ignore countless people with real innovations.
Feels very cargo culty. SBF superficially matched peoples idea of a revolutionary genius without any of the actual substance.
At this point, your 'quirky technologist' definitely IS the mold.
He was a quirky cryptobro league player. There are millions of them.
I think that idea in particular is quite good actually ^_^
I mean, I'm not imagining that they have groceries listings on the app, but that the app allows you to transfer money directly to someone from your crypto wallet. Like a venmo payment but with crypto.
> but that the app allows you to transfer money directly to someone from your crypto wallet. Like a venmo payment but with crypto.
The thing is that's not a novel concept, just about every crypto wallet app can already do this. And the achilles heel of all of these apps is the gas fees that are out of their control. The only way to conceptually get around gas fees is to keep everyones money centralized and sidestep the trading of crypto all together, but in the process you defeat the entire purpose of crypto.
Let's not forget the league of legends incident. https://www.businessinsider.com/ftx-sam-bankman-fried-league...
Oh wow! It was in that same meeting!
I don't know. To the extent that Musk had a plan at all with his $44B Twitter purchase, a big part of his idea seems to be that he wants X to be the next banking app/Venmo.
Venmo is valuated at something like 40 billion dollars, and a huge amount of its use is people making $10 payments to each other.
I'd hate to live in a world where I conducted all my business on FTX, but you can see why it might be appealing to investors.
Musk is copying wechat.
There is this weird thing in venture investing:
the line between "crazy, brilliant founders who will build world changing companies" and "crazy, lunatic founders who will lie and cheat and be awful" is very hard to distinguish, especially at the series seed/series A level.
It can lead to false positives and false negatives all the time.
This, to me, is just a myth that is pushed by investors that don't know what they are doing, and media outlets who want to talk about spicy people. There's no strategic reason to put your eggs in the basket of crazy people. We only hear about the crazy people because they are newsworthy.
FTX didn't have a CFO. They didn't have a legitimate board of directors.
No VC in their right mind should ever pour billions into a finance company that doesn't have a CFO or risk management team, doesn't have properly audited financial statements, doesn't have board oversight, etc. Especially so in a risky industry like crypto where scams and fraud are well known to be rampant.
This is the main criticism I have of the people who invested in FTX. Even if you thought SBF was a world-changing entrepreneur 2 years ago, the structure of his company should have disqualified it from investment.
I am as happy as anyone about arrogant half-smart crypto bros being called out as the frauds they are.
It is still sad that a young person's life is taken away today. I don't think any type of nonviolent crime should get anyone a life sentence, especially not in a prison system as inhumane as in the US.
Hmm, I don't usually see people defending white collar crime as being oversentenced.
Who would have thought that Ross is followed by SBF.
Sentencing isn't until March, and it's pretty unlikely he'll get a life sentence. Could be decades though.
I want to see his parents go down too. Sounds like some criminal actions there too.
Now convict his parents!
Of what?
Facilitation
IMHO our whole country is run by criminals and financial crime. Remember when HSBC knowingly laundered millions for cartels and no one went to jail? The President is a criminal. SBF is either a patsy or didn’t grease the right palms.
He certainly lost the wrong people's money, that's for sure...
Officially Sam Jailman-Jail.
Not my joke, I heard it on TrueAnon. But I like it.
What about Brett Harrison? Where did he dissappear off to?
Here’s hoping he gets 100 years. Good riddance. Let this be a warning against charlatans doing this again in crypto.
So what’s the final outcome? A long prison sentence or a few years hanging out on appeal followed by a few years in a low security federal penitentiary and a long career doing speaking engagements and appearances?
Holmes got 9 years, but her actions had severe real world effects on people. Is that the ceiling for SBF?
The collapse of FTX had huge rippling real world effects. Genesis got jammed up, which froze all assets in Gemini Earn and other defi platforms. Customers assets have been frozen for months now. Of course all investors assume risk in this case, but it is a real world effect.
I'm guessing he will get a bigger number, maybe even 30-50. But considering SBF and his personality, he doesn't seem like the guy that would ruffle too many feathers with prison officials and will most likely be released in half the time on account of good behavior.
> and will most likely be released in half the time on account of good behavior.
https://www.robertslawteam.com/blog/2013/05/early-release-fr...
> Federal law allows a credit of 54 days for every 365 days (or one year) of good behavior. To be eligible for early release, a person must be sentenced to more than one year in prison. ...
> The maximum number of days that can be awarded for good conduct is 54. The Bureau of Prisons has discretion to award any number of days less than 54 based on its evaluation of the inmate’s conduct.
The specifics are https://www.govinfo.gov/content/pkg/USCODE-2021-title18/pdf/...
If sentenced to 30 years in federal prison, you'd be serving 85% of that time -- a bit over 26 years (after 26 years, 1404 days will be credited which is 3.8 years).
In almost all circumstances, the security level of the prison is determined by the "points" measured up in the sentencing guidelines. There can sometimes be "enhancements" (like you used a gun during the crime, or hate speech). There can sometimes be mitigations (like the person taking responsibility for the crime).
If you add up all of the crimes SBF was convicted of, the max could be 110 years. It isn't that simple. Sentencing is a complicated thing that could be replaced with a simple spreadsheet. Instead, judges have to do the calculations by hand with charts and checklists.
Madoff was sentenced to 150 years.
> Holmes got 9 years, but her actions had severe real world effects on people. Is that the ceiling for SBF?
I feel like for the most part Holmes had theoretical effects on people – tests that were fraudulent, but where an equivalent standard test was done at the same time, and so most likely everything was caught. I think the time she got made sense for the level of fraud, but thankfully I don't think her actions ended up being actively harmful to individuals (other than her employees) in almost all cases.
SBF on the other hand has conducted a significantly larger fraud in monetary terms, and caused many individuals to lose significant amounts of money. In a way I'd say these are bigger real-world effects. I think it's possible to conclude that he had a substantially bigger negative impact on the world than Holmes did, and therefore feels reasonable that his sentence will reflect that.
Both are sociopaths, but SBF didn't have the intelligence to act as if he was sorry for what he did.
He's never going out of jail in his life. Sentencing is expected to be harsh, remember he had his bailed revoked for witness tempering!
On top of that, he's been convicted on 7 counts, but there's another trial in March 2024 for other felonies. He will spend the rest of his life between prison and the tribunal.
Both his parents are likely to be sentenced to jail as well.
I don't know what the maximum would be in sentencing guidelines for her, but for SBF, afaik it is life. That would be an ugly sentence, but I imagine he's going to be away for significantly longer than Holmes.
In a way, who cares? People who had funds there should get about 0.5:1 back (which isn't too bad) and, hopefully, investors are now going to do at least five minutes of due diligence before investing in such people (five minutes of googling / searching on Twitter was all that was needed to see SBF was a ponzi scammer: the info was all out there but nobody wanted to listen. Maybe now they will).
I don't care if he does zero year, one year or 100 years. It's not as if he was a killer representing a serious menace on society. With what he did nobody will want to hire him, not even as an accountant for a small town's tennis table club.
Sure, he's a despicable person who was using stolen money to rent private jets to have amazon shipments sent to him in the Bahamas and he didn't hesitate to lie in court by pretending it was all the fault of his co-conspirators (co-conspirators who pleaded guilty btw) but all that counts is that now he's not going to scam people anymore.
The two private jets he bought, the luxury houses in the real estate in his parents name (another trial coming for his parents btw), his scamming company all have been seized.
The supposedly "billionaire kid genius", his parents, and his effective altruism guru (who bought a $15m mansion using stolen funds donated by FTX and who was part of the Alameda scam) all got exposed.
The true color of these people has been revealed.
It's game over.
Well, we kinda all care. It's not that I bought an ice-cream and it was sour and I threw it away. You have to consider the absolute numbers, not just the percentages (50% as you write 0.5:1). I have $100 on Binance. If I lose it, I don't really care. Someone who put their life's savings though has a much bigger problem.
Then there are a BUNCH of lessons to learn here. You kinda touch on a couple: "kid genius", "altruism guru", "bahamas" and so on. So how can we all learn from this? 1) there is no fast money?, 2) turtle wins the race?, 3) regulations are there for a good reason (in most cases)? 4) when you see athletes promote financial products run away?, and many many more..
> Holmes got 9 years, but her actions had severe real world effects on people.
My understanding is she was convicted for financial bits, not harming people.
No different than Al Capone being convicted for tax fraud. Real people got hurt in both cases.
Bernie Madoff pleaded guilty and got 150 years in federal prison. Sam Bankman-Fried was smug until the end, both with the Judge and the Jury, but the fraud is 1/6 smaller. I say 15 to 20 years.
There's some video Shkreli going over how federal sentencing guidelines are. He is going to get close life.
It's going to be more than that
Sentencing happens some time later.
My guess is that he’ll get something closer to Bernie Madoff’s sentence than Elizabeth Holmes. She at least was pregnant at the time of sentencing and her defense was seemingly successful in painting her business partner as the puppeteer.
This is just the conviction. Sentencing is sometime end of March next year.
But considering that he was found guilty on all accounts and after the mess he was making during the trial, his sentence will most likely be no good news for him.
He is also kind of being made an example of to encourage more due diligence in the industry. Being bad at business is one thing, but handling billions without basic risk management is basically gambling with customer funds.
For someone unfamiliar with law, why is sentencing at a later date and not immediate? Does SBF just get to roam free for 5 months in the meantime?
Judicial process is a very methodical thing. Lot's of paper needs to be filled with words and filed properly. Judge needs to review and condense all that and put it together into a judgement that is well reasoned (well, there are layers that assist with that).
As for what happens between conviction and sentencing, the typical law answer is: it depends..
He certainly has been in jail for some time already, as he could not help himself from doing stupid things, like contacting witnesses. Maybe it continues, maybe not. Maybe he'll be free for some time after sentencing too. They set a date when he has to show up at the prison.
Until then, it's mostly up to the judge. If he is deemed a flight risk, or continues to run his mouth, he very well may spend the time up to his prison sentence in jail. Though, as he cannot mess with his trial any more and he is not generally a danger to community, he could walk around some more. It depends..
Considering his bail was revoked before and the notoriety of the case, I have a feeling they are going to make him wait behind bars.
Yea, at this point he probably pissed of the judge enough to enjoy his wait behind bars.
I agree.
I believe the evidence in this trial will support a civil trial against him showing that he pierced the corporate veil, and that he was personally tied to FTX with some of his purchases with company funds.
> but handling billions without basic risk management is basically gambling with customer funds
He actively gambled with customer funds, not just basically did because of poor institutional controls.
The SBF "magic box" interview with Matt Levine where he casually describes yield farming as nothing more than a Ponzi scheme never gets old.
https://www.ft.com/content/eac0e56c-f30b-4591-b603-f971e60dc...
Here it is, with audio: https://m.youtube.com/watch?v=KZYqL79GDXU&t=1289s
This is why it's silly to say that the prosecution had an airtight case. It's like saying the winning fighter boxed perfectly, when actually the other one just kept smashing his own face into the ground.
I thought that was a great interview and sbf was a great and clear speaker. He really got his point across.
It kinda makes me sad that he fucked up doing some unrelated shit.
“if you’d like to gain greater insight about “valuable boxes” with no economic use case that go “to infinity” because of “the bullishness of people’s usage of the box”, don’t forget to sign up for the FT’s Crypto and Digital Assets Summit beginning Tuesday.”
Well, he wasn't wrong about that.
I listen to this a few times year, cheers me up everytime
Fall guy took the hit.
That had always been plan B.
His conviction is 200% deserved.
Certainly there were other people involved, and hopefully they will receive their due as well, but to say he's just a "fall guy" is not at all accurate.
I can finally share my brainworm since all of this started:
Don McLean - American Pie melody
"The daayy the Bankman fried".
Poor dude. Nobody deserves what we call 'prison'.
I’m also an abolitionist and I agree the US prison system is atrocious. But we have to be morally consistent. If he doesn’t deserve it, neither do other criminals deserve to be punished egregiously.
So edgy. So opinion.
When are we going to stop calling him a “book smart kid who lacked common sense and things spiralled out of control” to “scam artist who is too dumb to keep his mouth shut”?
There is no evidence this person is smart in any way, yet some people still portray it as a narrative.
There are dumb people at MIT (and at every institute or company) let’s admit it.
I agree. The more we learn, the more he looks like a tweaked out Miles Bron. He doesn't seem to understand how anything actually works.
I think the narrative is to cover up the bruised egos of the powerful people and institutes (Jane Street, MIT, investors) that got scammed or thought he was smart.
What about the politicians who happily took the bribes?
Curious: why does the legal system work for some and not for others. Eg: how come this guy is convicted but trump walk free especially after Jan 6th? Does the legal system also fall prey to money ? ie the better your representatives the Better they can argue for you. And the better ones cost a lot of Money so essentially the people with money have higher odds of succeeding in such a legal system?
My guess is:
1. SBF's crimes hurt rich powerful people 2. Trump has a third of the voting population in a cult-like trance 3. Prosecuting political figures is a lot harder, especially presidents
Because every case is different? For example, there is little-to-no overlap in any of the details related to this case and to the Jan 6th insurrection shenanigans.
Because some people throw tea into the sea and some help to collect taxes.
So she walks free because of muh vagina?
We've banned this account for posting too many unsubstantive and/or flamebait comments. That's not what this site is for, and destroys what it is for.
If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html.
Anyone else have a weird vibe on how fast this went? I don’t remember how long Bernie Madoff’s trial was, but this one flew by really fast.
The Spidey senses tell me there’s more to this we’re seeing.
Whether you believe Elon or not, FTX was greasing the DNC wheels with a lot. FTX also had a lot of celebrities on board. They had the Miami Heat arena with their name on it.
Now it’s all wrapped up, guilty as charged, and now what?
Why is everything a conspiracy to people like you?
Or it was a very clear-cut case
Is a black person speaking in the AAVE dialect contemptuous? It not, then how is SBF's way of speaking contempt?
"Eschew flamebait. Avoid generic tangents."
https://news.ycombinator.com/newsguidelines.html
We detached this subthread from https://news.ycombinator.com/item?id=38123997.
SBF isn't a black person. Based on the absurd argument you're making here, I am going to assume you weren't aware of this.
Please don't respond to a bad comment by breaking the site guidelines yourself. That only makes things worse.
How is that a bad comment? I'm serious. The way a person naturally talks is ok and is never contempt. SBF says yup instead of yes. I usually say yeah. That's just how people talk.
It's a bad comment because it was a generic tangent that was very likely to lead (and indeed already did lead, a bit) to a flamewar about race.
Haha how is it absurd? It's the way he talks. The way someone talks isn't contempt.
It is if the reason they talk that way is contempt.
It is not if its not.
I sure hope all the HN commentators confidently predicting this would never happen because of his large donations to the democrats see this.
If you like HN commentators being wrong, you’ll love this initial thread on Alameda being insolvent [0]. I post only in jest, as hindsight makes much of this hilarious.
Thank you for bringing this up. I cannot believe how many people tried to use this case as a tool to smear a political party.
He donated to both sides through another FTX exec. What is your real message? (I’m a leftist, not a liberal apologist).
Regardless of whether or not corruption is the case, it only has forward guarantees if there is a hint of blackmail involved.
Donating a bunch of money to a group gives you no power over that group unless they think there is more on the table. When you’re about to get arrested they will cut all ties immediately unless there is an actual obligation to support you.
I don't care either way, but I would guess most people expect that the sentencing to be very light if you have friends in important places.. not that you're just totally let off on all charges.
Eh, he must be pretty much broke now so why would politicians from either party care about him anymore? He made his donations and they looked the other way on regulating crypto.
They're like 300 conspiracies beyond that at this point.
The goalposts will change to his imminent pardon.
His campaign finance trial is March 11, sentencing March 28. I think it’s reasonable to speculate on whether he’ll plead guilty in exchange for clemency at sentencing. Who knows. I don’t think anybody reasonable has ever believed a pardon is on the table for the largest fraud ever.
90% of them will never willingly admit they were wrong.
To be fair, 90% of all people won't admit they were wrong.
Sidenote, I think HN will be wrong on Elon Musk and X as well over the long term (personal opinion of course). But the way the discourse around X has changed on HN is incredible.
When Parag Agarwal was made CEO, everyone on HN complained about the platform and how a subscription model was the way to go. Now that Elon Musk has instated a subscription model, (seemingly) all on HN agrees he's running the company into the ground.
Seems to be happening a lot more often over the past 4 or 5 years.
Wondering if its perhaps two different subsets of people, with differing opinions that haven’t so much shifted, as that primarily just one’s been highly motivated to engage at a time? (In the same way that say surveys might draw disproportionately more engagement from those that feel extremely dissatisfied)
Or do you feel more that its a wholesale shift?
I mean, he did a couple other things besides try to launch a subscription model.
I don’t remember a single person even claiming that. HN delusion is real.
I have seen a some posters on HN and a lot of posters else where trying to use this case to bash the Democratic party. It very annoying because they never provide evidence to back up their claims.
You also see a lot of people bashing Sam Bankman-Fried’s parents or accusing them of committing crimes without providing any evidence.
There is literally a top-level reply on this very submission still saying:
> I will still be surprised if he spends a single day in prison though.
https://news.ycombinator.com/item?id=38122135
and several similar comments scattered throughout, that Dems will pardon him. So yes, delusion on HN is quite real. And crypto news attracts a deeply paranoid, cynical sort of mind, who have seen a glimpse of some big conspiracy and can't let go of it.
I agree on this
I've definitely seen several people claim it on HN. Almost invariably, such comments were downvoted into oblivion though, or had replies basically saying something along the lines of "what crack are you smoking?"
Some specific links to comments:
So our friend saeranv is actually just parroting the consensus.
I believe there is quite a few in the comments section here: https://news.ycombinator.com/item?id=33908577
Office Space seems appropriate here -- https://www.youtube.com/watch?v=oBzvMLW0ii4&ab_channel=Peter...
> These charges carry a maximum sentence of 110 years.
Didn't HN recently conclude that calculating the 'maximum sentence' as the sum of sentences of the individual convictions is journalistic malpractice? Do better, NYT (they won't).
Given that there were 7 charges and assuming all charges can be served in parallel that's a minimum sentence of ~15 years (why is left as an exercise to the reader).
Wait, hacker news is a single source that comes to definitive group conclusions? Where can I find these beliefs we all collective hold and adhere to written down?
> Given that there were 7 charges and assuming all charges can be served in parallel that's a minimum sentence of ~15 years (why is left as an exercise to the reader).
Looks like your logic is 110/7 = ~15, therefore there must be at least one charge with a maximum sentence of at least ~15 years. But why does that imply a minimum sentence of ~15 years? He could get less than the maximum sentence for some or all of the charges.
Yes I assumed he would get the maximum sentence on all charges, which given optimal parallelism would be a minimum of 15 years (less optimal parallelism would mean more). But you're right that it's called a maximum sentence for a reason and that assumption may not be valid; thanks for the correction.
Thanks, I honestly appreciate this reply. I'm always a bit worried I'll come across unpleasantly when making posts like that, and spark a negative reaction.
In terms of what's likely, from a quick search it looks like the maximums are 20 years for some of the charges and 5 for the others, and 10-20 years is a realistic guess for his actual prison time.
Usually the judge has discretion whether to make them serve consecutively or in parallel.
This makes me very happy. I was honestly slightly worried that if I ever saw SBF in person, I would be unable to stop myself from kicking him in the nuts. Since I was a victim of the Winklevoss twins' GUSD unregistered security scam (Gemini Earn) [1], there has not been a day since ~November 2022 that I haven't wished something kind of bad happened to SBF.
To be clear, I genuinely am not advocating for violence, but I'm saying that if he walked free, and if I were to see him just casually sauntering along in NYC, I think I would have an overwhelming compulsion to hurt him, and then I would go to jail, which I don't think I'd enjoy, so it's a much better outcome for me personally if he's behind bars.
Well, upon typing this out, I guess if he gave me the 13 grand that was taken from me, I'd be willing to forgive him.
[1] I've posted about this before, but just to reiterate, not my opinion, but the SEC's https://www.sec.gov/news/press-release/2023-7
Totally normal post
What's wrong with wishing something bad happens or feeling like retribution towards someone who was the cause a large injustice towards you? It's a normal human emotion.
Yeah, just to reiterate, I genuinely, sincerely, and unambiguously do not advocate any violence for SBF. I believe in the justice system, and much as I enjoy Batman comics, I do not think vigilantism is actually a good idea.
But of course, when someone personally wronged me, I think I'm entitled to a little bit of vengeful fantasies.
Heh, I'll acknowledge it's a weird post.
Basically, the FTX stuff blew up at the very worst possible time for me personally. I had just been laid off (really fired) from my job in November 2022, and I had naively believed the kind of hand-waivey advertising about Gemini Earn and GUSD being safe, so a lot of my cash reserves were stored in GUSD, but the day that I need to use it to pay for my mortgage, I'm unable to withdraw it because apparently Genesis Holdings was in bed with Alameda Research, which in turn was in bed with FTX and thus SBF was throwing my money away.
Now, I'm one of the fortunate ones, because I didn't keep all (or even most) of my savings in GUSD and Earn; I keep most of my savings in the form of low-risk ETFs (VOO and VTI), so there was never a risk of me being homeless or anything, but I did have to sell a good chunk of them at a loss in order to pay for my mortgage and for my food, and that wasn't fun. The entire ordeal really depressed me, and I've been upset with SBF for the last year for exacerbating an already frustrating experience.
> Now, I'm one of the fortunate ones, because I didn't keep all (or even most) of my savings in GUSD and Earn; I keep most of my savings in the form of low-risk ETFs (VOO and VTI)
Is this a US thing or what? Don’t keep money you may need in the short term (< 5 years, at least) in stocks. A stock ETF is not low-risk, cash and bonds are.
Well, I didn't keep money I would need in the short term in stock; I kept it in GUSD and Gemini Earn, because I believed their marketing.
I'll admit that I definitely should have done more investigating on my end, and I'll take my share of the responsibility on that, but that doesn't absolve the Winklevoss twins and SBF from responsibility. An "obvious" scam is still a scam.
EDIT:
Just to clarify, I actually agree with your point. It's good practice your short-to-mid-term savings in FDIC-insured savings accounts, bonds, and treasury bills; basically stuff with nearly-zero risk. Since the fiasco with GUSD I've been saving my shortish term stuff in treasury bills specifically for this reason (and because they're a bit more tax efficient in a place like NYC).
One aspect of SBF's downfall that is not discussed enough, IMO: amphetamines (even taken for medical reasons/ADHD) release a ton of dopamine, seek more release, and make you do some weird stuff and seek risky behaviors (and reinforce them through reward system).
I recall his interviews and annoyed tone at uncomfortable questions - made me laugh, just like people on speed.
And absolutely avoid selegiline for "productivity", especially with amphetamines, this will turn anyone into a pathological compulsive person (e.g. a gambler).
How many years?
Another trial will determine that. "His sentencing was scheduled for March 28, 2024." Up to 110 years:
https://abcnews.go.com/Business/sam-bankman-fried-trial-verd...
https://www.justice.gov/usao-sdny/pr/statement-us-attorney-d...
"This case is also a warning to every fraudster who thinks they're untouchable, that their crimes are too complex for us to catch, that they are too powerful to prosecute, or that they are clever enough to talk their way out of it if caught."
Lot of sketchy crypto players will likely get away with stuff. This was just the most egregious one (so far).
What's interesting about that to me is quite a few things. For one, where are the charges against all the other fraudsters? Bankman-Fried's parents were both in on it and helped orchestrate parts of it. As far as I know, they both even still hold their positions as law professors at Stanford! What an embarrassment to the world Stanford is. Sam Trabucco was co-CEO of Alameda Research up until August 2022, which means that he was certainly part of all the fraud happening. He is known for his extravagant spending. Just because he left a few months before the crash, he gets away scot-free? And then there's other employees, the investors, partners, etc.
Lastly, these messages always fall a little flat to me. The justice departments always go after and nail these fraudsters that have little actual power and then make a big stink about it. Sam Bankman-Fried, Elizabeth Holmes, Billy McFarland, etc. are all nailed to the cross. Yes, they committed clear and damaging actions of fraud and other crimes. But higher level fraudsters, like those in industries that are much more protected and in positions of actual power and influence, do not get touched. For example, Steve Cohen gets to own the New York Mets yet he clearly committed insider trading for years, if not decades (https://www.youtube.com/watch?v=1szayJV505M). Several of his high-level employees were convicted, but he remains untouched. There's other examples of people like this that are actually intelligent (unlike Bankman-Fried, Holmes, etc.) but still sociopathic, and they are able to weasel themselves into tight nets of power such that the justice department doesn't or can't touch them.
Unfortunately the real beneficiaries of these crimes will be overlooked now that their fall guy has taken the hit.
https://www.wsj.com/articles/sam-bankman-frieds-dirty-politi...
I doubt the politicians and political action committees would have taken the money if they had known it was stolen.
In a lot of ways, they are also victims because they now have to do extra work to either defend themselves, or payback the "donation". In the case of the PACs, I bet many of them already spent the money and can't pay it back.
"Oh no," a person just like SBF is surely thinking in response to this verdict, "I'd better straighten up and stop thinking that I am clever enough to talk my way out of situations if caught."
he talked his way into this conviction. Any news on his ethics teacher parents?
His mom, a business ethics professor at Stanford, retired at around the same time she left the political funding organization she founded called "Mind the Gap," the one that FTX was funneling money into illegally. No word yet on whether she and her husband, a Stanford Law professor, will be able to keep the 8 figure house in the Bahamas that FTX bought them.
They have not been charged with any crimes and I have seen no evidence that they committed any.
They are being sued by FTX. For more information, please see https://www.npr.org/2023/10/02/1200764160/sam-bankman-fried-... and https://restructuring.ra.kroll.com/FTX/Home-DownloadPDF?id1=... .
It turns out this whole thing, SBF’s entire upbringing, was in fact a giant scheme on their part to get the ultimate case study for their classes.
Actually, kind of a twofer, since raising him to be like that was in and of itself unethical.
If they did it for a good cause and the betterment of man kind, then would the ends justify the means? ;)
> You’d think this MIT graduate would wise up, but he never did.
The MIT campus has a major public road running through the middle of it, one of the busiest surface streets in the area. You don't have to stand there very long to see a crowd of students almost get hit by a car because they didn't look before they crossed the street.
Point is, the old cliche is true, there really is such a thing as a person with a lot of book-learning but less common sense than a sea slug. I think we saw one such get convicted today.
Should probably close that street then. Killing college kids isn't worth saving 14 seconds to get to your house in the suburbs.
I think a lot of the time he couldn't control his autism.
Is he, in fact, autistic? Has he been diagnosed by an actual doctor as opposed to, say, Reddit? If so Wikipedia is silent on the subject.
I typically think that what makes MIT the greatest is their marketing department. They do a lot of great things, but what they do best is telling everyone that they are the best.
every other month they have another "breakthrough" in materials science that is going to bring us more energy/clean water from recycled toxic sludge, but somehow you never hear the follow-ups of it ever being deployed...
I'll give them this: they throw a great puzzle hunt.
They still manage to recruit some of the best students, so their graduates are smart simply by the fact that they got accepted at MIT.
First, a university is great by doing great stuff and producing great graduates. Then those great graduates confirm the greatness of the university. And then, ultimately, graduates are great simply by coming from an university that once did great things.
Yes but there's plenty of institutions that all do what MIT does and field dependent probably better. It's simply not the case that MIT always represents the best all the time. It doesn't even make sense that that could be true. And why would you want it to be unless you were the MIT marketing department?
That assumes the fourish years of being surrounded by other students and professors who are smarter than you, and work harden than you, along with making friends with them does nothing for the students after their time there. Students entering MIT are used to being the smartest at their highschool and coasting through it. So it's a shock when those things are no longer true. (tbc, the same thing happens at other schools to a lesser degree.
It's quite insane that your society puts the onus on the pedestrians not to get hit, and even makes it illegal to cross the road. It should be the licensed drivers' responsibility to not hit someone. And in the middle of a campus cars should of course yield to pedestrians. Such a car-centric world.
It's a little more complicated than I've laid out here. There's not a hard boundary between the MIT campus and the rest of the city, in contrast with Harvard Yard on the other side of Cambridge, which is surrounded by high brick walls. Cambridge is an old city and MIT is, for a New England university, fairly young--not to mention that for the first few decades it was at a different location than today, in Boston proper. I'm pretty sure the road was there long before the first university building.
would you say the same for trains?
and if not why?
Not for trains - there's a shared expectation that pedestrians should not access the track.
Similarly, not for a freeway.
Where some feel the balance is wrong, is at local-level streets. Today the assumption in most places is that cars have total right of way, and pedestrians must keep clear. It doesn't have to be that way. In a residential area, it's quite feasible to say all road users have equal right to use the space. And in that circumstance, put the onus on the car user (wielding a heavy, dangerous weapon) to not hit other road users.
* Train tracks does not take up 70% of cities.
* Trains are not constant, they come more seldom
* Trains are _extremely_ predicable. Cars are the opposite. This is why trams in i busy inner city are more safe than cars. You know exactly where that tram is going and at what speed.
Yes, and on top of that if there were a train line on campus with any high speed train traffic it would be surrounded by tall fences and the pedestrians would be provided with off-level crossing. (One or more tunnels and/or bridges)
This is exactly the case a little ways away at Tufts University in the city of Medford. There's a busy train line that runs through the campus and it's fenced off. Students do sometimes find ways in there and use the right-of-way as a shortcut. Sometimes they get killed doing this--which is why the fence is there in the first place.
In the same vein, you could find through experimentation that the speed at which you can finally get hit by a car without someone claiming it's your fault for being too quick on your bicycle is to be approximately stationary
But not so stationary, because then you were not visible enough
Well obviously then you should have been wearing a high-viz vest and a full Christmas tree's worth of blinking lights. Then when a driver hits you they can say they were distracted by all the visual effects.
Schrödinger's cyclist, both too slow and too fast at the same time. When behind on a road: "you're holding up traffic with your slow cycling!". When later causing an accident for not yielding to a cyclist "he came out of nowhere in a reckless speed!".
Occam‘s razor suggests simpler explanations than book smart, stupid at common sense. For a person openly opposed to reading books, and proud of it.
"Book smart" is an idiom. Doesn't mean they're necessarily a big reader.
I do not think he is smart (book or not, MIT or not) at all. That is my point.
When confronted with his actions 2 simpler explanations than "booksmart, but not real life smart" are:
- A scammer (unethical, independent of intelligence)
- Not smart at all
I do not understand how someone see his actions and concludes: he is book smart only. Especially since he has expressed anti-intellectual views.
EDIT: expanded
> there really is such a thing as a person with a lot of book-learning but less common sense than a sea slug
I don't even think SBF had the book-learning, just intellectual arrogance. "I don’t want to say no book is ever worth reading, but I actually do believe something pretty close to that. I think, if you wrote a book, you f---ed up, and it should have been a six-paragraph blog post."
He seems smart and excellent at everything he sets his mind to. He just opted to set his mind to math and things that relate to math. That's an easy way to grow up and become a jerk.
This is true for many non-fiction and business books. :-)
But on the other hand, I can think of a few books that really might have helped him. The Emperor's New Clothes, and also Extraordinary Popular Delusions And The Madness Of Crowds (dated now, still a good read).
As I mention in a thread below I'm using "book-smart" as a concise idiomatic way of saying "educated and talented in a traditional academic field", such as mathematics in this case. Kind of unfortunate that I had forgotten that SBF is not actually a big reader. But he did graduate from MIT: perhaps they'll let him hang his diploma on the wall of his cell.
If he read more, it's possible his spoken grammar might not be so atrocious.
That’s an unfortunate attitude for a guy looking at a stretch with not a lot to pass the time…
Maybe they'll let him play LOL in prison. But I kind of doubt it.
The craziest thing to me is that when he was saying things like that noone in the mainstream media was questioning him. The FT had a very flattering lunch interview with him shortly before his demise. It was embarrassing how they were portraying him.
Elon Musk says idiotic stuff all the time and people revere him.
The difference being Elon has a history of multiple successful business and products. And didn't defraud anyone in the process. (Note he is still a narcissistic asshole but he is a successful narcissistic ass and we generally value competence higher than personality)
Hey, Musk did one thing right: he picked fabulously wealthy parents.
https://www.astralcodexten.com/p/book-review-elon-musk
> Musk claims to be self-made; he moved to Canada at age 17 with $2500 and worked his way up from there. For a while he supported himself by cutting logs, Abe Lincoln style. Nobody paid for his college and he took out $100,000 in debt. Musk’s father invested $28,000 in his first company, but Musk dismissed this as a “later round” and claimed he was already successful at that point and would have gotten the money anyway. The total for that round was $200,000, so Musk’s father’s contribution was only about 15%.
> Obviously there’s still some sense where he benefited from a privileged upbringing or whatever, but in a purely business sense he’s mostly self-made.
People like people who talk a lot. It's that simple.
It is mainstream culture to not question (at least temporarily) financially successful businessmen. Financial success in the eyes of many must mean, that they are doing something right. But that "something" quickly is left out and the conclusion becomes "doing all things right". Basically ethics is supplanted by how capitalism works.
It is not brought up too often, that often one of the most important differences between them and the viewer of mainstream media is, that this person is vastly more ruthless with regards to ethics.
Have we talked about sequoia recently?
https://web.archive.org/web/20221027181005/https://www.sequo...
Wow. Hagiographic would be an understatement
I knew the embarrassment level was going to be turned up to 11 when your link was to archive.org.
They were deliberately misled and lied to - there’s nothing they could have done to prevent that!
I’m at a loss for how to process that tweet.
Is he just completely incapable of reading the room, or is it a lvl 10 cynical FU?
Honestly my completely outside the valley impression is that VC operates a lot on pedigree and connections.
SBF has an impeccable pedigree, so the thought that he was a Michael Fenne type was never even considered. Why would he lie, when he could live an honest life and be fabulously rich and comfortable (Jane St, wealthy connected parents, etc)
Not too different from the case of Elizabeth Holmes, when you frame it like that.
> The craziest thing to me is that when he was saying things like that noone in the mainstream media was questioning him.
Well, what's the difference between an unhinged, drug-addled loony and an eccentric visionary genius?
The difference is having $26 billion.
Why not call him out on what seems like bullshit? That bullshit has convinced "informed" tech investors like Softbank and Sequoia Capital. And elsewhere at the same time, Andreessen Horowitz is investing $450 million in ape jpegs.
This is absolutely gourmet, Grade A, top quality wagyu bullshit.
> NO! Poor people are crazy, Jack. I'm eccentric.
-- Howard Payne (Dennis Hopper), Speed, 1994
> Well, what's the difference between an unhinged, drug-addled loony and an eccentric visionary genius?
One big factor is who your parents are. SBF coming from an upper-class background, that tilts the scales towards eccentric genius. After all, we know that the children of these families are all extremely special.
Upvoted for usage of the term "wagyu bullshit". It conveys a world of meaning in two words :)
He came very close to getting away with it all. If the investments had panned out a little differently he would have been able to stay solvent and no one would have really noticed the regulation breaking.
That kind of assumes a change in behavior and that any number of other things wouldn't eventually trip things up.
Right, and assumes he didn't abandon the Kelly Criterion for the mentality of "keep playing double-or-nothing even when you win":
>>Bankman-Fried’s error was an extreme hubris that led him to bite bullets he never should have bitten. He famously told economist Tyler Cowen in a podcast interview that if faced with a game where “51 percent [of the time], you double the Earth out somewhere else; 49 percent, it all disappears,” he’d keep playing the game continually.
https://www.vox.com/future-perfect/23500014/effective-altrui...
Exactly. Evading disaster doesn't make someone like this reconsider their decision making process and act smarter next time, it shows them that they're a goddamn genius who can do no wrong.
To be frank, the value proposition of those investments was never what the companies claimed they did but how much money they could bring in before going bust. And of course some of those companies were also useful by fostering acceptance of ideas those investors benefit from: for example, a big part of the "blockchain" and "smart contracts" narrative was privatization (or "democratization") of government functions (e.g. managing land deeds, educational certifications and other claims).
Not to mention that a big part of investing in start ups is just ape jpegs with extra steps (i.e. "greater fool" theory).
Maybe not the mainstream media but I feel like a lot people, especially in the Bitcoin community, were suspicious of him. He just screamed grifter to me. I never really bought his arbitrage story either and wouldn't be surprised if that was not his first scam.
Here's an interview he gave a few months before the FTX collapse: https://www.youtube.com/watch?v=C6nAxiym9oc
The arbitrage story definitely seems bogus. People have been aware of difference in bitcoin price across Asia since like the beginning of bitcoin - I don't think it is any huge billion $ opportunity.
Now Tether on the other hand.. I would not be surprised if that has a lot to do with it.
I was running an arbitrage bot well before he claims to have started arbitrage and even back then, it was competitive enough that there weren't tons of money to be made, especially considering all the risks and costs involved. In those days, a relatively common scam involved setting up an investment scheme that promised high returns thanks to "arbitrage trading" (but which was really just a ponzi scheme). I wouldn't be surprised if he was involved in something like that.
But you had Zeke Faux, a specialist, going there, looking at SBF screen and seeing nothing too special too.
Blame the "mainstream media" all you want but as long as we refuse (for good reason) to give audit power to journalists, mainstream or specialist, you'll keep reading positive pieces about frauds if they stay hidden purposefully.
I'm not sure why you would have wanted to NYT to destroy every company it interviews just for the sake of it. Wouldnt they need proof ? And how do you get them, when they're hidden by a conspiracy ?
Plus, the police in the US, Hong Kong and the Bahamas found nothing and waited for Coindesk to publish a leak by CZ, a competitor, to start looking...
I say that because at the peak of the crypto fever I couldnt distinguish SBF from, say, the CEO of Kraken, and I suspect it's hindsight convincing you something could have been done.
I don't suggest to "destroy" any company, or to say they are guilty of things without proof.
The FT did an impressive investigation of Wirecard, for example. There is a difference between destroying a company and making a couple of common sense questions instead of parroting whatever the interviewee wants. Some basic journalistic practices. It is really not so much to ask.
EDIT: interviewer/interviewee
Agreed but we only ask that after the conspiracy was revealed and honestly it's so mindblowingly stupid it's hard to imagine anyone could have thought they used QuickBooks or just thad no accountant.
Again you re asking someth that had been done several times: many people did dig a bit deeper and couldnt find the Alameda hole or the real balance sheets, or the parents siphoning millions and all that stuff that took even time for prosecutors to find.
The role of the media isnt to uncover fraud I think, it's to give you a chance to expose one if you know one. If nobody was willing to talk, what s a journo gonna do?
Carreyrou, a personal hero, had tons of witnesses coming to him for instance.
I had to search to check that the quote was real, that is some spectacular hubris!
If you like that, you should hear what he had to say about Shakespeare:
"I could go on and on about the failings of Shakespeare ... but I really shouldn't need to: the Bayesian priors are pretty damning. About half the people born since 1600 have been born in the past 100 years, but it gets much worse than that. When Shakespeare wrote almost all Europeans were busy farming, and very few attended university; few people were even literate—probably as low as ten million people. By contrast there are now upwards of a billion literate people in the Western sphere. What are the odds that the greatest writer would have been born in 1564? The Bayesian priors aren't very favorable." [Going Infinite, p29]
Now I get that Shakespeare doesn't appeal to everyone and is definitely an acquired taste, but to judge his work on probability when the work itself is right there to judge on its own merits is like the joke about an economist who sees a hundred dollar bill on the street and says, "If that were a real bill, someone would already have picked it up."
He also dismisses the "plot twist" in Much Ado About Nothing (when Beatrice asks Benedick to kill Claudio) as "illogical" and the province of characters who are "one-dimensional and unrealistic" because "I mean, come on—kill someone because ... his fiancée is cheating on him?" As if no actual human being had ever killed out of jealousy, when it's usually one of the main motives for murder. It's like he's visiting from another planet or something.
That's really insightful into how this guy works. He's judging everything off probabilities to an egregious degree. He's also utilitarian, which doesn't really offer a foundation for any kind of morality because there's no provision against the ends justifying the means.
> It's like he's visiting from another planet or something.
He's visiting from planet Adderall. If you have $26 in your pocket then you're a tweaker but make it $26B and you're an eccentric genius.
"I could go on and on about the failings of Shakespeare ... but I really shouldn't need to: the Bayesian priors are pretty damning."
I don't mean to lower the tone, but honestly - what an absolute bell-end!
Well, we can be really sure that SBF wont change after being convicted.
Luckily, he wasn't asked about Homer. The Bayesian prior there would have been damning!
Hahahahaha good point!
What a bunch of Jays.
Perhaps the fact that his wealthy Stanford lawyer parents have always provided ample bubble wrap around him his whole life that has internalized making excuses for things and being used to getting wrapped in more bubble wrap rather than face negative consequence.
Affluenza?
This is what comes to mind imo. Michael Lewis describes his ability to dance around questions as dazzling, but I have to wonder if his parents would have just called him out on his bullshit a little more often if he might not have gotten himself in as much trouble later.
Why didn’t we see any of that question dance dazzle on the stand? I can’t believe he was “I don’t remembering” in the instances Lewis was referring.
Audience. What may come across as question dance dazzle might suffice to impress or allay concerns of certain people (employees, investors, etc), but it's not probable to work the same under oath and the techniques of prosecution. It's hard to dance around evidence with what you say, no matter how its said, with evidence to the contradictory put right in front of the court.
We did! He was doing exactly what he did to everyone else whose questions he tried to evade, it's just that this time people called him on it (and had legal power to compel non-evasive answers).
Oh come on, you’re just using a stereotype here and hurling it at MIT students as a whole it’s almost as if the remark is just supposed to make you feel better about yourself. What you said isn’t even relevant to the FTX case and it’s highly unlikely that someone who’s “just book-smart” will have SBF’s connections to commit a crime of this scale.
I stand by what I said.
That's been my impression of SBF since FTX collapsed. Quite book smart, but zero experience in building a major service that custodies billions in other peoples' money.
Raw intelligence is not enough in that context. Ideally you want to have apprenticed for at least a few years at a real exchange or custodial service. Somewhere you learn all the engineering details about how to architect it with proper financial controls, safeguards, and correctness guarantees so that this kind of failure cannot happen, either via human skullduggery, mistakes, or system bugs or security vulnerabilities.
Sam never had any of that. He probably got caught up in the moment, implicitly assumed he was smart enough to compensate and not need it, that money is fungible and free-flowing and he can move it around and always make more, etc. And his investors were all finance guys overly impressed with his trading ability and ignorant of the above. This is the unfortunate but unsurprising result.
IMO his downfall was thinking that he was smarter than everyone else. When you think everyone is a rube, you think you can get out of the mess you are in by just explaining yourself, writing a bunch of blog posts and tweets and going on a media blitz. And in the process of doing all of that he just dug the hole he was in 10x deeper.
You don’t need a few years’ apprenticeship at a real exchange or custodial service to know that exchanges are not permitted to gamble with customer money, to spend it on private planes or arena naming rights, or to allow your other company to go into millions of debt.
He was a Jane Street trader, he's not new to high finance.
He wouldn't want a bunch of proper engineering because that would prevent him from betting with billions of customers' deposits that were supposed to be safe.
Maybe the rubes can be exonerated for falling to the incessant hyping of crypto but a smart person should know all crypto is a scam because the Washington Post, the bloody Washington Post told you it's either a Ponzi or a pyramid scheme in 2015. In 2017 you had Preston Byrne challenging that article in that he considered the scam to be significantly different from a Ponzi and gave it a new name, a "Nakamoto scheme" (as an aside, Jorge Stolfi will continue the debate in 2020 where he considers the difference not to be significant and I find his arguments to be rather convincing). But he didn't, not for one second, challenged the fact it is a scam. Attack of the 50 Foot Blockchain came out in July 2017. There's no way to enter the crypto space without mens rea in 2019.
This critique is basically saying that cryptocurrencies have Ponzi-esque economics or more aptly named greater-fools economics. The argument being that as they have no cash-flows, any appreciation must come from future investors piling into the asset. I think this is a great optic to look at the problem as it focuses on the economic design, its sustainability, and its valuation in terms of future cash-flows.
Nevertheless not all cryptocurrencies satisfy the above. The prime example being Ether. In the last year it has experienced -0.186% circulating supply inflation (i.e. it's non-dilutive to its holders) [1]. While the network has captured around USD 6.5M per day ~ 2400M per year in fees due to its usage as settlement layer which are paid to its stakers. Basically, it's cash-flow positive and does not rely on greater fools to sustain its economics.
[1] https://ultrasound.money/ [2] https://charts.coinmetrics.io/crypto-data/?config=JTdCJTIybm...
What you are saying is you can invest Ether (i.e., stake it) and then might earn a return in Ether (not USD). Any appreciation of Ether vs USD still needs to come from outside demand for Ether.
This is a subtle point but the fee revenues that the network observes are best understood as priced in fiat currency, even if denominated in ETH. In much the same way the earnings of Microsoft in Europe are to be understood as priced in EUR even if denominated in USD in their financial reports. The reason for it is basically that the network offers a service (transaction settlement layer) that provides some value to its users and has some costs. The cost is set dynamically due to the scarcity of blockspace to include transactions, if the cost is too high it will be outcompeted with all other alternative uses of that money. They may settle in a different chain, they may settle using a centralized provider (e.g. Visa, Paypal), they may not interact at all with the network, etc... This makes it so, at the margin, the network revenues are inherently priced in fiat. Because prices will be set at the point where use of the network is discouraged given the value provided and all other alternative uses of that money.
Additionally, the fees of the network can only be paid in ETH, which means that any use of the network implies ETH demand.
If there were no outside demand for Ether then Ether would we worthless in USD. What you are saying is, that there is demand for the network services from beyond existing Ether holders, thereby creating demand for Ether by USD (or other currency) holders.
Whether people transacting on the network care strongly about the costs vs alternatives to create a proper link with fiat is not so easy to show because there isn't always a direct 1-to-1 correspondence between services (and there are switching costs, too) - so the "inherently priced in fiat" is tough to show, I think. Also, being priced in fiat might still not create demand for Ether from fiat holders - that comes from outside demand as per the above.
> If there were no outside demand for Ether then Ether would we worthless in USD. What you are saying is, that there is demand for the network services from beyond existing Ether holders, thereby creating demand for Ether by USD (or other currency) holders.
Demand to settle a transaction on the network is demand for ETH. Because the base_fee of a transaction is burnt, destroyed, so ETH needs to be acquired to use it as a settlement layer. Much in the same way to how heating your house with a gas boiler is demand for gas. Similarly, when natural gas prices skyrocket (cue Ukraine invasion), alternative forms of heating start to look more attractive, and consumers may change their behaviors lowering the thermostats. In the case of Ethereum, alternative settlement layers will look more attractive or some users may lower their use. The same mechanisms are in place. I agree though that the relationship is not linear, that's not what I implied. Simply that the revenues of the network are priced in fiat, because the price is set by an auction to include your transaction on the scarce blockspace. And given at least some users will be sensitive to the price of the transaction in USD they will, at the margin, set the prices for a transaction in USD and therefore the fee revenues of the network.
By the way I appreciate you engaging rationally on this topic in HN. Not a common sight when discussing anything related to crypto but much appreciated.
Thank you, likewise, needs two to have a rational discussion.
I agree that there can be some link based on the utility of the network and with less of a speculative frenzy it might actually be stronger now. Not dissimilar perhaps to (other?) commodities, which have some link to economic activity but are not directly producing the activity themselves (and they can also have speculative phases). And commodities also have conceptual issues around their use in long-term investment for that reason (but at the same time they exist and trade).
>>> Did you fly to the Super Bowl in a private plane?
> all crypto is a scam
Most people think SBF spent all his customers' deposits on private jets and luxury condos, and blew the rest on shitcoin bets that went bad.
But despite the insinuations of prosecutors, the PJ trips just don't add up to much in the scheme of things, and the real estate is still there and can be sold.
Yes, some shitcoin bets were bad, but they're offset by investments that paid off like the Anthropic stake.
It's likely that the only haircut depositors will have to take is the billion dollars in bankruptcy lawyer billings.
> the bloody Washington Post told you it's either a Ponzi or a pyramid scheme in 2015
If you put in $10K when WaPo told you it was a Ponzi, you'd have $1.6M today.
Maybe next time the bloody Washington Post gives you investment advice, you should do the opposite.
> If you put in $10K when WaPo told you it was a Ponzi, you'd have $1.6M today.
This is the fuel that drove crypto. Yes it's a scam; I'm just hoping others will buy in after me and I can cash out with their money.
Oh, so stocks must be a ponzi as well.
Not necessarily but some financial products based on stocks can be and meme stocks usually function much like ponzi schemes (i.e. buying a stock, telling everyone else to buy the stock because it'll go to the moon, then selling the stock before everyone else finds out they were the only ones adding value to it, forcing them to sell at a loss).
The biggest and greatest of them all!
Tell me you lack basic financial literacy without telling me...
Investment into a corporation becomes capital. It is used to buy resources which when combined properly can be sold for more than the raw cost. You are entitled to a share of these profits in the form of dividends.
On the other hand, buying crypto"currency" becomes ... just that. It sits there until you sell it to someone else.
In other words, if you rolled back all transactions in a stock ever made you'd end up with a positive sum totaling dividends paid out. If you rolled back all Bitcoin transactions you'd end up with a big fat zero. Minus, in both cases, transaction fees but while it's a mere convenience for stocks it's inherent in Bitcoin which makes it a negative sum game and as such a scam.
Clearly currencies don't pay dividends but doesn't matter for this argument. There's a fair chunk of people treating stocks exactly the way gp described. To conclude from that that all stocks are a ponzi is as retarded as it is to conclude all crypto is a ponzi
Is crypto not a ponzi as an investment, though? Who in their right mind buys currency and sits on it as an investment? If it has utility as a currency, then use it as one, otherwise it is just speculative, and a speculative investment which relies on other people to buy out your stake and has no positive cash flow is a ponzi. No?
Gold.
Y'all really should read Stolfi because he carefully addresses all these, gold stock etc
> gold has a source of revenue besides the investors; namely, the purchases by consumers like jewelers and industry, who take gold out of the market (2/3 of the production) for uses other than re-sale. When one buys 1 oz of gold, one gets a chip of a metal that one can sell to those consumers, and thus obtain some money that does not come from other investors.
This is simply mentally reclassifying "consumers" outside the category of investors.
The argument for crypto, etc is the same. There are consumers who want to make purchases, use contracts, etc.
No, it's saying that gold has value as a commodity as well as a currency. You can't melt down a bitcoin and sell it as jewellery.
Actually, all commodities and it is a known issue with commodity investments (which maybe are more like trading positions therefore).
Stocks don't rely on other people buying in to create value. They are buying into something with underlying value.
That doesn't explain GME or BBY. Which have explanations, but I wouldn't call rush underlying value.
Fundamentals define a floor for stock price, but above that it's all vibes. Which is fine, as long as we're on the same page.
I'm not saying rush is underlying value.
Stocks are ownership of something real. The company you own a share of does things in the real world. They can make intelligent (or stupid) decisions about the company strategy. They can enter new markets, or launch new products. They can share a dividend with the owners.
Obviously there's still investment bubbles - but underlying it all is ownership in a corporation.
> Maybe next time the bloody Washington Post gives you investment advice, you should do the opposite.
I did and I had significant losses. What does that say about your statement?
It says the bloody Washington Post has no obvious skill at predicting the future, therefore any statements they make should be taken with a hefty dose of salt.
The article was not predicting the future, though.
https://www.washingtonpost.com/news/wonk/wp/2015/06/08/bitco...
> The thing is, I don't actually use it. I just hoard it. I'm waiting for some greater fools to push up the price by using theirs.
And what is this made up quote (not to call it a strawman, as the wapo is certainly a prestigious outlet with very high standards) supposed to prove?
you should have hodld
The price of Bitcoin in 2015 was ~$350. To have significant losses after buying at that price point would have taken very serious skill.
Each time it doubled you would have been a fool not to sell it.
Holding is about the same thing as buying but with no transaction cost.
Could you elaborate a bit the "very serious skill" needed to store your bitcoin in e.g. Bitfinex or CuadrigaCX?
Since it's apparently not obvious, long term holding your coins in a centralized exchange misses the entire point of crypto. Not understanding that takes some skill indeed.
Oh, neat. So misplacing your hardware wallet also requires lots of skill. Gotta love that rugged libertarian individualism that turns bad luck into stupidity and good luck into galaxy brains.
As someone who’s never been into crypto, the general discourse when I look in crypto-related subreddits suggests that the very fact that mainstream media were calling it a Ponzi scheme is one of the reasons you should invest in crypto.
It’s that “one simple trick (what they don’t want you to know)” kind of predatory advertising that seems to be what ensnares people.
It’s adjacent to the hustle culture you see on social media where people with gleaming white teeth tell you they’ll make you rich
Try the /r/buttcoin sub for a more informed opinion.
As someone who made lots of money on crypto early on, then didn't touch it for many years, made lots of money again and haven't touched it since I can tell you (and others) what is a winning strategy for "investing" in crypto.
Consider it a VC investment. First, you gave to either understand the underlying technology, or someone you trust have to understand it sufficiently to be able to say "this is bullshit", or "this is a great novel idea that makes a lot of sense".
Then you invest a bit of your really disposable income in it and don't touch it for a couple of years. Eventually you sell once you're happy with the price, or you forget about it and check few years later.
Edit: also, it really is down to luck too. An idea might be great, but the people behind it can be scammers. Etc. Crypto is(or was) a very high reward, very high risk game.
And for God's sake don't invest your life's savings in crypto!
> First, you gave to either understand the underlying technology, or someone you trust have to understand it sufficiently to be able to say "this is bullshit", or "this is a great novel idea that makes a lot of sense".
> Then you invest a bit of your really disposable income in it
Sorry, but I find it a bit funny that in your "winning strategy" you seem to invest on the second step regardless if you in the first step ended in the "this is bullshit" or not. (full disclosure, so far, every crypto thing I have seen has fallen to the "this is bullshit" bucket in my opinion. But I guess my "if it looks, walks and smells like bullshit, don't touch it with a ten foot pole" is not a winnig strategy.)
Well, yeah: If it's bullshit, you invest and then make sure you spread the word so there are enough people under you in the pyramid to keep you solvent.
It's not an investment. You are gambling. And even worse, you are gambling by robbing the less informed. Make no mistake: every cent you made is a cent someone else lost -- even if they haven't realized their loss yet, it's there. And even worse, it's not a cent, it's a bit more because bitcoin is not even a zero sum game but a negative sum game and those are inherently scam. But, I guess, good for you?
It has real value for as long as there are people who need a currency that isn't controlled by a government. In other words, it's an investment in the working capital of the criminal underworld. (and tinfoil-hatters) The money you put in is probably used to commit crimes of some sort, and the money you take out was probably the result of some crime. But with coins like Bitcoin that have a distributed trust in all miners to maintain the algorithm, I don't think you can say it's a scam.
The ones I think are truly scams are the "stablecoins" and "exchange tokens", which are nothing more than a fiat currency offered by an entity smaller than a government with less accountability than a government, and no way to ensure the value/supply/demand of their coin. So yes, I think FTX was a scam to the extent that they traded FTT while printing or consuming it however they liked.
It's effectively a pyramid scheme in which the potential marks are everyone in the world. It's not that much of a surprise that crypto continues to have money pumped into it - there's an almost never ending supply of greater fools.
Arguably the entire monetary system is also kind of like that - but it's got the benefit of true utility outside of speculation. It's a shame that most of the interesting crypto-as-money stuff - smart contracts, accessible to everyone financial APIs, pseudo-anonymous payments etc, has been completely dwarfed by the crypto-as-investment situation. Maybe it'll shake itself out long term, but I suspect the fundamental problems of unregulated "money" will be inescapable.
It turns out there's a reason we have financial regulation.
> It's effectively a pyramid scheme in which the potential marks are everyone in the world.
That's about as big as it gets, and pretty well explains the long legs this con continues to have. A lot of marks out there.
The only thing bigger would be an interstellar "galactic-coin". God. I can only imagine the carnage. Seems like a great premise for a sci fi story.
> He probably got caught up in the moment, implicitly assumed he was smart enough to compensate and not need it
The pop psychology term for this is the Dunning-Kruger effect.
Not really. The Dunning Kruger effect was that those in the bottom quartile of competency greatly overestimated their own competency. He wasn't incompetent. Just had good old fashion hubris.
The person I'm responding to was making the case that he was incompetent at his job:
> zero experience in building a major service that custodies billions in other peoples' money.
This is exactly what the Dunning-Kruger effect describes. He was incompetent at the task he was doing and didn't know enough to be aware of his incompetence.
No, it's a specific phenomenon about lack of raw cognitive competence, like for general tasks in life, not lack of experience in a given domain. The point of the DK effect was even with experience, the disparity between ones competence and awareness of ones relative competence doesn't improve. The original paper opens with an anecdote about a bank robber that couldn't believe he was caught because he "wore the juice" — he was under the impression that lemon juice would make his face invisible on camera.
What you might be thinking of is the smbc Mt. Stupid diagram [1] which does relate overinflated sense of know-how to a relatively low experience level.
That is distinct from the DK effect in important ways. Of course it doesn't help that if you google images for DK effect 19/20 first results will be a bastardisation of the Mt Stupid comic.
> No, it's a specific phenomenon about lack of raw cognitive competence, like for general tasks in life, not lack of experience in a given domain. T
This is a common misconception. Wikipedia has a pretty good write-up. Quoting the first paragraph:
> The Dunning–Kruger effect is a cognitive bias in which people with limited competence in a particular domain overestimate their abilities. Some researchers also include the opposite effect for high performers: their tendency to underestimate their skills. In popular culture, the Dunning–Kruger effect is often misunderstood as a claim about general overconfidence of people with low intelligence instead of specific overconfidence of people unskilled at a particular task.
The original paper [1] was explicit that this was domain-dependent.
> The point of the DK effect was even with experience, the disparity between ones competence and awareness of ones relative competence doesn't improve.
I don't think this is consistent with the literature. In the studies I'm familiar with, there is the classic Socrates effect that the people with the most skill are aware of how little they know and tend to underestimate their relative performance. So it improves significantly, but there's a slight over-correction.
Quoting the original paper:
> improving the skills of participants, and thus increasing their metacognitive competence, helped them recognize the limitations of their abilities.
[0] https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
It had nothing to do with engineering issues / risk. He was a scammer.
Anyone, who gets into building a company in the crypto space is a scammer. Period.
I think that's either untrue, or at least there are different levels of scaminess. I put some money into FTX to short Celsius (another scam) and would have been happy with the service if they hadn't gone and stolen my money. I mean you could argue that any trading of crypto is inherently a scam but there are some consenting adults who chose to do it.
"...would have been happy with the service if they hadn't gone and stolen my money."
That's a pretty big caveat, though.
That's a bit spicy. Don't forget we're on the Y Combinator forums, so this may read as an attack against their investment strategy - not even dang can protect us here.
This forum actively supported deplatforming crypto source from VCS hosts so I'm pretty sure it being YCombinator doesn't matter at all.
This is it exactly. He was running a confidence game. There are some big parallels with Bernie Madoff in fact. Spinning a story of financial genius out of a lucky break he got early on that had higher than typical returns, but in a market small enough to fly under the radar of the big players. The big difference is that SBF had less sense and let it spin out of control way too fast and hastened his own demise. At least Madoff got to live most of his life before he got sent to jail.
I don't think SBF was a scammer in the Bernie Madoff sense. I don't think he set out to intentionally scam anyone. I just think he was so arrogant that he thought he could do whatever he wanted. He thinks he's smart and the rest of the world is dumb. He thinks the legal system is just something to "route around." Not because he wants to steal money but because, if there's money in "his" account, does it really matter if it technically belongs to a customer? He seeemed genuinely surprised at the verdict, and he's acted all along as if he were, not exactly innocent but undeserving of all this bother.
SBF strikes me as someone who firmly believes ends-justify-the-means, and as such, if all his victims could be made whole, then he couldn't have committed any fraud. However, Matt Levine put it best:
> You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.
Yes, I agree with that.
It's undeniable he committed fraud, repeatedly lied to his clients and tried to make them give him money by telling them tales that weren't true.
But it also seems likely he thought he was clever/lucky enough that it would all work out in the end.
That makes the intent different, and culpability is always about intent.
In fact SBF reminds me more of Billy McFarland (of Fyre Festival fame) than of Madoff.
>It's undeniable he committed fraud, repeatedly lied to his clients and tried to make them give him money by telling them tales that weren't true.
What on earth is the difference between this and Madoff?
>But it also seems likely he thought he was clever/lucky enough that it would all work out in the end.
What on earth is the difference between this and Madoff?
>That makes the intent different
Why do you assume bad intent in one case and none in the other? SBF stole customer money and used it for political donations during one of the most heated, divisive, controversial elections in recent American history. He's the sitting President's largest donator, and he's going to prison for fraud. The potential consequences here are massive.
There's a possibility that the customers of FTX recover most or all of their money, thanks to SBF's investments.
Those investments were fraudulent because they were made without the consent of the people providing the money, but they were investments nonetheless: SBF was buying assets, not just pissing money away in jets and catering (although he also did that).
In Madoff's case there were no assets at all. It was not possible for Madoff to convince himself he was doing something that may become viable, given enough time. It was possible for SBF.
I think that's a pretty big difference.
(Also, campaign finance violations are not part of the trial that just ended, at all.)
Yeah, Madoff was a scammer, SBF is a megalomaniac. He thought he couldn't fail, and thus the rules didn't apply to him. So, when he did (predictably) fail his reaction as basically a big "I didn't mean to do anything wrong, therefore I shouldn't be punished" makes sense. But hey you know what, this is why we have rules. Not following the rules was actually the wrong thing, not losing people's money, which--crucially--he couldn't have done had he followed the rules.
I feel like justice is being done here, but there's a sense in which SBF and his cohort are the victims here. A world of zero interest rate incentives/people, a trendy money machine in crypto, a general sense that old people/regulations are impoverishing us all with their nervous sclerosis, all created an environment where--in hindsight--this was inevitable. If not FTX then someone else.
I think people are 100% right to call out the press/publications/investors/regulators who flat out encouraged this charade to continue well beyond the point where it was an obvious scam, and I think we really need to examine the VC culture of "find (or create) a young megalomaniac, give them tons of money, ... profit". How do we think these things will turn out? Will we spend billions of dollars building Uber, which at this point is an app that shows you ads and incidentally hails a cab? Will we spend billions of dollars building trash companies that scam people? Will we spend billions of dollars building Airbnb, which was pretty ruinous for cities and at this point not even a good business? Will we spend billions of dollars building e-scooter companies that exist essentially to create tons of e-waste that litters our sidewalks and landfills?
It's nuts. Please just fund day care.
How does using a random number generator in sizing the insurance fund fit into that view?
FTX had "infinite money", so the actual insurance fund was that supply of money; having a pretend number on the front page was simpler than actually implementing it; in a sense it was a favor to investors, because it saved on operational costs.
(All things SBF may have told himself.)
That's typical startup shenanigans, not specific to FTX. Lying to customers and embellishing the truth is business as usual. I'm sure they hoped that at one point they'd turn this into a real insurance fund.
If that is the case then the standard operating procedures of startups is fraud, not that Sam isn't somehow a deliberate scammer and con artist.
Like every other decision SBF would prefer you not examine: It fits because the ends justify the means.
It's important for the business that the insurance fund is safe. If you look closely you will find that it is unsafe. But if people believe it is safe you won't need the insurance fund, so do whatever you need to to inspire confidence in the insurance fund.
The safety (or not) of the insurance fund is not related to the need for it. The need would come from a counterparty defaulting - which is generally unrelated.
That's the thing - he successfully ran a lot of involved arbitrage and other legitimate trading tricks before he decided to run the confidence game. Unlike Madoff, he could have retired before the FTX scam with "buy a jet every year" kind of cash.
Is there actually good visibility on the profits of the earlier trading?
There's indication it was in the higher 9 digits.
There is a very fine line between fraud and financial engineering. Perhaps none at all.
Yes, but he crossed the fine line by like 500 kms.
It had to do with lack of internal controls that safeguard the organization and its custodied assets from both employee mistakes and fraud. That's a part of engineering high-assurance high-integrity systems and SOP at big exchanges, banks, and similar orgs.
> lack of internal controls that safeguard the organization
That's a bit like:
"The bank robbers' mistake was a lack of internal control and security advisors who could have safeguarded them from robbing banks"
It sounds silly but you are not a bank robber before any attempted robbery or at least sincere planning of such.
Lack of internal controls will cause some peon that you employ to steal money from you/lose your money.
Lack of internal controls isn't the reason for why the CEO and owner of FTX is funneling billions of its customer dollars into a company he owns - Alameda.
It's just straight up fraud.
Loose, or rather non existant, controls also allow you, as senior management to get away with even worse fraud without one of your employees realizing.
He's not senior management. He's the owner. It doesn't matter what your controls are, if he wants you to eat paste and hand him over the keys to the production database so that he could delete it, you can comply, or he can fire you.
You should probably let some other adult, (and the FBI) know if the owner asks you to do that, but you can't physically stop him. It's his company. He has complete power over it. It's not a democracy, there's no checks and balances on the power of an owner-CEO.
SBF has just been convicted of committing intentional fraud, not just "lack of internal controls". Was it an oversight to use rand() to generate your deposit insurance figures, or add that switch to allow Alameda unlimited rights to dip into the customer fund kitty?
Yeah but if you want to scam why would you want to engineer the company you are creating to prevent you from scamming.
That's true of course, but every control can be turned off. In this case, they wanted to turn every safeguard off.
the whole "book learning nerd not living in the real world" is quite cliche these days, there are much better descriptors such as emotional, literary, mathematical, etc intelligences. Someone may be high in all of them or in just one or none.
I mean, I explicitly _said_ it was a cliche. But I'd argue that it's not wrong. I guess if I had to describe the kind of person I'm thinking of in a more nuanced way, I'd say they're educated and very good, often brilliant, in their chosen work, but both have low emotional intelligence and are lacking a sort of...I don't know how to put it exactly...basic ability to take care of themselves.
There are also plenty of booksmart nerds with high emotional and practical intelligence. (I like to think I'm one, sure didn't used to be.) On the whole they are fun people to be around.
that "almost hit by car" anecdote is complete nonsense. There is plentiful jay-walking in Boston/Cambridge (just as there is in New York City, and has been recently legalized in California). To an outsider, perhaps it looks like people are dangerously walking into traffic?
But how many MIT students actually get hit by cars? the number would be unusually high if the number of close calls were unusually high, but without looking up any statistics I can assure you it's something nobody ever thinks twice about.
Also Mass Ave which tons of people cross is not the most highly trafficked street by MIT, that would be Memorial Drive, but hardly anybody even has a need to cross Memorial Drive so that part is also hinky.
I went to Purdue. The joke among engineering students was that we used calculus to compute trajectories and to avoid "elastic" collisions with motor vehicles when crossing State Street (the main road through campus). And that the liberal arts students got to go to some secret class where they were taught how to do that without calculus.
Back then, painted crosswalks would have been a waste of paint.
The thing I learned very quickly while living in Boston is that no one will ever stop for you if you let them think they can keep going without running you over, but drivers do expect pedestrians to just walk into the street and are prepared for it. If you want to cross at a spot without a signal or stop sign, you have to act like you have no idea that there's any cars coming while still keeping an eye on them in case they genuinely didn't see you.
The end result looks like a lot of people have death wishes, but the pedestrian injury rate isn't actually unusually high.
I actually use almost the complete opposite strategy, which is to make eye contact with the driver and stare them down. So far so good.
Boston or Cambridge? Coming from NYC I was shocked at the fact that cars in Cambridge would constantly yield to me, even in situations where I really didn't expect it.
Contrast to NYC where I do follow that exact process you're describing - act oblivious, make yourself look like you really will let them hit you, that way they won't. Although in NYC you gotta be real careful about that strategy...
I'm talking here about Mass Ave directly adjacent to the bridge--so it's Cambridge but involving drivers coming out of Boston.
Damn, you found me out. smoke bomb
I saw this when visiting Washington University in St. Louis too! Street, plenty of cars, light turns red, students continue to walk into the crossing directly in front of an oncoming car which brakes and honks.
Perhaps so, but I also think this situation is less of an indictment upon academia than it is upon, say, bankers - which is basically what his career was, both before his crypto work, and during it.
After all, it's not difficult to find an effective book teaching one to safely cross a road.
To be fair, those students are contending with people driving in and out of Boston. The odds are not in their favor.
I've lived in 6 different cities in my lifetime, in every one they claimed they had the worst drivers in the USA.
Edit: well color me an idiot, I just checked and a 2019 usnews report had boston as ranked 3rd on worst drivers, based on whatever set of variable they came up with, so touche.
I found what I think is probably the same report. This one anyway had DC and Baltimore, two cities where I've personally driven a good deal, as the worst, and I would believe that.
One other thing to note is that two of the _other_ top 10 are also in Mass, Worcester and Springfield. That's the only triplet on the list in the same metro area.
Though I guess, for the point I was making, it doesn't matter if Boston driving is the actual worst in the country or not, as long as it's very bad, which I promise you it is.
Insane that Miami wouldn't be on there, makes me question the whole thing.
Imagine Miami only with ice storms, and you've got Boston.
I lived in Boston for 2.5 years and it's not as bad as Miami on it's worst day, driving-wise.
Speaking seriously, I'll take your word for it, I haven't visited Miami since I was a little kid.
You're not wrong--but all the more reason to be on your guard, and maybe wear running shoes.
His problem was not a lack of common sense. His problem was he was dishonest, a conman, and a thief.
He can (and does) have multiple problems.
It's not like because he made one really bad decision, none of this other bad decisions exist anymore.
True--but nobody made him talk to the media in the time before the trial, and nobody made him take the stand and thereby make himself vulnerable to cross examination. So in addition to "dishonest," "conman," "thief," and "convicted felon likely to die in federal prison," we can also reasonably call him "dumbass".
Good point - I think you are right about this.
There's also a fact of human nature that smart people often don't understand: you can be the smartest person in the world and still be stupid under the right circumstances.
Quite right. One more related fact: competence in area X does not necessarily translate into competence in area Y, even if X seems to be a much more difficult thing than Y.
A fact that is so easily placated with celebrity status om social media.
And when AI does the same thing, some people argue that it's proof for its lack of intelligence.
Mark Karpelès did nothing wrong!
Besides designing a crappy site that validates the data in user's browser with JS.
I'm curious how the sentencing goes, not only for SBF but those around him that took deals.
In my limited view of US cases, it often seems prosecutors let off lightly anyone that will testify in return for their whale. Sometimes feels it's more symbolic justice that way than real.
Some of this is also "Prisoner's Dilemma" type game theory with prosecutors playing a long game to improve their odds of winning not just the current case but future cases as well. When there are several co-defendants the prosecutors will give the best deal to whoever cracks first and agrees to testify against the others. Future co-defendants in other cases (and their attorneys) see that pattern and then race each other to get the first, best deal.
Prosecutors don't decide sentences in the United States. Judges decide sentences and in US Federal Government cases, the US Government issues sentencing guidelines. These guidelines are usually used to determine how long a person goes to prison for.
What prosecutors can do is recommend a sentence and let the judge know that a criminal cooperated. Cooperating typically reduces a criminal's sentance. Ultimately, Federal sentences are decided by three things:
A) The laws of the United States. These can be changed by the United States Congress.
B) The sentencing guidelines (https://www.ussc.gov/guidelines)
C) Prison Capacity (At some point, you cannot send anyone else to jail because the prisons are full)
> What prosecutors can do is recommend a sentence and let the judge know that a criminal cooperated. Cooperating typically reduces a criminal's sentance. Ultimately, Federal sentences are decided by three things:
The prosecution does decide charges to bring forward, so the prosecution can decide to only charge defendants with lesser charges if they cooperate to catch bigger fishes.
If Judges stopped going along with prosecutor's deals, then nobody would be making deals ever again. Usually, judges do honor deals made with the defendant.
That depends heavily on what you think the purpose of the justice system is. For most purposes, nailing the whale and breaking up the party is enough to set an example and send a message.
There isnt much value in incarcerating additional people simply for the sake of punishment/revenge. The other individuals are unlikely to cause future harm.
The federal prison system abandoned the concept of rehabilitation back in the 1970s. The current system is a combination of exile (we don't want you around), some punishment (this place sucks) and some mitigation (if you're in jail then you can't do more crimes). I do not believe that potential criminals are the sort who are capable of thinking something like "I better not do X, I don't want to be in jail that long".
There's a YouTube channel called "Insider" and they have a series of videos called "how crime works" which are part interviews with past-criminals about how their particular scheme worked:
https://www.youtube.com/c/thisisinsider/videos
The videos all have extensive credits and one thing was that very few of the participants actually considered potential punishment/incarceration beforehand.
>There isnt much value in incarcerating additional people simply for the sake of punishment/revenge.
The idea is that everyone knowingly involved goes to jail. This way others presented with opportunity to go along with such fraud /know/ there is a very, very real consequence. Rather than "CEO could go down for this but what the hell, I'll go along with it."
It's not retribution, it's justice.
yeah, I agree you don't want to prosecute the CEO exclusively every time, but beyond that, I dont think it makes much of a difference with respect to deterrence. Nobody thinks they will get caught to begin with, so the severity doesn't matter much.
Prosecutors need snitches.
nobody talks, everybody walks.
I'd also note that the people around often profit from these things as well. It's not like the CEO is doing something only for the CEO's benefit. The other people involved lived lavish lifestyles with high salaries and were looking at a huge pay day. They didn't just go along with it. They were looking to profit from it.
I tend to agree that both practically and legally, when you’re dealing with a fraud as big as this one, that successfully prosecuting the Big Man At The Top is the best strategy.
People might scoff at mid-level fraud “doers” getting a slap on the wrist deal for their testimony, but the alternative where you go full scorched earth and fail to get a conviction would be terrible for the defrauded and the system beyond them. Capitalists (i.e. the owners of capital, the investor class, in this case) love a system where you don’t really have to quadruple check that a financial document is valid. Who can blame them? I certainly wouldn’t want to live in a world where something like FDIC doesn’t exist or where fraudsters can easily rip people off with low chances of jail time if/when the operation goes belly up.
I'm not American, but it's my understanding that there's more scrutiny on prosecutors to "nail" and close cases due to the stupid double jeopardy rule.
You lose the chance to convict a criminal, you lose your face and the chance to see him behind bars.
Double jeopardy is a relatively common protection and predates the United States.
All of Europe, India, all of the Americas, and any other country that inherited English common law are among the majority of countries on earth that have this protection in one form or another.
Italian system definitely does not have it, neither Poland or France.
You are incorrect, or they are in violation of the European Convention on Human Rights. You can use your favorite search engine to verify this.
Polish law translated: "No criminal proceedings shall be initiated if another criminal proceeding in respect of the same act committed by the same person have been validly completed (ne bis in idem, res iudicata) or are already pending (lis pendens)[19] If criminal proceedings are initiated in contravention of this principle, the proceedings shall be discontinued."
Double jeopardy rule doesn't prevent appeals to a higher court which is what happens in Italy frequently, and it doesn't prevent retrial when there are new legal facts or a defect with the original case.
I don't know why you are so unwilling to research this when it is a very accepted legal principle.
Are you sure that you understand what double jeopardy is? That the government cannot retry your case once a final ruling has been made. Simply put: you can't have two separate trials for the same crime. You can still have the case pass through separate courts and judges through appeals process since many systems allow review of a conviction before it is considered "final".
> the stupid double jeopardy rule
You really want the government to decide to re-arrest and re-try you indefinitely if you are acquitted of a crime?
The double jeopardy rule is not stupid.
That's not what happens in countries that don't have double jeopardy, you know that right?
But it's shown to be stupid in movies. How could that possibly not be right?
Charles Ponzi also forgot to run with the money. But Ponzi only got 12.5 years.
I'm curious about the political donations aspect of the story. Can a court force politicians who got money from FTX/SBF to give back to creditors?
In practice, I don't think it matters. Here is why:
1. The donations to candidates are usually pretty small (think $2,900/candidate). The candidates can return the money but getting all of the money back will not do much for the creditors.
2. Some PACs got a LOT of money (think millions of dollars). The problem is they probably already spent it. You can probably sue them to try to get back the money but the PACs will probably just declare bankruptcy.
Here is a link to the donations: https://www.opensecrets.org/donor-lookup/results?name=&cycle...
Except there are 5M, 200k, 300k donations
Still small compared to all the stolen money
Those are to political action committees, not politicians. The probably spent most or all of it during the last election cycle. If they raise more money, you can go after that but what are you going to do if they don’t raise more money?
SBF was the largest donor to the Democrat party. Can we rehold those elections?
He donated the same amount to both Democrats and Republicans.
Quick back of the envelope calculation based on FEC data for 2022 says that SBF’s $40m donation accounted for about 0.03% of Democratic-aligned PAC donations. PACs across the political spectrum raised over $7bn and spent over $6bn.
No, he was not the largest donor. And he gave to the Republic party too.
What was the exact moment the fraud began?
What should he have done instead?
> What was the exact moment the fraud began?
Very early on. Probably from the very start.
When Alameda, before FTX existed, gave investors leaflets saying Alameda had guaranteed 20% returns and it could sustain 20% profits on as many billions as they would get. This was a lie and criminally defrauding investors already.
SBF never did the Kimchi trade (i.e. arbitraging the US/Asia Bitcoin price differences) at scale (it's not even clear if he even managed to do it at all: he claims he did, but he's a pathological liar who kept lying in court).
So Alameda was already a scam. Then FTX was a bigger scam, to keep the Alameda scam going.
But the Alameda scam came first.
> What should he have done instead?
He should have kept playing LoL only.
> What was the exact moment the fraud began?
When he used customer funds deposited into FTX to gamble through Alameda.
Since customer deposits into 'FTX' went straight to Alameda's bank account, it began pretty much the moment Alameda executed a trade. Everything after that was just more fraud to cover up the consequences of the original fraud.
> What should he have done instead?
Not treat customer deposits like a personal piggy-bank.
Well for one, if you are going to start an exchange, build a ledger based accounting system.
You don't have to pick an exact moment, but there are several clear moments of fraud. The biggest moment of fraud was whenever alameda's FTX account was allowed to have a riskier position than a normal account, including holding a negative balance. This is something FTX specifically allowed and publicly lied about (SBF on twitter said they were treated as a regular account, which we now know is false).
This fraud became worse the more negative the balance became since it became more and more misleading to users to continue to present themselves as a financially healthy business.
What they should have done instead is to not allow alameda to have an account with special rules and negative balances, and to actually operate their business as they claimed. They likely would have grown less quickly or even gone out of business, but sometimes the way you avoid fraud is indeed by going bankrupt instead of lying.
They also could have not lied to users, both about the status of alameda's account, and about the status of FTX's liquidity. Each time they made a statement about their exchange that excluded that materially relevant information was also fraud.
I do say all of this with full awareness that a large fraction of YC startups also "fake it until they make it", i.e. lie about what their product can do, lie about their financials, etc. Most YC startups are also committing fraud on a much smaller scale, and just manage to keep the scale small enough that no one goes to prison.
Hold your horses! What startups are lying about what they do? I don’t get the impression this is the case at all. MVP and move fast tactics are not fraud. Saying your SOC2 compliant or something when you are not probably is.
I know first hand of YC founders lying to (corporate) customers on their business size, revenue, etc in order to secure business. Is that fraud? At best its an unethical and dubious business practice.
It is only fraud if a jury of your peers would think it is fraud, which is probably a higher bar than you think.
Most of the fraud you are talking about also wouldn’t have the explicit benefit directly to the founders the way it did with FTX. SBF took money that wasn’t his and spent it on private planes and luxury apartments and hundred million dollar investments _in his name_.
The average startup founder who is trying to close a sale by exaggerating their business a little bit is not going to have that kind of clear gain, because most founders do not use their companies as piggy banks.
> What was the exact moment the fraud began?
There's not necessarily an "exact moment" that they can pinpoint, nor is that their job to do so.
FTX was promising customers it would hold onto their funds and keep them safe, much like a bank. Then they did not. That's the short of it, tat is what they uncovered. The date it "began" was not in scope of the case, just the end result, and the end result was that there was fraud.
> What should he have done instead?
Again, the short of it is: He should have delivered what he promised to customers, or not make those promises to begin with.
Not commit fraud?
The fraud began when he gave false information to investors and customers.
RE: What should he have done instead?
Here is what he should have done:
1. Sam Bankman-Fried SHOULD NOT HAVE STOLEN CUSTOMER MONEY.
2. Sam Bankman-Fried should have been honest.
3. FTX should have kept excellent records. FTX was notorious for its bad record keeping. Also, its poor record keeping meant it was not sure how much money it had and it was not sure which money it owned and which money its customers owned.
I'm sure there was a long slippery slope to more and more brazen fraud, but for what he should have done instead that's a very very simple question to answer. He shouldn't have committed fraud. All the illegal stuff he did with comingling funds and stuff? Just - don't do that.
> What was the exact moment the fraud began
When assets held on behalf of customers were comingled with company assets?
Ah but that’s not fraud. Though it did pave the way for it.
What’s the over under on the years