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Honestly I actually doubt he did anything he can be charged with. The whole point of crypto is that you are investing in something ABSOLUTELY NOBODY wants to ta

Honestly I actually doubt he did anything he can be charged with. The whole point of crypto is that you are investing in something ABSOLUTELY NOBODY wants to take responsibility for. I find it amusing that there is now a call to apply the same rules for crypto exchanges. Didn't everyone hate traditional finance a few months ago?

VagueMag 4y ago
He signed up customers with documented agreements saying that their funds would be segregated and not lent out, and then he used the U.S. banking system's wire infrastructure to have their money sent directly to his hedge fund Alameda Research instead of the exchange FTX.
- lazide 4y ago
  Cite? If so, that's amazingly dumb.
  - VagueMag 4y ago
    This was one of many admissions in his text exchange with Vox. You can see an example wire here https://twitter.com/EventLongShort/status/1593469270918414344 https://twitter.com/EventLongShort/status/159346927091841434...
    - treis 4y ago
      That doesn't really make a lot of sense. Customers sent him dollars to buy crypto. So any dollars that came in were almost immediately turned into crypto. The only way for those crypto assets to be missing is if the crypto was transferred.
      - VagueMag 4y ago
        The dollars were used to purchase a claim on crypto payable by the exchange FTX. But it is not at all clear at this point that if someone sent money to them ("them" being some kind of quantum superposition of FTX and Alameda Research) and used it to purchase Bitcoin on the exchange, that FTX ever did anything other than update a number in their internal customer-facing ledgers. They had only $639,000 in Bitcoin on their balance sheet in their bankruptcy filing. And obviously the crypto is not all sitting at FTX ready to meet customer withdrawals or they would never have paused them in the first place.
lazide 4y ago
He admitted to using client funds against the stated TOS. Embezzlement, Fraud, whatever - a crime did occur, regardless of if it was crypto, and every country I've run across has laws against that. Untangling how to charge him, and where, and digging up concrete enough evidence to file an indictment is going to take awhile of course. The post-bankruptcy CEO seems to be finding plenty. As with a lot of non-violent crime, it takes awhile to arrest someone because there is a lot of paperwork. When the suspect has a lot of cash and lawyers, it takes longer because they need to make sure there isn't an angle they are missing that could get them off.
- treis 4y ago
  What he's admitted to are loose financial controls and by the letter of the law it's not illegal to be bad at your job. Obviously no one really believes his "whoopsie poopsie accidentally lost a few billion" story but technically he hasn't yet admitted to a crime.
  - lazide 4y ago
    Nope. Mishandling customer funds yourself against your own stated use of said funds to customers when you gathered those funds is one of those crimes above, depending on specifics. Bad financial controls is if someone else whoopsie accidentally steals or mishandles the funds. Which at least per a cite provided earlier, he admitted to doing it himself. To be able to claim a lack of culpability for this requires a degree of plausible ignorance about what the left and right hands were doing. He seems to be working hard to chip away at any sort of plausibility there.
    - treis 4y ago
      He doesn't have to claim anything because he's presumed innocent. To nail him for wire fraud you need to prove: >(1) that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money; >(2) that the defendant did so with the intent to defraud https://www.justice.gov/archives/jm/criminal-resource-manual-941-18-usc-1343-elements-wire-fraud https://www.justice.gov/archives/jm/criminal-resource-manual... Thus far he hasn't admitted to either and so hasn't yet admitted to a crime.
beiller 4y ago
What would happen if everyone's starbucks phone wallet balance suddenly vanished because starbucks YOLO'd all the funds on Dogecoin? Would that be fraud? Or would they just get away with Oops moneys is gone, all your balances are now zero.

VagueMag 4y ago

He signed up customers with documented agreements saying that their funds would be segregated and not lent out, and then he used the U.S. banking system's wire infrastructure to have their money sent directly to his hedge fund Alameda Research instead of the exchange FTX.

lazide 4y ago
Cite? If so, that's amazingly dumb.
- VagueMag 4y ago
  This was one of many admissions in his text exchange with Vox. You can see an example wire here https://twitter.com/EventLongShort/status/1593469270918414344 https://twitter.com/EventLongShort/status/159346927091841434...
  - treis 4y ago
    That doesn't really make a lot of sense. Customers sent him dollars to buy crypto. So any dollars that came in were almost immediately turned into crypto. The only way for those crypto assets to be missing is if the crypto was transferred.
    - VagueMag 4y ago
      The dollars were used to purchase a claim on crypto payable by the exchange FTX. But it is not at all clear at this point that if someone sent money to them ("them" being some kind of quantum superposition of FTX and Alameda Research) and used it to purchase Bitcoin on the exchange, that FTX ever did anything other than update a number in their internal customer-facing ledgers. They had only $639,000 in Bitcoin on their balance sheet in their bankruptcy filing. And obviously the crypto is not all sitting at FTX ready to meet customer withdrawals or they would never have paused them in the first place.

lazide 4y ago

He admitted to using client funds against the stated TOS. Embezzlement, Fraud, whatever - a crime did occur, regardless of if it was crypto, and every country I've run across has laws against that. Untangling how to charge him, and where, and digging up concrete enough evidence to file an indictment is going to take awhile of course. The post-bankruptcy CEO seems to be finding plenty. As with a lot of non-violent crime, it takes awhile to arrest someone because there is a lot of paperwork. When the suspect has a lot of cash and lawyers, it takes longer because they need to make sure there isn't an angle they are missing that could get them off.

treis 4y ago
What he's admitted to are loose financial controls and by the letter of the law it's not illegal to be bad at your job. Obviously no one really believes his "whoopsie poopsie accidentally lost a few billion" story but technically he hasn't yet admitted to a crime.
- lazide 4y ago
  Nope. Mishandling customer funds yourself against your own stated use of said funds to customers when you gathered those funds is one of those crimes above, depending on specifics. Bad financial controls is if someone else whoopsie accidentally steals or mishandles the funds. Which at least per a cite provided earlier, he admitted to doing it himself. To be able to claim a lack of culpability for this requires a degree of plausible ignorance about what the left and right hands were doing. He seems to be working hard to chip away at any sort of plausibility there.
  - treis 4y ago
    He doesn't have to claim anything because he's presumed innocent. To nail him for wire fraud you need to prove: >(1) that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money; >(2) that the defendant did so with the intent to defraud https://www.justice.gov/archives/jm/criminal-resource-manual-941-18-usc-1343-elements-wire-fraud https://www.justice.gov/archives/jm/criminal-resource-manual... Thus far he hasn't admitted to either and so hasn't yet admitted to a crime.

beiller 4y ago

What would happen if everyone's starbucks phone wallet balance suddenly vanished because starbucks YOLO'd all the funds on Dogecoin? Would that be fraud? Or would they just get away with Oops moneys is gone, all your balances are now zero.