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I think this article is "directionally correct", but wrong (or at least misleading) about some key details. > Instead, Bankman-Fried’s parents promised to pled

by nkurz 4y ago

I think this article is "directionally correct", but wrong (or at least misleading) about some key details. > Instead, Bankman-Fried’s parents promised to pledge their Palo Alto, California, home as collateral. The Palo Alto home is rumored to be worth $4 million. And that is the full extent of the collateral pledged to guarantee the $250 million bond. No other collateral was posted or promised. The first couple sentences are true: his parents have agreed to convey title to their ~$4M Palo Alto house to the court as partial guarantee of the $250M bond. But I think the last sentence is contradicted by the actual bond agreement: "2 non-parent sureties to sign bonds in lesser amounts to be agreed to" This is in all-caps at the middle of page 5 of https://storage.courtlistener.com/recap/gov.uscourts.nysd.590940/gov.uscourts.nysd.590940.14.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.59.... Which is to say, at least according to the published agreement, it is not true that "no other collateral was posted or agreed to". > Yes, you read that right. Bankman-Fried walked out of court a free man by signing a piece of paper where he promised to pay the court $250 million if he decides to flee to another country with no extradition. It is true that this is all that Sam did, but it intentionally fails to mention that 3 (or perhaps four?) additional people have also signed up for the same agreement to be responsible for the gigantic (potentially non-collectible?) amount should Sam disappear. Presumably the hope is that they are able to apply social pressure to keep him from disappearing. Given that much of the failure of FTX related to overvaluing of collateral, the irony is definitely strong. But I think we should still try to be accurate when pointing out the apparent absurdities. Further corrections of course appreciated if I'm wrong about these corrections. Edit: dragonwriter points out below that the "2 non-parent sureties" are likely just additional signed surety bonds, and thus the article is probably correct the "no other collateral was posted or agreed to".

maxbond 4y ago
Seems like there's a group of people who want him to be obliterated and will be dissatisfied at every step if it isn't mounting his head on a pike. It's honestly one of the more disturbing parts of the story for me.
- cageface 4y ago
  At least in my circle the people screaming the loudest for his head are the same people that are adamantly opposed to any government regulation of crypto. I think they're just mad that SBF spoiled their get rich quick scheme.
  - plsbenice34 4y ago
    He was pushing for absurd regulations himself, such as KYC for front-ends of decentralised exchanges, so it is no surprise that they weren't his fan. More importantly, people who are in those groups tend to be aware how much he stinks of government corruption given his family ties, religion etc. - so it has always been assumed that he will get unfair treatment - and now it is seemingly turning out to go as expected. He is part of 'the establishment' that acted against the interests of the space. Regulations are also seen as only protecting the interests of the traditional financial system rather than actually protecting people; that's exactly how it seems to go so far
    - maxbond 4y ago
      > More importantly, people who are in those groups tend to be aware how much he stinks of government corruption given his [...] religion... He "stinks of corruption" in part because he's Jewish? How am I meant to interpret this as anything other than bigotry?
    - cageface 4y ago
      How is it turning out as to be expected? He's being prosecuted and faces a very severe sentence if convicted.
- JumpCrisscross 4y ago
  > group of people who want him to be obliterated and will be dissatisfied at every step if it doesn't result in his head on a pike He’s a fraudster who was content evading justice in the Bahamas for years to come. Of course there is popular desire for retribution, even beyond that which exists and continues to build against crypto at large.
moralestapia 4y ago
What a weird argument you're making, >2 non-parent sureties to sign bonds in lesser amounts to be agreed to I'll be extremely generous and interpret that as two bonds worth 3.99...M each or the absolute max. value that is less than the 4M house. Would you extend a 250M credit to someone who offers you 11.8M in illiquid assets? Also, they happen to be the parents of one of the biggest fraudsters in recent years ... Come on, this is ridiculous.
- JumpCrisscross 4y ago
  > they happen to be the parents of one of the biggest fraudsters in recent years Evidence seems to be building that, if they weren’t complicit, they at least benefited from his fraud.
  - texasbigdata 4y ago
    Arguably their careers are now both collectively and irreversibly ruined. Like the Nobel prize winner that invented some major form of fertilizer that turned out to be a nazi
    - shdhjdj 4y ago
      Fritz Haber was not a Nazi. In fact, he was Jewish, and was forced to leave Germany when the Nazis came to power. His involvement with chemical weapons was during WW1; he died in 1934.
      - selimthegrim 4y ago
        In addition his involvement with chemical weapons took a huge toll on his wife Clara to whom he wasn’t the nicest to begin with
    - purpleflame1257 4y ago
      Assuming you are talking about Haber, you couldn't be more wrong. He was actually a German Jew (convert to Lutheranism) who was forced out of his position when then Nazis came to power than died en route to Mandatory Palestine in 1934. He discovered the Haber process around 1911, which was well before WWII and it was intended for fertilizer only. Eventually people realized that mass ammonia production was very helpful for chemical warfare, and many (including French nobel winners like Grignard) engaged in it. The Zyklon B synthesis is a red herring.
dragonwriter 4y ago
> Which is to say, at least according to the published agreement, it is not true that "no other collateral was posted or agreed to". This is wrong, a signed surety bond is not collateral, its a binding commitment to liability. Security/collateral for that liability is a separate thing, abd the only security provided is the house. OTOH, federal law allows fully unsecured, personal bond of the accused if the jidge thinks it is sufficient, so having any security or surety (where this agreement has both) is optional, so really this just seems to be a bunch of people who don’t know how federal bail works being shocked not by something out of norms, but because their understanding of the norms is inaccurate.
- loeg 4y ago
  Extending a large unsecured personal bond to a fraudster seems pretty useless and I think laypeople can recognize that.
  - tiahura 4y ago
    Hence, the ankle monitor and his parents’ house. And judge, don’t forget, Mr. SBF voluntarily waived extradition.
    - loeg 4y ago
      His parents' house is the secured portion of the bond! It's $4M, which is a lot, but nothing compared to the unsecured $246M IOU.
      - dragonwriter 4y ago
        Its not an IOU. Bail is not a loan. People often have the model that the premium paid to an arms-length bail agent is a finance charge on a loan, which is (1) not strictly true, because bail agents don't deposit the full bail with the court and get it back, (2) to the extent it is, while not accurate, a not-too-bad loose approximation of how doing business with a bail agent works, since a bail agent is a for-profit business weighing the risk of flight and the cost of recovery and/or bail forfeiture, within state regulations. But that's not what courts are trying to do with bail, so when you have a bond that isn't from a bail agent, the model that is tolerably-incorrect in the bail agent case becomes wildly inapplicable.
itslennysfault 4y ago
Still seems like the system is bending over backwards to give him some freedom (and chance to run) before spending the rest of his youth in prison. The alternative is they keep him in jail pending trial if he can't come up with the $25m (10% bond). This is the reality any "normal" criminal would face. Why does he get special treatment?
- whatshisface 4y ago
  Perhaps bail is lower for people with lesser means. I know I haven't heard of $25M figures thrown around very often.

by nkurz 4y ago

maxbond 4y ago

Seems like there's a group of people who want him to be obliterated and will be dissatisfied at every step if it isn't mounting his head on a pike. It's honestly one of the more disturbing parts of the story for me.

cageface 4y ago
At least in my circle the people screaming the loudest for his head are the same people that are adamantly opposed to any government regulation of crypto. I think they're just mad that SBF spoiled their get rich quick scheme.
- plsbenice34 4y ago
  He was pushing for absurd regulations himself, such as KYC for front-ends of decentralised exchanges, so it is no surprise that they weren't his fan. More importantly, people who are in those groups tend to be aware how much he stinks of government corruption given his family ties, religion etc. - so it has always been assumed that he will get unfair treatment - and now it is seemingly turning out to go as expected. He is part of 'the establishment' that acted against the interests of the space. Regulations are also seen as only protecting the interests of the traditional financial system rather than actually protecting people; that's exactly how it seems to go so far
  - maxbond 4y ago
    > More importantly, people who are in those groups tend to be aware how much he stinks of government corruption given his [...] religion... He "stinks of corruption" in part because he's Jewish? How am I meant to interpret this as anything other than bigotry?
  - cageface 4y ago
    How is it turning out as to be expected? He's being prosecuted and faces a very severe sentence if convicted.
JumpCrisscross 4y ago
> group of people who want him to be obliterated and will be dissatisfied at every step if it doesn't result in his head on a pike He’s a fraudster who was content evading justice in the Bahamas for years to come. Of course there is popular desire for retribution, even beyond that which exists and continues to build against crypto at large.

moralestapia 4y ago

What a weird argument you're making, >2 non-parent sureties to sign bonds in lesser amounts to be agreed to I'll be extremely generous and interpret that as two bonds worth 3.99...M each or the absolute max. value that is less than the 4M house. Would you extend a 250M credit to someone who offers you 11.8M in illiquid assets? Also, they happen to be the parents of one of the biggest fraudsters in recent years ... Come on, this is ridiculous.

JumpCrisscross 4y ago
> they happen to be the parents of one of the biggest fraudsters in recent years Evidence seems to be building that, if they weren’t complicit, they at least benefited from his fraud.
- texasbigdata 4y ago
  Arguably their careers are now both collectively and irreversibly ruined. Like the Nobel prize winner that invented some major form of fertilizer that turned out to be a nazi
  - shdhjdj 4y ago
    Fritz Haber was not a Nazi. In fact, he was Jewish, and was forced to leave Germany when the Nazis came to power. His involvement with chemical weapons was during WW1; he died in 1934.
    - selimthegrim 4y ago
      In addition his involvement with chemical weapons took a huge toll on his wife Clara to whom he wasn’t the nicest to begin with
  - purpleflame1257 4y ago
    Assuming you are talking about Haber, you couldn't be more wrong. He was actually a German Jew (convert to Lutheranism) who was forced out of his position when then Nazis came to power than died en route to Mandatory Palestine in 1934. He discovered the Haber process around 1911, which was well before WWII and it was intended for fertilizer only. Eventually people realized that mass ammonia production was very helpful for chemical warfare, and many (including French nobel winners like Grignard) engaged in it. The Zyklon B synthesis is a red herring.

dragonwriter 4y ago

> Which is to say, at least according to the published agreement, it is not true that "no other collateral was posted or agreed to". This is wrong, a signed surety bond is not collateral, its a binding commitment to liability. Security/collateral for that liability is a separate thing, abd the only security provided is the house. OTOH, federal law allows fully unsecured, personal bond of the accused if the jidge thinks it is sufficient, so having any security or surety (where this agreement has both) is optional, so really this just seems to be a bunch of people who don’t know how federal bail works being shocked not by something out of norms, but because their understanding of the norms is inaccurate.

loeg 4y ago
Extending a large unsecured personal bond to a fraudster seems pretty useless and I think laypeople can recognize that.
- tiahura 4y ago
  Hence, the ankle monitor and his parents’ house. And judge, don’t forget, Mr. SBF voluntarily waived extradition.
  - loeg 4y ago
    His parents' house is the secured portion of the bond! It's $4M, which is a lot, but nothing compared to the unsecured $246M IOU.
    - dragonwriter 4y ago
      Its not an IOU. Bail is not a loan. People often have the model that the premium paid to an arms-length bail agent is a finance charge on a loan, which is (1) not strictly true, because bail agents don't deposit the full bail with the court and get it back, (2) to the extent it is, while not accurate, a not-too-bad loose approximation of how doing business with a bail agent works, since a bail agent is a for-profit business weighing the risk of flight and the cost of recovery and/or bail forfeiture, within state regulations. But that's not what courts are trying to do with bail, so when you have a bond that isn't from a bail agent, the model that is tolerably-incorrect in the bail agent case becomes wildly inapplicable.

itslennysfault 4y ago

Still seems like the system is bending over backwards to give him some freedom (and chance to run) before spending the rest of his youth in prison. The alternative is they keep him in jail pending trial if he can't come up with the $25m (10% bond). This is the reality any "normal" criminal would face. Why does he get special treatment?

whatshisface 4y ago
Perhaps bail is lower for people with lesser means. I know I haven't heard of $25M figures thrown around very often.