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It's clear Caroline Ellison has turned against him. Stephanie Avakian, former SEC enforcement chief, is representing her in NY. I'm guessing they wouldn't have

• aliljet 4y ago
  Can you explain what makes this so clear?
  • favflam 4y ago
    1. Someone took a picture of her in a coffee shop down the street from the Manhattan FBI/US attorney office a few weeks ago (last week?). She is supposed to be in Hong Kong as that is where she was based. 2. BBG news article recently speculated some hot-shot lawyers have begun representing Caroline.
    • dmix 4y ago
      She was spotted in NYC with another Alameda employee too. Maybe the Alameda execs are trying to say they just made irresponsible gambles (like a shitty Wall St investor) but SBF is the one who secretly covered the massive losses with FTX customer assets without telling the public and was responsible for the "dual accounting" issue where deposits were counted twice. Among all the other things that they did wrong. Or maybe there was a more direct/overt conspiracy at play they both took part in and she snitched first. The good news is we'll probably find out sooner than expected if the extradition gets challenged in court. We'll see exactly how altruistic SBF really is soon.
      • DonHopkins 4y ago
        "Unctuous Altruism"
      • iudqnolq 4y ago
        What you've described is also consistent with her asking the DOJ for a deal and then being laughed out of the room.
        • mbreese 4y ago
          But DOJ would have needed someone who had the receipts (who could also explain it all) to be able to act this quickly. So, in this case, I think it's a reasonable theory (but not the only viable one). Maybe part of the urgency was also the planned congressional testimony.
          • iudqnolq 4y ago
            > But DOJ would have needed someone who had the receipts (who could also explain it all) to be able to act this quickly. Citation needed? I'm not a lawyer, but it seems plausible to me that SBF's public admissions of crimes, plus the full records of his company, are sufficient.
            • mbreese 4y ago
              Where would they have gotten the full records? Or been able to know where to look in the records? Forensic accounting takes time (even if the records are as bad as alleged). To me, this suggests someone on the inside helping to build a case. Federal cases can take years to build because they are usually very thorough. Going from collapse of the company to extradition request in the course of weeks seems really fast to me from a historical perspective (but IANAL either). But this, like most of the thread, is all speculation. We’ll find out more in due course.
              • vgatherps 4y ago
                It appears that many FTX/Alameda employees were in the dark as well and had huge losses. There's probably no shortage of angry employees interested in sending him to jail (and probably ensuring SBF gets blamed and not them). Add SBF bloviating endlessly on the internet and admitting crimes and you have an easy case?
      • RC_ITR 4y ago
        > Maybe the Alameda execs are trying to say they just made irresponsible gambles (like a shitty Wall St investor) but SBF is the one who secretly covered the massive losses with FTX customer assets without telling the public and was responsible for the "dual accounting" issue where deposits were counted twice. Among all the other things that they did wrong. Here’s the crazy thing. Maybe they pierce the veil and say the two companies acted as one, but hedge funds fail all the time. The fraud was SBF using FTX to prop up Alameda…
        • dmix 4y ago
          Yes that was basically the point CoffeeZilla made during his notorious SBF interview https://youtu.be/4o_jPzBZSIo https://youtu.be/4o_jPzBZSIo
        • dragonwriter 4y ago
          > Maybe they pierce the veil and say the two companies acted as one, but hedge funds fail all the time. “Piercing the veil” is a term of art for holding shareholders accountable for corporate liabilities notwithstanding the civil liability shield usually provided by the corporate form. Holding coconspirators accountable for their role in a criminal conspiracy doesn’t have a special name because it is routine rather than exceptional.
          • RC_ITR 4y ago
            Sigh. Why is HN always like this? (don’t answer, I know) Piercing the veil broadly refers to removing limited liability protections because the individuals behaved in such a way (criminally) that they have forfeited their protections. The most common people held to limited liability protections are shareholders in limited liability corporations (LLCs) A different sort of limited liability is the idea that customers/partners of a fraudulent business are not liable for that fraud, unless they committed gross negligence in allowing the fraud to continue. To your point, there is not a snappy term for that specific phenomenon, because it is so rare, but piercing the veil 100% applies here because it refers to the “veil of limited liability”.
            • 4y ago
      • carlmr 4y ago
        >responsible for the "dual accounting" issue where deposits were counted twice. You're supposed to count everything twice in corresponding accounts. That's double-entry accounting.
        • ben_w 4y ago
          While it's possible someone just misunderstood colossally in the reporting (happens all the time), one of the allegations is that he had two different sets of documents to hide stuff and get things past auditors, not just double every as is standard.
          • carlmr 4y ago
            I know it was just a jab because dual/double entry accounting is the standard, so in a sense he did quadruple accounting.
      • rightbyte 4y ago
        > "dual accounting" issue The badly labeled @fiat account ... ? I am still in awe over that 11yo's soda stand spreadsheet.
  • throw_m239339 4y ago
    It's purely my opinion: She was staying completely silent since the moment FTX collapsed while he was spilling the beans everywhere. She obviously cut a deal while he was parading on social media for god knows what reason instead of shutting his mouth. SBF is a complete moron who didn't understand how the party was already over for him, I put it on his upbringing given the kind of ideology his scholar parents preach at university, especially the bits about personal responsibility...
    • bagels 4y ago
      Yes, any lawyer would have told him to shut up. It means his hubris was so great that he thought he didn't need one, or chose to ignore their advice.
      • wsc981 4y ago
        Somewhat relevant, always good to keep in mind: https://m.youtube.com/watch?v=d-7o9xYp7eE https://m.youtube.com/watch?v=d-7o9xYp7eE
    • bambax 4y ago
      > while he was parading on social media for god knows what reason instead of shutting his mouth Matt Levine: > “Sam Bankman-Fried Should Shut Up, Bernie Madoff’s Lawyer Says,” (...) perhaps it is one more case of us watching in real time as crypto re-learns the lessons of traditional finance. Maybe in six months all the busted crypto leaders will be saying “oh wow we should not have given all those interviews.”
    • wmil 4y ago
      I think the cocktail of designer stimulants he took every day had some effect on it.
      • shapefrog 4y ago
        Half (probably 3/4) of silicon valley is on the same cocktail... also popular in schools, college campus, law, banking, politics and even recent presidents had the same cocktail of pills ...
  • jmyeet 4y ago
    As others have mentioned, there is circumstantial evidence in that she was photoographed recently at a Lower Manhattan Starbucks quite close to the Southern District of New York (who would handle any Federal prosectuion like this as it realtes to securities fraud). But you have to look at the larger picture: The Federal prosectuion conviction rate is 95%. The Federal government is very good at getting prosectuions in cases they choose to prosecute. They tend to plea out cases that are riskier. A key tactic in doing this is they get one or more cooperating witnesses. That witness gets a better deal in exchange for their testimony that pretty much turns the case into a lock. It's classic Prisoner's Dilemma. The first to take the deal is always the best off. Lawyers know it so if their clients are at risk, they'll tend to push their clients to be the one to take it. Ellison will most likely have direct knowlege of the situation and will be able to produce evidence such as emails and texts. Importantly, she's not the main guy. It's SBF who opened up custodial assets to be used in that way (or so it seems). That's the primary offence here. It's a bit like how in a murder case the cooperating witness might be a driver or a witness but unlikely to be the actual shooter. They may get embroiled in a felony murder conviction otherwise thanks to the US-specific pecularity (and some, including myself, would call a miscarriage of justice) of felony murder but that's another story. So Ellison fits the profile of an ideal cooperating witness, there's supporting circumstancial evidence and the fact that Federal prosecutors indicted SBF so quickly further suggests a cooperating witness with firsthand khowledge or they'd otherwise be mired in subpoenas for communications, conducting interviews and otherwise building a case. A criminal indictment represents the end of the investigation, not the beginning. SDNY has already built their case to their satisfaction. People seem to think an arrest happens and the investigation continues. That's not how Federal prosecutions works.
    • thelogicguy 4y ago
      A necessary conceit of the prisoner's dilemma is that they can't communicate, and therefore can't strategize together so that doesn't exactly apply here. It's just self preservation.
      • jmyeet 4y ago
        The prisoner's dilemma isn't predicated on the inability to communicate. It's predicated on (the lack of) trust. Put it this way: if you could lock in your decisions in an atomic fashion there would be no dilemma.
  • deleted 4y ago
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  • 3327 4y ago
• whaleofatw2022 4y ago
  One would hope whatever she gave them is bulletproof. Cons gonna con...
  • ceejayoz 4y ago
    I mean, it doesn’t hurt that he’s been publicly incriminating himself to anyone who will listen.
• tomp 4y ago
  Hm... does that mean she gets away scot-free? Not sure that's fair, she seems very complicit.
  • glenngillen 4y ago
    Wasn’t she only CEO for the last couple of months? The previous CEO seems to have completely dodged any scrutiny in all of this.
    • dereg 4y ago
      Caroline and Sam Trabucco were co-CEOs. He too will face the full scrutiny of the DOJ.
      • deleted 4y ago
        [deleted]
      • shapefrog 4y ago
        Apparently the "citizen journalists" who have been ahead of hte story and breaking it minute by minute are not so worried about him.
  • xnyan 4y ago
    2nd in command is a great position to be in when defecting to the government, but probably not scot-free. Expect a year or two in jail vs 3-5 for SBF.
    • gonzo41 4y ago
    • coolspot 4y ago
      Nah, she is connected and willing to cooperate. No jail time for sure.
      • deleted 4y ago
• pclmulqdq 4y ago
  She is also VERY well connected to the SEC. It wouldn't surprise me if they gave her a sweetheart deal.
  • deleted 4y ago
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  • kasey_junk 4y ago
    Bernie Madoff sat on SEC advisory committees and was the onetime chairman of Nasdaq.
    • lokar 4y ago
      He gave up
    • PaulHoule 4y ago
      Madoff's scam was so baffling because his contributions to finance before that were legendary. He practically invented modern market making but his firm and others following in his footstep were wiped out by HFTs.
      • seanhunter 4y ago
        Madoff practically invented modern market-making? Do you have a citation for that? I’ve certainly never heard that claim before.
        • PaulHoule 4y ago
          https://news.fintechnexus.com/payment-for-order-flow-bernie-madoffs-golden-goose/ https://news.fintechnexus.com/payment-for-order-flow-bernie-... Is one of many articles on the topic. I had an old textbook (maybe 2003) textbook on markets and trading that had a sidebar that lionized him but almost everything on the web is colored by his scam.
      • MrMan 4y ago
        I think they were gradually decimated due to shrinking margins but that was partly due to decimalization, Reg NMS and other market structural reforms / changes. Then HFTs stared to flourish which drove the older market makers out of the picture.
• lzaaz 4y ago
  Poor guy didn't read about Adam and Eve.
  • frupert52 4y ago
    That’s because he refused to read
• synergy20 4y ago
  • hsbauauvhabzb 4y ago
    What does her polyamory have to do with anything other than a thinly veiled attempt to slut shame a woman?
    • synergy20 4y ago
      just a quote from wikipedia as a whole paragraph, you can verify it, did not think that much, no need to over react, everyone is so sensitive these days.
      • hsbauauvhabzb 4y ago
        Whether or not you thought about it much, or whether you think I’m over reacting and calling me sensitive is you disregarding your own actions rather than acknowledging the sexist undertones. Bet your mother is proud.
      • c22 4y ago
        But what does it have to do with this thread or the comment you replied to? If I wanted to read random wikipedia snippets I'd be at wikipedia.org, not news.ycombinator...
• yabatopia 4y ago
  Maybe they don't need a cooprerating witness or special deals. Apparently the companies were really badly run, with lots of clear-cut violations, making it very easy to file charges. From The Verge article about the arrest of Bankman-Fried ( https://www.theverge.com/2022/12/12/23506483/sam-bankman-fried-arrest-us-extradition-ftx-crypto https://www.theverge.com/2022/12/12/23506483/sam-bankman-fri... ) : John J. Ray III, who has taken over for Bankman-Fried as CEO of FTX and whose credentials include supervising the corporate cleanup after Enron imploded, has already said, 'Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.'
  • throwaway2037 4y ago
    John J. Ray III is a star. The board did right to hire him for the clean-up. I am sure he is cooperating closely with US and Bahamian authorities for criminal evidence gathering. And, he is being paid ~2.6M USD annualised (1,300 USD per hour, 2,000+ hours per year). Seems cheap to clean-up that mess. It might take 5-10 years for full clean-up and wind-down. As the mess is so extensive, I wonder if some board members will also be under investigation. While board member normally have liability insurance, it won't help if crimes were committed. Source on pay: FT.com -> https://www.ft.com/content/5d826ca9-389e-41ec-a38b-da43211da974 https://www.ft.com/content/5d826ca9-389e-41ec-a38b-da43211da... FTX disclosed in court papers that Ray was billing his time at $1,300 an hour and had been paid a $200k retainer fee.
    • shapefrog 4y ago
      FTX's Board of Directors actually consisted of just one person: the controlling shareholder, Mr. Bankman-Fried
      • throwaway2037 4y ago
        The last press release I could find is here: https://www.prnewswire.com/news-releases/ftx-us-derivatives-announces-board-of-directors-301463938.html https://www.prnewswire.com/news-releases/ftx-us-derivatives-... FTX US had (at least) nine board members. FTX International (non-US entity) was private, as I understand, and essentially unregulated, so who cares about the board.
• hintymad 4y ago
  I remember there was a picture of her in a NYC Starbucks in the past week. Someone predicted she had made a deal with DA and SBF would be indicted soon. Now it appears the prediction was spot on.
  • sriram_sun 4y ago
    There aren't too many variables here to work with. One of the predictions is bound to be "spot on."
• helsinkiandrew 4y ago
  If the charges include manipulating the prices of TerraUSD and Luna earlier in the year - that ironically probably caused the FTX implosion, it's hard how to see Caroline Ellison as head of Alameda wasn't heavily involved in major criminal activities. https://www.nytimes.com/2022/12/07/business/ftx-sbf-crypto-market-investigation.html https://www.nytimes.com/2022/12/07/business/ftx-sbf-crypto-m... Getting one of two culpable people to testify against the other and let them off the hook seems a dreadfully lazy approach to prosecution.
  • deleted 4y ago
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  • boppo1 4y ago
    I suspect she may be leveraging political connections.
    • michaelt 4y ago
      It's possible - but politicians don't stick their neck out very far for past donations, it's the prospect of future donations which is important. If you've just got wiped out financially? Unless they can expect donations from your allies, or from your peers in industry who are eager to see you released, they can just stop returning your calls.
  • hnmullany 4y ago
    You don't know her deal yet. She might still be going to prison. (If my copious Law & Order watching is anyway accurate.)
    • harambae 4y ago
      Oddly enough, the person with the most insights into SBF/Caroline and prison time is Shkreli... https://www.youtube.com/watch?v=2ivqzyjfHG0 https://www.youtube.com/watch?v=2ivqzyjfHG0 he walks through a lot of how the points are calculated.
  • dragonwriter 4y ago