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Where did FTX customer money go? Firm says Bankman-Fried took $2.2B
- deleted 4y ago[deleted]
- sposeray 4y ago[dead]
- ilrwbwrkhv 4y agoSequoia has the rest.
- Shank 4y ago> The other payment and loan totals described by FTX yesterday were $587 million to Nishad Singh, $246 million to Zixiao "Gary" Wang, $87 million to Ryan Salame, $25 million to John Samuel Trabucco, and $6 million to Caroline Ellison. Singh, Wang, and Ellison have pleaded guilty to criminal fraud charges and are cooperating with government prosecutors. SBF running off with $2.2B really makes Caroline's $6m look quaint. I mean, why even go after her for (relative) pennies? The compensation gap between SBF and his underlings just goes to show you that wealth inequality exists even in corrupt organizations. Her charges will be far less, but it goes to show you that even in crime you're being stiffed unless you're at the absolute top of the food chain.
- makestuff 4y agoThey went after her to get to SBF. Basically a "you cooperate with us or you could end up with 20 years in prison yourself." While SBF received much more, I wonder how much in total benefits everyone received. The penthouse, private jets, and vacations probably add up quick.
- HWR_14 4y agoCompared to SBF's 2.2 billion, Singh's 587 million or even Wang's 246 million, a couple of years of jetsetting in private jets and free rent on an apartment is a rounding error.
- tannhauser23 4y agoThey're going after her because she enabled the much larger theft, not just because she took six mil herself.
- HWR_14 4y agoI understand why they went after her (although stealing 6 million should also be punished, even if no one else stole anything). I was respond to: > While SBF received much more, I wonder how much in total benefits everyone received. The penthouse, private jets, and vacations probably add up quick. They don't add up quick. Not in any meaningful sense.
- seviu 4y agoI wonder why nobody is talking about Trabuco. He was the one Carolina replaced just months away from FTX going down. He is probably more guilty than her. He was however smart enough to see what was cooking and decided to walk away.
- tempsy 4y agothis is not “compensation”. it was money borrowed from the company.
- wmf 4y agoIf it was truly borrowed, how would it have been repaid? From future compensation. It's just shifting compensation in time.
- runako 4y ago> why even go after her for (relative) pennies? Because (potentially) stealing $6 million is still a very large crime in the absolute sense, even if it is smaller than other related crimes. Because it would be bad to alert white-collar criminals to the fact that they can escape prosecution by not being the largest participant in the criminal enterprise. Because $6 million is roughly 1000x larger (not a typo) than the typical bank robbery, which carries a 20-year sentence, and we don't advocate for non-prosecution of $500 bank robberies. Because it's only fair in a justice system that routinely imprisons people for stealing much smaller amounts.
- dralley 4y agoAnd because she's a juicy target for flipping on the rest of them. In the end she's going to make off much better than the rest, in all likelihood.
- runako 4y agoMaybe? I would imagine their case is pretty strong without her flipping on the rest of them. She will get some credit for pleading guilty, but she was CEO of a criminal enterprise while it was actively involved in criminal activity. She's not going to die old in prison, but in all likelihood she will do at least 10-15 years. As things stand today, she could be sentenced to 110 years for what she's already pled to; she's really got to make the prosecutors happy if she ever wants to live outside again.
- edmundsauto 4y agoThere is often lots of evidence in fraud cases of what happened, but the mens rea of knowingly committing fraud is bolstered by having a close partner testify. It can otherwise be difficult for the jury to differentiate negligent incompetence from willful fraud, especially in complex scenarios like most financial fraud.
- cipheredStones 4y agoIf I've learned anything by reading Popehat (Ken White), it's that the "faces up to X years in prison" lines you see in news articles are totally uninformative - there's a complex set of sentencing guidelines that determines the actual range of possibilities. I don't know what that range is in this case, but I very much doubt the top end is anywhere close to 110 years. Edit: One such article for illustrative purposes: https://www.popehat.com/2013/02/05/crime-whale-sushi-sentence-eleventy-million-years https://www.popehat.com/2013/02/05/crime-whale-sushi-sentenc... . In this case, the news-headline number is "up to 77 years" and the plausible range Popehat calculates is 2-2.5 years.
- lukas099 4y ago> wealth inequality exists even in corrupt organizations. I'd argue that it's worse in corrupt organizations. Sometimes much worse.
- Invictus0 4y agoIs this the most white collar comment on HN? I'm sure you're also in favor of prosecuting the guys stealing detergent at CVS right?
- MengerSponge 4y agoOur little monkey brains can't really reason about numbers that big. At some point it just becomes $*illions. The Other Guys played with this for comedic effect, but you see the same nonsense everywhere.
- cornholio 4y agoEllison was Bankman's principal co-conspirator, fully aware that Alameda was a bucket shop operating on money unlawfully borrowed from FTX customers, with privileged access to the exchange thus further defrauding customers, and a massive money black whole due to the trades she organized and supervised. This hemorrhaging of money bankrupted FTX in the end, not the occasional billion here and there borrowed by Bankman. Ellison couldn't have not known this state of affairs, yet she kept the lights on and most of her staff in the dark until the very last day when everything started crumbling around her. She fully deserves to go to jail for a long time, but probably won't since she was smart enough to get the early worm in terms of deals with the prosecution.
- deleted 4y ago[deleted]
- vkou 4y ago> I mean, why even go after her for (relative) pennies? Because when the feds go after her, she is strongly incentivized to flip, and cooperate in kicking the stool out from under SBF. And because 6 million is big enough of a fraud that you can do a decade for it in Club Fed all on its own. If that were the only fraud that took place with FTX, she'd still deserve to be fully investigated and prosecuted for it.
- roland35 4y agoThere is definitely enough "crime" to go around here. In any other context $6,000,000 is a heck of a lot of theft!
- wnevets 4y ago> The compensation gap between SBF and his underlings just goes to show you that wealth inequality exists even in corrupt organizations. Related to this is an interesting piece from Freakonomics[1] about drug gangs. They claim wealth inequality existing in corrupt organizations like drug gangs is a necessity. [1] https://genius.com/Steven-levitt-the-freakonomics-of-mcdonalds-vs-drugs-annotated https://genius.com/Steven-levitt-the-freakonomics-of-mcdonal...
- eastbound 4y ago> The compensation gap between SBF and his underlings just goes to show you that wealth inequality exists even in corrupt organizations. In the first Freakinomics book you learn that they once had found the accounting of a major drug cartel in NYC and the wage distribution from shoofer (?) on the street to the refiller, the dealer, the neighborhood lord, all the way to the top manager… was the same as at McDonald’s. Feels like none of those laws helped, we’re stuck with a “natural distribution”.
- owaislone 4y ago> I mean, why even go after her for (relative) pennies? Because it is still a crime and it would signal other criminals that they can be part of billion dollar scams, make 10s of millions and not be charged of fraud.
- rocket_surgeron 4y agoWe are very lucky that cryptobros are arrogant to the point of having a god complex. In surgeons it means they have the confidence to perform some of the most difficult tasks a human being can undertake and is a net positive even though it makes them difficult to be around. With cryptobros it makes them easier to catch after their schemes inevitably blow up because in their arrogance they refuse to consider than anyone could ever be smart enough to catch on to them.
- lukas099 4y agoI do not want my surgeon to 'have a god complex'. I want them to reasonably weigh the relative risks and payoffs of every job.
- RandomLensman 4y agoIf the surgery is risky but the right thing, you might want people willing to take a risk in the belief they can do it and not ruin some success statistic. Might not be a "god complex" but quite a lot of confidence and ability not to panic.
- lukas099 4y agoYes, and I want my surgeon who takes good risks and doesn't take bad ones.
- rocket_surgeron 4y agoMy surgeon had (well, has, but also had) a god complex and pulled off one of the riskiest surgical procedures currently performed. Now I can walk. Hooray for god complexes!
- klyrs 4y agoMy dad's surgeon had a god complex and performed a surgery within an hour of getting off a transpacific flight, confident that he'd be immune sleep depravation and jet lag. My dad died because the surgeon cut something he shouldn't have cut. Glad you can walk though.
- misiti3780 4y agoI cant wait to see his sentence. He's going away for decades.
- xiphias2 4y agoFor the amount he robbed and the lives he destroyed he should go away for many lifes. Also he should already be in prison, as every second he's not spending there is a second robbed away from his jail time.
- misiti3780 4y agothe wheels of justice move very slowly in the US. in 2014 I worked for a startup where the founder stole all the money and spent it on his lifestyle. he stole roughly 900K. He confessed via email and I got access to the bank accounts. Took them to the same unit that is going to prosecute SBF. Took almost 4 years for him to plead guilty, he didn't spend a day in prison, and he has his whole life to pay us all back, without interest. Naturally, he is trying to be a christian influencer in Nashville.
- andreareina 4y agoI am dumbfounded that they haven't yanked his bail given all the shenanigans he's been up to.
- sgammon 4y ago[flagged]
- sgammon 4y agowhy am i getting downvoted. he has said himself he's not a strong coder? u guys are weird
- justincredible 4y ago[dead]
- bitxbitxbitcoin 4y agoBecause the comment isn’t in line with HN rules.
- sgammon 4y agowhat do you mean? how so? it is clearly labeled as a joke, I’m honestly curious.
- churchill 4y agoHas anyone else noticed that Sam Trabucco managed to run off without a trace? No one even mentions him much. He was Alameda's former CEO & he resigned just days before FTX collapsed
- SilasX 4y agoI had to look that up — he resigned in August 2022, over two months before the FTX collapse on ~November 6. https://en.wikipedia.org/wiki/Sam_Trabucco https://en.wikipedia.org/wiki/Sam_Trabucco
- carbonatedmilk 4y agoThis just keeps getting weirder. From the infamous irony quotes 'balance sheet': https://d1e00ek4ebabms.cloudfront.net/production/7ab64a3b-6ce0-47cc-96ac-5e2d2a8c5d6c.png https://d1e00ek4ebabms.cloudfront.net/production/7ab64a3b-6c... Liablities: $8.8bn of customer deposits * $6.6bn-ish in USD or USDT * $2.2bn in crypto * I'm assuming the 'poorly labelled $8bn' is included in this amount, and you don't add it Assets: $2.5bn? * $1.5bn of liquid assets. * $1bn-ish? of illiquid assets. * Most of these numbers are just made up, but let's finger-in-the-wind them at $1bn ($500m at least is in 'locked USDT') Now we find out they have another magical pool of money, the $3.2bn that they'd taken out of FTX and put in their pockets. So the position looks really different: They had $8.8bn on one side of the ledger, and $5.7bn on the other side - After the massive bank run which collapsed the price of their shitcoins. It appears they had the money to pay out most of their USD / USDT depositors at $0.85 on the dollar, which is obviously still 'insolvent', but possibly enough to survive a bank run (almost) all the way down to the ground (If you suspend redemptions of your crypto and persuade 15% of your USD depositors not to pull their money out) The final question is: Who did they owe the liabilities to? If some of those 'deposits' were actually owed to other FTX-associated entities, it seems even more survivable, and would probably have preserved some of the value of their shitcoins
- phoenixreader 4y agoHow can SBF ever be convicted now? Even if he spends just 10% of that in legal fees (220m), he will be able to have a legal team no government can match. He can afford to have countless mock trials and to approach countless expert witnesses before finding one that aligns with him (e.g. an expert that portrays him as ignorant rather than criminal). And these are just the legal methods to obstruct justice with 2.2B. If he is willing to stray to the illegal side, he can also just straight up pay people an unspeakable sum to testify for him. Perjury only has a sentence of several years. Heck, he can even offer to return or donate the 2.2B (assuming only he knows where it is) in exchange of a lighter sentence. Will any government refuse that offer? 2.2B is the wage of thousands of people for 10 years. No one with a personal wealth of more than 2B at the time of arrest has ever served a single day in jail in the United States. People only go to jail if they have lost their billions.
- walkhour 4y agoYour understanding of the judicial system is off. All prediction markets estimate he'll be away decades. If you're confident in your assessment, you can make a lot of money.