8 ms·

It this real? Is he really THAT stupid? His defense against "you took user deposits and gambled the money" is "No, I took user deposits, loaned them to myself

by expazl 4y ago

It this real? Is he really THAT stupid? His defense against "you took user deposits and gambled the money" is "No, I took user deposits, loaned them to myself and then gambled the money". I mean this is like nested layers of stupidity. You'd be stupid to do this, you'd be stupid to think it's not a major crime, you'd be stupid to think that this was in any way acts as a defense of your crime and you'd be stupid to actually tell people that this is what you did thinking that it's a defense for the crime you committed. Guy literally though that Ponzi schemes would be legal if only the perpetrators on the way to court wrote on a document "I hereby lend myself all the money I misappropriated"?

logicalmonster 4y ago
Even if he gets convicted of anything non-trivial, how does he actually stay in jail for very long? Call me cynical or a conspiracy theorist or whatever, but a guy who's rubbed shoulders with the "elite" and who probably has at least a billion dollars in crypto stashed away can probably figure out who to bribe to walk out the jail's back door and take a private flight to a country who won't send him back.
burkaman 4y ago
For FTX's Sam Bankman-Fried, incompetence could be a legal strategy - https://www.axios.com/2022/11/16/ftx-sam-bankman-fried-incompetence-legal-strategy https://www.axios.com/2022/11/16/ftx-sam-bankman-fried-incom... > Lawyers tell Axios the main criminal risk Bankman-Fried faces is an indictment on charges of fraud — one of the more common charges in white-collar prosecutions. But to convict, prosecutors must prove beyond a reasonable doubt that someone had knowledge or intent to commit fraud, which can be tricky, they say. > That’s why the defense against such charges typically centers on something like, "It wasn't fraud, I was just really bad at my job." > "Typically, in a fraud case, the person at the top argues that he was inattentive, delegated to others, and wasn’t focused on the details," Mariotti tells Axios. "The point is to argue that he was sloppy or inattentive, not a fraudster."
- AnimalMuppet 4y ago
  OK, but "I loaned it to myself" is a deliberate step. So the defense is "I took user deposits, loaned them to myself and then gambled the money, and I did not know that that constituted fraud or embezzlement." That seems unlikely to fly.
- deleted 4y ago
  [deleted]
- Invictus0 4y ago
  The notion that someone that made it through MIT physics, worked for several years at Jane Street, and actively cultivated the persona of a genius can't understand that making a million tokens, selling one of them to yourself for a dollar, and then calling yourself a millionaire is nonsense, is frankly preposterous.
  - curiousgal 4y ago
    I am a genuine believer that environment plays a big role in all of those "achievements".
  - smsm42 4y ago
    And then there's also the question of actual deposits, which would still have to be sent to somewhere - intentionally - and given as those were represented, afaik, as deposits and not buying shares in a high-risk hedge fund, that alone constitutes separate fraud, regardless of how he tried to cover it up afterwards. If I tell you "if you give me $1000 I'll keep them safe and return them to you anytime you want" and then I take these money and go gambling to Vegas, I can't say "I was just not paying attention, sorry". I knew I promised to keep them for you and gambled with them instead.
    - Breza 4y ago
      Exactly. People keep referring to FTX as a Ponzi. It's even worse than that.
  - bb88 4y ago
quirk 4y ago
I think he probably declared it. "I declare bankruptcy".
- artificial 4y ago
  You have to walk in a circle three times after stating this.
  - FireBeyond 4y ago
    And throw a pinch of salt over your left shoulder.
323 4y ago
Maybe he's going for the insanity defense. Could be legit, he's literally digging, admitting to blatant criminal behaviour like it's normal stuff.
deleted 4y ago
[deleted]
superfrank 4y ago
This text resonates with me a bit: > like, "oh FTX doesn't have a bank account, I guess people can wire to Alameda's to get money on FTX" > ..3 years later.. > 'oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that and so it was never delivered to FTX' I'm not trying to defend his actions him and I think he should be prosecuted to the fullest extent of the law, but honestly, I kind of get what he's saying. I've worked at enough start ups where everything is always chaos and speed and scrappiness are valued above all else, that I feel like I've seen this multiple times. It's like, someone makes a dumb choice and everyone goes, "we'll that's not great, but it's working and it's not that bad, so I don't want to make it my problem" and eventually that dumb decision is just how things are. Eventually, new people join the company and don't realize things aren't this way intentionally and eventually one of them adds another dumb decision on top of that and the same cycle plays out again. After a few years, you end up with multiple of your processes or parts of your infrastructure based on these chains of bad choices and the one of them collapses. When you're close to the problem, each of the decisions on their own don't look too bad, but when you step back and summarize it in one sentence, it's clear how fucked up things are. It's funny because he smugly spends the start of this article arguing about how pointless regulators are, but I feel like if there was actually regulation in the space, there's a good chance they would have slowed things down enough to catch these bad decision chains.
- ceejayoz 4y ago
  If they could afford to hire an on-staff performance coach, they probably could and should have hired an on-staff accountant to manage literally billions of dollars rather than having the CEO put things in a spreadsheet.
  - superfrank 4y ago
    Agreed. He absolutely could have caught this if he had cared to, but my guess is he was too caught up in the "move fast and break things" mindset to really give a shit and that's why I fully support him going to jail for this. I don't think he intentionally lost peoples' money, but I think he was intentionally reckless and for that reason he should be prosecuted.
BrainVirus 4y ago
>It this real? Is he really THAT stupid? No, it's media damage control. Gets you to think about unverifiable stuff like personal motivation instead of what his company actually did. It revelatory that VOX interviews him instead of investigating him.
jcampbell1 4y ago
“That’s as good as money sir. Those are IOUs.” https://m.youtube.com/watch?v=n73DD0kv2l4 https://m.youtube.com/watch?v=n73DD0kv2l4
FireBeyond 4y ago
Not to mention, "what would you do different?" > more careful accounting Maybe it's just me being cynical. Maybe benefit of hindsight. Maybe a little of both. And talking with my partner, who is working towards a CPA and absolutely loves forensic accounting. "Careful accounting" doesn't in any way mean "doing the right thing financially", though it is certainly meant to imply that. "Careful accounting" is "hiding where the bodies/cash is buried".
naveen99 4y ago
Market makers on stock exchanges are allowed to naked short with abandon (more leverage than retail). Almeda was a market maker on an exchange that allowed 100x leverage to retail. leverage on margin is a loan. The shocking part is they took on so much leverage and lost, not that they were extended margin like any other market maker or even market participant on ftx. Really not so different from archilego/ hwang or London metals exchange fiasco or gilt fiasco or oil going negative or cds fiasco or LTCM.
idontwantthis 4y ago
“That’s as good as cash”!
belter 4y ago
Think about that next time somebody says: "Trust me, I am smart, I have a Physics degree from MIT..."

by expazl 4y ago

logicalmonster 4y ago

Even if he gets convicted of anything non-trivial, how does he actually stay in jail for very long? Call me cynical or a conspiracy theorist or whatever, but a guy who's rubbed shoulders with the "elite" and who probably has at least a billion dollars in crypto stashed away can probably figure out who to bribe to walk out the jail's back door and take a private flight to a country who won't send him back.

burkaman 4y ago

For FTX's Sam Bankman-Fried, incompetence could be a legal strategy - https://www.axios.com/2022/11/16/ftx-sam-bankman-fried-incompetence-legal-strategy https://www.axios.com/2022/11/16/ftx-sam-bankman-fried-incom... > Lawyers tell Axios the main criminal risk Bankman-Fried faces is an indictment on charges of fraud — one of the more common charges in white-collar prosecutions. But to convict, prosecutors must prove beyond a reasonable doubt that someone had knowledge or intent to commit fraud, which can be tricky, they say. > That’s why the defense against such charges typically centers on something like, "It wasn't fraud, I was just really bad at my job." > "Typically, in a fraud case, the person at the top argues that he was inattentive, delegated to others, and wasn’t focused on the details," Mariotti tells Axios. "The point is to argue that he was sloppy or inattentive, not a fraudster."

AnimalMuppet 4y ago
OK, but "I loaned it to myself" is a deliberate step. So the defense is "I took user deposits, loaned them to myself and then gambled the money, and I did not know that that constituted fraud or embezzlement." That seems unlikely to fly.
deleted 4y ago
[deleted]
Invictus0 4y ago
The notion that someone that made it through MIT physics, worked for several years at Jane Street, and actively cultivated the persona of a genius can't understand that making a million tokens, selling one of them to yourself for a dollar, and then calling yourself a millionaire is nonsense, is frankly preposterous.
- curiousgal 4y ago
  I am a genuine believer that environment plays a big role in all of those "achievements".
- smsm42 4y ago
  And then there's also the question of actual deposits, which would still have to be sent to somewhere - intentionally - and given as those were represented, afaik, as deposits and not buying shares in a high-risk hedge fund, that alone constitutes separate fraud, regardless of how he tried to cover it up afterwards. If I tell you "if you give me $1000 I'll keep them safe and return them to you anytime you want" and then I take these money and go gambling to Vegas, I can't say "I was just not paying attention, sorry". I knew I promised to keep them for you and gambled with them instead.
  - Breza 4y ago
    Exactly. People keep referring to FTX as a Ponzi. It's even worse than that.
- bb88 4y ago

quirk 4y ago

I think he probably declared it. "I declare bankruptcy".

artificial 4y ago
You have to walk in a circle three times after stating this.
- FireBeyond 4y ago
  And throw a pinch of salt over your left shoulder.

323 4y ago

Maybe he's going for the insanity defense. Could be legit, he's literally digging, admitting to blatant criminal behaviour like it's normal stuff.

deleted 4y ago

[deleted]

superfrank 4y ago

This text resonates with me a bit: > like, "oh FTX doesn't have a bank account, I guess people can wire to Alameda's to get money on FTX" > ..3 years later.. > 'oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that and so it was never delivered to FTX' I'm not trying to defend his actions him and I think he should be prosecuted to the fullest extent of the law, but honestly, I kind of get what he's saying. I've worked at enough start ups where everything is always chaos and speed and scrappiness are valued above all else, that I feel like I've seen this multiple times. It's like, someone makes a dumb choice and everyone goes, "we'll that's not great, but it's working and it's not that bad, so I don't want to make it my problem" and eventually that dumb decision is just how things are. Eventually, new people join the company and don't realize things aren't this way intentionally and eventually one of them adds another dumb decision on top of that and the same cycle plays out again. After a few years, you end up with multiple of your processes or parts of your infrastructure based on these chains of bad choices and the one of them collapses. When you're close to the problem, each of the decisions on their own don't look too bad, but when you step back and summarize it in one sentence, it's clear how fucked up things are. It's funny because he smugly spends the start of this article arguing about how pointless regulators are, but I feel like if there was actually regulation in the space, there's a good chance they would have slowed things down enough to catch these bad decision chains.

ceejayoz 4y ago
If they could afford to hire an on-staff performance coach, they probably could and should have hired an on-staff accountant to manage literally billions of dollars rather than having the CEO put things in a spreadsheet.
- superfrank 4y ago
  Agreed. He absolutely could have caught this if he had cared to, but my guess is he was too caught up in the "move fast and break things" mindset to really give a shit and that's why I fully support him going to jail for this. I don't think he intentionally lost peoples' money, but I think he was intentionally reckless and for that reason he should be prosecuted.

BrainVirus 4y ago

>It this real? Is he really THAT stupid? No, it's media damage control. Gets you to think about unverifiable stuff like personal motivation instead of what his company actually did. It revelatory that VOX interviews him instead of investigating him.

jcampbell1 4y ago

“That’s as good as money sir. Those are IOUs.” https://m.youtube.com/watch?v=n73DD0kv2l4 https://m.youtube.com/watch?v=n73DD0kv2l4

FireBeyond 4y ago

Not to mention, "what would you do different?" > more careful accounting Maybe it's just me being cynical. Maybe benefit of hindsight. Maybe a little of both. And talking with my partner, who is working towards a CPA and absolutely loves forensic accounting. "Careful accounting" doesn't in any way mean "doing the right thing financially", though it is certainly meant to imply that. "Careful accounting" is "hiding where the bodies/cash is buried".

naveen99 4y ago

Market makers on stock exchanges are allowed to naked short with abandon (more leverage than retail). Almeda was a market maker on an exchange that allowed 100x leverage to retail. leverage on margin is a loan. The shocking part is they took on so much leverage and lost, not that they were extended margin like any other market maker or even market participant on ftx. Really not so different from archilego/ hwang or London metals exchange fiasco or gilt fiasco or oil going negative or cds fiasco or LTCM.

idontwantthis 4y ago

“That’s as good as cash”!

belter 4y ago

Think about that next time somebody says: "Trust me, I am smart, I have a Physics degree from MIT..."