14 ms·

SBF’s legal defense is being funded with Alameda money he gave his father

344 points by lxm 4y ago

djbusby 4y ago
And Dad is a Law Professor. Hope he's not teaching the ethics course.
- fullstop 4y ago
  I've known a few people who have taught ethics courses. None of them were ethical by any stretch of the imagination. Maybe I've just met a bad batch.
  - Veen 4y ago
    There are studies that show ethicists are no more ethical than the general population. https://www.tandfonline.com/doi/full/10.1080/09515089.2012.727135?src=recsys https://www.tandfonline.com/doi/full/10.1080/09515089.2012.7... > However, on no issue did ethicists show unequivocally better behavior than the two comparison groups. https://www.tandfonline.com/doi/abs/10.1080/09515089.2019.1587912?journalCode=cphp20& https://www.tandfonline.com/doi/abs/10.1080/09515089.2019.15... > Our results indicate a successful replication of the original effect that ethicists do not behave any morally better compared to other academics across the vast majority of normative issues.
    - notch898a 4y ago
      I wonder if fundamental ethical values are mostly absorbed in childhood or through genetic instinct. At some point it seems most people would just use greater knowledge of law, ethics, etc to either become better at arguing why what they did was right or wrong or use the details to get better at not getting caught. Teaching a grown adult to internalize a new value system would appear quite difficult from my observation.
      - throwawaysleep 4y ago
        I have not met many people who wouldn't compromise their ethics for some benefit. This is especially true if they think nobody will find out. So I am not sure there are fundamental ethical values.
        repomies69 4y ago
        Also, the tendency to do so depends on your financial status. Poor people will happily sell thei ethics, those who are more well off don't have to.
        mellavora 4y ago
        I've usually seen the opposite.
        fullstop 4y ago
        I'd argue that the opposite is more common. People who are well off can often feel that they are entitled to things.
        djbusby 4y ago
        The situation we're discussing involves wealthy folk doing unethical things.
    - sidewndr46 4y ago
      Why would anyone expect this in the first place? It'd be like expecting the pastor to be more or less religious, or more moral than his following. Ultimately they are just going to be a single sampling of the population, which means they have a pretty reasonable probability of being average.
      - colpabar 4y ago
        Well idk about you but if I wanted to learn karate I would find an instructor who is better at karate than the average person to learn from.
        tsgagnon 4y ago
        We are talking about being taught in an academic context, not a practical context. So, a better analogue might be that you wouldn't necessarily expect a martial arts historian to be better at the application of martial arts than the average person.
        dmurray 4y ago
        I think I would?
      - capableweb 4y ago
        Well yes, I think the usual intuition is that the people who preach something (religiously or not) should be better at what they are preaching than the ones they are preaching to. Right or wrong, I think that's a pretty common presumption to make. Might be small sample, but that sample is also biased to have a lot of knowledge about what they are preaching (supposedly), meaning they put higher importance about it compared to other things.
      - nathan_compton 4y ago
        ??? You'd expect Pastors or Ethicists to be more moral/ethical because they spend a lot of time thinking about being moral/ethical compared to members of the general population. Seems pretty intuitive to me.
    - knodi123 4y ago
      Kinda like how marriage therapists have slightly higher divorce rates than the national average? https://psychcentral.com/pro/do-marriage-family-therapists-have-better-marriages#1 https://psychcentral.com/pro/do-marriage-family-therapists-h...
      - 0cf8612b2e1e 4y ago
        Makes sense to me. I suspect most people are not quick to end a bad marriage, and will hold out hoping things will improve. Marriage therapists might be more likely to act on a bad situation and extricate themselves from it.
      - jeffrallen 4y ago
        And IT people can't get the printer to work either?
    - mrguyorama 4y ago
      How can they claim any could have "unequivocally better behavior"? What is their ground source of truth for morals?
      - GalenErso 4y ago
        Well, asking the ethicists if the ethicists are acting ethically would not be unbiased.
  - Zetice 4y ago
    You've got to know where the line is to teach people not to cross it!
    - bee_rider 4y ago
      Yeah for most of us, ethics is more of a “know it when you see it, don’t get to close to the line” sort of thing. Although there definitely are hard ethical question out there, so the study of it is good, they just don’t show up that often in day-to-day life.
  - rootsudo 4y ago
    "None of them were ethical by any stretch of the imagination." At least they know the course material well. Isn't that the reason why you're really enrolling in the class for?
  - deleted 4y ago
    [deleted]
  - r00fus 4y ago
    Naturally Voldemort cosplaying as a "defense against the dark arts" instructor was clearly an implication that regulatory capture is way to hide power.
- deleted 4y ago
  [deleted]
- skeeter2020 4y ago
  If I was a student in his ethics course it would be a great opportunity to practice grilling a hostile witness
- jeffbee 4y ago
  Has anyone ever studied ethics at Stanford? As far as I can tell the subject is not required. CS undergrads must fulfill a "Technology in Society" requirement but it can be satisfied with bullshit like "Technology Entrepreneurship", a series of guest lectures by VCs, which is almost the opposite of studying ethics. Nothing about a university that would let Condi Rice serve as provost screams "ethics", frankly. Their history is not one that suggests a strong ethical culture.
- mahart 4y ago
  On his staff page he's described as a "leading scholar in the field of tax law". Maybe he was the one that got FTX on QuickBooks after having been paid for 11 months there.
- watwut 4y ago
  Ethics course is not supposed to make you better person. It teaches you some theories relevant to law practice and regulations layers are under.
  - salawat 4y ago
    ...Actually, it's supposed to equip you to see your actions don't occur in the void; and ensure you at least have some introductory calibration to a moral compass. Is altering a digital artifact for someone else to be used for financial gain on their part ethical? Transitive property says no; you're an accomplice intheir deception. The only people who tend to assert Ethics courses aren't there to help you be a better person are those that never started out with an intention to be ethical at all. At least in my experience.
- deleted 4y ago
  [deleted]
bradleyjg 4y ago
[flagged]
- causality0 4y ago
  Because "gave" could encompass a wide variety of transactions and "gifted" is a specific one.
- stevenpetryk 4y ago
  Gifting is a subset of giving.
- lovich 4y ago
  I’d think that gift is slightly different in this situation in that a gift severs control completely vs theoretically you can give someone an item with the expectation of getting it back. It’s really splitting hairs though, what is your problem with the word gifted? I’ve never seen someone critique it’s use before
  - gwd 4y ago
    It's not slightly different at all. If I say, "The server at the restaurant gave the man a fork", would you think the man expected to walk away with the fork? Or to put it differently: Depositors gave money to FTX, which gave the money to Almeda Research, which gave the money to SBF, who gave it to his father. But only one of these four transactions was a gift.
- chatmasta 4y ago
  Maybe because "gift" has a specific meaning in the tax code, especially with money transfers that involve immediate family members. No idea if that's why Forbes is using that language though.
- welder 4y ago
  To me, using Gift implies his father wrote it off on taxes as part of his lifetime gift exemption ($12.06 million). It just means SBF gave $10M to his father and his father didn't have to pay taxes on that money because he reported it as a gift. It doesn't add much to the story though. Edit: Thanks to comments below I found out the sender pays the tax if over $12.06M not the receiver of the gift.
lordnacho 4y ago
How does the law work? If you nab a pile of money from your customers and give it to your family, and then get sued, what happens? If you lose, does the court reverse all the transactions and give it to the creditors? Or can you just have your parents give you money to live off when you're out of jail? Surely not?
- boeingUH60 4y ago
  It takes time to investigate the transfers and prove they were fraud proceeds before possibly clawing them back...as the investigation lingers, prosecutors will likely ask SBF's dad to return that money.
- mindslight 4y ago
  I believe the creditors would have to challenge the gift as a "fraudulent transfer", based on the idea that at the time the giver knew they were open to a huge liability from having taken the money in the first place. And then another similar step to go after the money that went to the attorneys. And in this case the "creditor" would be the FTX bankruptcy estate, led by whomever has been appointed the receiver. Theoretically they should be working for creditors of FTX, but can obviously have their own motivations of expediency, not wanting to rock the boat by suing another firm, etc.
- nradov 4y ago
  FTX creditors will presumably sue SBF's parents in US civil court and claim fraudulent conveyance. The plaintiffs will certainly ask the court to freeze those assets and not allow them to be squandered on criminal trial defense, but who knows whether the court would approve such a motion.
- kibwen 4y ago
  You always hear RICO get thrown around in these sorts of things, which allegedly allows the government to seize anything obtained as part of a criminal enterprise, but I'd need a lawyer to weigh in and determine whether that's actually true and whether RICO would apply to this case.
  - 4y ago
chollida1 4y ago
Well most fraud trials involve a person stealing directly from their company. Atleast SBF took the extra step of first funneling money to Alameda and then directing Alameda to send it back to him and then send it to his dad as a tax free gift. That way he could honestly say he personally has no money left. That atleast makes it harder for FTX to claw back that money. One interesting thing a lawyer pointed out to me is that a lawyer has a duty to ensure that the money used to pay them wasn't from the proceeds of a crime. I wonder how SBF's lawyers have done thier diligence in this case and satisified themselves that this wont' get them into trouble with the state bar.
- blockwriter 4y ago
  Aren't tax free gifts capped at $14,000.00 per year? Edit: Er, I guess it's $16,000.00 without needing to report it, and then anything above that can be offset against a $12 ish million lifetime exclusion. https://money.usnews.com/money/personal-finance/taxes/articles/gift-tax-tax-rules-to-know-if-you-give-or-receive-cash https://money.usnews.com/money/personal-finance/taxes/articl...
  - rsstack 4y ago
    You need to report a gift over $14k but you don't owe until much higher limits. Same as how people who make very little money have to report income even if it's lower than the lowest tax bracket. Also, as a reminder, the gifter pays the tax and not the person who received the gift. If someone gifts you an illiquid asset, you aren't forced to go into debt to pay a tax. But the gifter has to figure things out on their end.
    - cft 4y ago
      This is correct. The tax thresholds are of the order of 12mm
    - ambicapter 4y ago
      What does the gifter pay tax on? -$14k?
dwighttk 4y ago
This isn’t that money! It’s entirely different money I saved while spending the Alameda cash!
caseysoftware 4y ago
Whoa. My GUESS is that since he's being prosecuted for fraud, et al, they can't say these were illegally obtained (innocent until proven guilty) and therefore they can't seize the funds yet. And if the lawyers are in on it, they're over billing and keeping building an escrow fund that would go back to one of them at the end. The scumminess is rather impressive.
- nradov 4y ago
  Prosecutors might not be able to immediately seize assets, however if they have evidence that those assets were obtained through criminal activity then they can ask the court to freeze the assets pending the outcome of a criminal trial.
- TacticalCoder 4y ago
  > And if the lawyers are in on it, they're over billing and keeping building an escrow fund that would go back to one of them at the end. The ones in charge of the bankruptcy are also bleeding the customers and investors dry. They charged $700 million in the Madoff case. There are $10 bn missing here. It's not unthinkable they'll steal 10% of that. They are vermins, just as scummy as SBF. But it's legal.
- hgsgm 4y ago
  Civil forfeiture law says the money can be seized on mere suspicion of being involved in a crime.
danso 4y ago
(tangent) Ok this confuses me: > (in December, their $1.8 million Palo Alto home was used to secure a $250 million bail package after Bankman-Fried was released on a personal recognizance bond. Their Palo Alto home is worth only $1.8M? Do they live in a 1BR/0.5BA shed? edit: Apparently the assessed value (for property taxes) is $1.8M. But realtor sites estimate it at $3.1M, and it was apparently renting for $12,000/month back in 2013. Still cheaper than I thought for a 4-br home on Stanford's Dish https://sfstandard.com/business/inside-sam-bankman-frieds-parents-beautiful-historic-home/ https://sfstandard.com/business/inside-sam-bankman-frieds-pa...
- dragonwriter 4y ago
  Looking right now at listings in Palo Alto, the few things in that range ($1.5M-$2M) are 2-3 bedroom, 1-3 bath, 1,200-1,900 sq. ft.
- jibe 4y ago
  The house is on the Stanford campus, and is under Stanford’s control. It can only be sold to Stanford employees, so it limits the value.
  - cdolan 4y ago
    I think you make a great point and I agree, but to play devils advocate for a second... Do we think Stanford is lacking in people willing to live there? I bet it may even increase the chance (so long as the HOA is not all that bad!)
    - mattheww 4y ago
      You're right, the thing limiting the value is not demand - there are more than enough faculty and high-level staff that want to live there. The thing limiting the value is the other restrictions that Stanford imposes on these houses - namely they essentially control the price the houses sell for because they all have to be financed through a Stanford-controlled lending program.
  - bee_rider 4y ago
eternalban 4y ago
Forbes has carved a uniquely slimely niche for itself. (These days I almost look at a Forbes promotion of a startup as a negative signal.) At the bottom of that article there are "more from Forbes" stories on the (now) 'bad bad' Sam. Search for Forbes articles from before the reveal for "more from Forbes" stories which I guess they didn't have room to link to in the bottom. (Naturally pointing out Forbes' role in pimping Sam Bankman-Fried in no way is supporting the 'wunderkind' or his & co.'s fraud.)
deleted 4y ago
[deleted]
jayess 4y ago
The FTX bankruptcy trustee will be able to claw it back as an avoidable transaction.
- shapefrog 4y ago
  The FTX bankruptcy trustee will charge $18 million in fees to claw back that 10 mil
  - vkou 4y ago
    The FTX bankruptcy trustee is charging $18 million in fees (or however much he's charging) to run a team of people who have been auditing and unfucking FTX's and Alameda's books for the past four months, and will continue to for a long, long while going forward. He's not paid $18 million to deal with any single problem with the money of a firm that kept no ~books, but had >100 offshore shell companies to conceal the flow of money, and a million people screaming at it that they are owed money. He and his team is paid to deal with the whole thing. Also, about $10 million of that has been legal fees. [1] [1] https://www.cnbc.com/2023/02/08/ftx-bankruptcy-fees-near-20-million-for-51-days-of-work.html https://www.cnbc.com/2023/02/08/ftx-bankruptcy-fees-near-20-...
  - TacticalCoder 4y ago
    > The FTX bankruptcy trustee will charge $18 million in fees to claw back that 10 mil $18 m? I thought they charged $700 m to claw back money in the Madoff case. (I may be off by one order of magnitude though). People in charge of these claw backs are thieves too and they go for easy money, legally, with the benediction of the state, at the expense of people who've been scammed.
AlbertCory 4y ago
As far as I understand the law, not being an actual lawyer, this is the "rationale" behind asset seizure: prevent a criminal from funding his or her defense with the proceeds of criminal activity. Obviously in the poster-child case, they haven't been convicted of anything yet. I'm not defending asset seizure: it's become a way for the government to steal assets without trial. But SBF cleverly made it what lawyers like to call a "close legal question" by funneling the money to his father as a gift.
gumby 4y ago
There's an interesting ethical dilemma and it must apply to lots of cases. It seems obvious that nobody should benefit from the results of their crime.* But if the accused is innocent until convicted, shouldn't it be OK to spend the ill gotten gains on their defense? After all, if they win the gains were legitimate, and by induction they were legit until conviction. How is this circle squared in practice? * this principle is more easily stated than enforced. Some places don't allow convicted criminals to earn any money from writing a book about their crimes (this rule seems reasonable) but where does it end? Apparently Bernie Madoff got respect in prison for the magnitude of his theft. That was a benefit of sorts...
- njovin 4y ago
  This is basically what civil forfeiture is designed for (although it's being severely abused). The cops arrest you and seize all assets that are suspected of being used in or obtained by the suspected crime. This has been heavily abused in California and elsewhere [1][2] to seize assets from marijuana dispensaries or "suspected drug criminals". Cops seize product and money, never file charges, and then let the business owners fight for months/years to get their property back (often times with the seized product having long since expired), despite no charges having been filed. IMO it's an egregious violation of the 4th amendment and it's maddening that more isn't being done to stop the practice. [1] https://reason.com/2022/02/04/a-california-sheriff-remains-free-to-rob-armored-cars-carrying-money-from-state-licensed-marijuana-businesses/ https://reason.com/2022/02/04/a-california-sheriff-remains-f... [2] https://www.newyorker.com/magazine/2013/08/12/taken https://www.newyorker.com/magazine/2013/08/12/taken
  - dragonwriter 4y ago
    > This is basically what civil forfeiture is designed for (although it’s being severely abused). No, this is basically what criminal forfeiture, and freezing assets potentially subject to it, is designed for. Civil forfeiture was designed for trade protectionism in the British Empire, but then it became an end-run around criminal process in the US, particularly around Prohibition.
- deleted 4y ago
sshine 4y ago
Portfolio diversification
AlexandrB 4y ago
The real Effective Altruism is the altruism we gave ourselves along the way.
- deleted 4y ago
  [deleted]
jmyeet 4y ago
Here are 2 questions I have about this whole FTX saga: 1. How is it that a supposed $250 million bond was secured with (according to news articles) significantly less value than that in assets? How does that work? The collateral seems to be his parents' house, a few hundred thousand in cash assets and little else beyond that. Huh? So what makes this a $250 million bond? 2. The government can (and routinely does) seize assets without the owner being convicted of anything. Hell, they do it when the owner never gets even charged with anything. To me, this is a clear 4A violation and should be unconstitutional but the 4A holds no sway over current judicial politics so here we are. In this case we have clear evidence of fraud. Pretty much anything SBF touched with FTX or Alameda money can quite reasonably be presumed to be the proceeds of crime. Why on Earth in this case is the government not seizing, well, everything? Bear in mind that the legal standard for this is quite broad. If you buy a $1 million home with $100,000 of fruad proceeds and $900,000 of your own money, those fraud proceeds taint the entire asset, not just the portion directly tied to fraud. As such, any money given by SBF to anyone poisons pretty much every asset the gift-receiver owns. The government would be well within its right to seize or at least freeze pretty much everything. So how have SBF's parents escaped the government's seizure net? If you think about it, it's the equivalent of robbing a bank and then using those stolen funds to pay for your bond and lawyer. The government wouldn't stand for that in the case of armed robbery. Why are they here?
- dragonwriter 4y ago
  > How is it that a supposed $250 million bond was secured with (according to news articles) significantly less value than that in assets? How does that work? That’s…just the way federal bail tend to work [0]. > So what makes this a $250 million bond? Because that’s what SBF and his parents have consented to become jointly and severally liable for, with essentially no available defense (bail forfeiture is essentially an automatic default judgement) if he fails to appear, etc. The “bond” is the agreement to be subject to that liability. Security for the bond is a separate thing, and unlike many state systems, full-value security or the involvement of a licensed bail agent isn’t a norm that applies. > The government can (and routinely does) seize assets without the owner being convicted of anything. Hell, they do it when the owner never gets even charged with anything. To me, this is a clear 4A violation and should be unconstitutional but the 4A holds no sway over current judicial politics so here we are. > In this case we have clear evidence of fraud. Pretty much anything SBF touched with FTX or Alameda money can quite reasonably be presumed to be the proceeds of crime. Why on Earth in this case is the government not seizing, well, everything? Believe it or not, even if you don’t like the process, there is legal process involved in seizures of assets suspected to be proceeds of a crime (including if they are not going through civil forfeiture, but being held as subject to future criminal forfeiture, which seems more likely in this case). “It appeared in a news article” does not fulfill the procedural requirements on its own. [0] actually, its more of a mixed bag, IIRC, because the individual districts have their own practice, but its how federal bail often works, and in SDNY particulary.
Overtonwindow 4y ago
This guy just won't quit. It's a circle firing squad of a mess. Even the cynic in me, who from the beginning of this affair thought he would never go to prison, is starting to gain hope that he actually will..
indigodaddy 4y ago
There is a sick irony in this

344 points by lxm 4y ago

djbusby 4y ago

And Dad is a Law Professor. Hope he's not teaching the ethics course.

fullstop 4y ago
I've known a few people who have taught ethics courses. None of them were ethical by any stretch of the imagination. Maybe I've just met a bad batch.
- Veen 4y ago
  There are studies that show ethicists are no more ethical than the general population. https://www.tandfonline.com/doi/full/10.1080/09515089.2012.727135?src=recsys https://www.tandfonline.com/doi/full/10.1080/09515089.2012.7... > However, on no issue did ethicists show unequivocally better behavior than the two comparison groups. https://www.tandfonline.com/doi/abs/10.1080/09515089.2019.1587912?journalCode=cphp20& https://www.tandfonline.com/doi/abs/10.1080/09515089.2019.15... > Our results indicate a successful replication of the original effect that ethicists do not behave any morally better compared to other academics across the vast majority of normative issues.
  - notch898a 4y ago
    I wonder if fundamental ethical values are mostly absorbed in childhood or through genetic instinct. At some point it seems most people would just use greater knowledge of law, ethics, etc to either become better at arguing why what they did was right or wrong or use the details to get better at not getting caught. Teaching a grown adult to internalize a new value system would appear quite difficult from my observation.
    - throwawaysleep 4y ago
      I have not met many people who wouldn't compromise their ethics for some benefit. This is especially true if they think nobody will find out. So I am not sure there are fundamental ethical values.
      - repomies69 4y ago
        Also, the tendency to do so depends on your financial status. Poor people will happily sell thei ethics, those who are more well off don't have to.
        mellavora 4y ago
        I've usually seen the opposite.
        fullstop 4y ago
        I'd argue that the opposite is more common. People who are well off can often feel that they are entitled to things.
        djbusby 4y ago
        The situation we're discussing involves wealthy folk doing unethical things.
  - sidewndr46 4y ago
    Why would anyone expect this in the first place? It'd be like expecting the pastor to be more or less religious, or more moral than his following. Ultimately they are just going to be a single sampling of the population, which means they have a pretty reasonable probability of being average.
    - colpabar 4y ago
      Well idk about you but if I wanted to learn karate I would find an instructor who is better at karate than the average person to learn from.
      - tsgagnon 4y ago
        We are talking about being taught in an academic context, not a practical context. So, a better analogue might be that you wouldn't necessarily expect a martial arts historian to be better at the application of martial arts than the average person.
        dmurray 4y ago
        I think I would?
    - capableweb 4y ago
      Well yes, I think the usual intuition is that the people who preach something (religiously or not) should be better at what they are preaching than the ones they are preaching to. Right or wrong, I think that's a pretty common presumption to make. Might be small sample, but that sample is also biased to have a lot of knowledge about what they are preaching (supposedly), meaning they put higher importance about it compared to other things.
    - nathan_compton 4y ago
      ??? You'd expect Pastors or Ethicists to be more moral/ethical because they spend a lot of time thinking about being moral/ethical compared to members of the general population. Seems pretty intuitive to me.
  - knodi123 4y ago
    Kinda like how marriage therapists have slightly higher divorce rates than the national average? https://psychcentral.com/pro/do-marriage-family-therapists-have-better-marriages#1 https://psychcentral.com/pro/do-marriage-family-therapists-h...
    - 0cf8612b2e1e 4y ago
      Makes sense to me. I suspect most people are not quick to end a bad marriage, and will hold out hoping things will improve. Marriage therapists might be more likely to act on a bad situation and extricate themselves from it.
    - jeffrallen 4y ago
      And IT people can't get the printer to work either?
  - mrguyorama 4y ago
    How can they claim any could have "unequivocally better behavior"? What is their ground source of truth for morals?
    - GalenErso 4y ago
      Well, asking the ethicists if the ethicists are acting ethically would not be unbiased.
- Zetice 4y ago
  You've got to know where the line is to teach people not to cross it!
  - bee_rider 4y ago
    Yeah for most of us, ethics is more of a “know it when you see it, don’t get to close to the line” sort of thing. Although there definitely are hard ethical question out there, so the study of it is good, they just don’t show up that often in day-to-day life.
- rootsudo 4y ago
  "None of them were ethical by any stretch of the imagination." At least they know the course material well. Isn't that the reason why you're really enrolling in the class for?
- deleted 4y ago
  [deleted]
- r00fus 4y ago
  Naturally Voldemort cosplaying as a "defense against the dark arts" instructor was clearly an implication that regulatory capture is way to hide power.
deleted 4y ago
[deleted]
skeeter2020 4y ago
If I was a student in his ethics course it would be a great opportunity to practice grilling a hostile witness
jeffbee 4y ago
Has anyone ever studied ethics at Stanford? As far as I can tell the subject is not required. CS undergrads must fulfill a "Technology in Society" requirement but it can be satisfied with bullshit like "Technology Entrepreneurship", a series of guest lectures by VCs, which is almost the opposite of studying ethics. Nothing about a university that would let Condi Rice serve as provost screams "ethics", frankly. Their history is not one that suggests a strong ethical culture.
mahart 4y ago
On his staff page he's described as a "leading scholar in the field of tax law". Maybe he was the one that got FTX on QuickBooks after having been paid for 11 months there.
watwut 4y ago
Ethics course is not supposed to make you better person. It teaches you some theories relevant to law practice and regulations layers are under.
- salawat 4y ago
  ...Actually, it's supposed to equip you to see your actions don't occur in the void; and ensure you at least have some introductory calibration to a moral compass. Is altering a digital artifact for someone else to be used for financial gain on their part ethical? Transitive property says no; you're an accomplice intheir deception. The only people who tend to assert Ethics courses aren't there to help you be a better person are those that never started out with an intention to be ethical at all. At least in my experience.
deleted 4y ago
[deleted]

bradleyjg 4y ago

[flagged]

causality0 4y ago
Because "gave" could encompass a wide variety of transactions and "gifted" is a specific one.
stevenpetryk 4y ago
Gifting is a subset of giving.
lovich 4y ago
I’d think that gift is slightly different in this situation in that a gift severs control completely vs theoretically you can give someone an item with the expectation of getting it back. It’s really splitting hairs though, what is your problem with the word gifted? I’ve never seen someone critique it’s use before
- gwd 4y ago
  It's not slightly different at all. If I say, "The server at the restaurant gave the man a fork", would you think the man expected to walk away with the fork? Or to put it differently: Depositors gave money to FTX, which gave the money to Almeda Research, which gave the money to SBF, who gave it to his father. But only one of these four transactions was a gift.
chatmasta 4y ago
Maybe because "gift" has a specific meaning in the tax code, especially with money transfers that involve immediate family members. No idea if that's why Forbes is using that language though.
welder 4y ago
To me, using Gift implies his father wrote it off on taxes as part of his lifetime gift exemption ($12.06 million). It just means SBF gave $10M to his father and his father didn't have to pay taxes on that money because he reported it as a gift. It doesn't add much to the story though. Edit: Thanks to comments below I found out the sender pays the tax if over $12.06M not the receiver of the gift.

lordnacho 4y ago

How does the law work? If you nab a pile of money from your customers and give it to your family, and then get sued, what happens? If you lose, does the court reverse all the transactions and give it to the creditors? Or can you just have your parents give you money to live off when you're out of jail? Surely not?

boeingUH60 4y ago
It takes time to investigate the transfers and prove they were fraud proceeds before possibly clawing them back...as the investigation lingers, prosecutors will likely ask SBF's dad to return that money.
mindslight 4y ago
I believe the creditors would have to challenge the gift as a "fraudulent transfer", based on the idea that at the time the giver knew they were open to a huge liability from having taken the money in the first place. And then another similar step to go after the money that went to the attorneys. And in this case the "creditor" would be the FTX bankruptcy estate, led by whomever has been appointed the receiver. Theoretically they should be working for creditors of FTX, but can obviously have their own motivations of expediency, not wanting to rock the boat by suing another firm, etc.
nradov 4y ago
FTX creditors will presumably sue SBF's parents in US civil court and claim fraudulent conveyance. The plaintiffs will certainly ask the court to freeze those assets and not allow them to be squandered on criminal trial defense, but who knows whether the court would approve such a motion.
kibwen 4y ago
You always hear RICO get thrown around in these sorts of things, which allegedly allows the government to seize anything obtained as part of a criminal enterprise, but I'd need a lawyer to weigh in and determine whether that's actually true and whether RICO would apply to this case.
- 4y ago

chollida1 4y ago

Well most fraud trials involve a person stealing directly from their company. Atleast SBF took the extra step of first funneling money to Alameda and then directing Alameda to send it back to him and then send it to his dad as a tax free gift. That way he could honestly say he personally has no money left. That atleast makes it harder for FTX to claw back that money. One interesting thing a lawyer pointed out to me is that a lawyer has a duty to ensure that the money used to pay them wasn't from the proceeds of a crime. I wonder how SBF's lawyers have done thier diligence in this case and satisified themselves that this wont' get them into trouble with the state bar.

blockwriter 4y ago
Aren't tax free gifts capped at $14,000.00 per year? Edit: Er, I guess it's $16,000.00 without needing to report it, and then anything above that can be offset against a $12 ish million lifetime exclusion. https://money.usnews.com/money/personal-finance/taxes/articles/gift-tax-tax-rules-to-know-if-you-give-or-receive-cash https://money.usnews.com/money/personal-finance/taxes/articl...
- rsstack 4y ago
  You need to report a gift over $14k but you don't owe until much higher limits. Same as how people who make very little money have to report income even if it's lower than the lowest tax bracket. Also, as a reminder, the gifter pays the tax and not the person who received the gift. If someone gifts you an illiquid asset, you aren't forced to go into debt to pay a tax. But the gifter has to figure things out on their end.
  - cft 4y ago
    This is correct. The tax thresholds are of the order of 12mm
  - ambicapter 4y ago
    What does the gifter pay tax on? -$14k?

dwighttk 4y ago

This isn’t that money! It’s entirely different money I saved while spending the Alameda cash!

caseysoftware 4y ago

Whoa. My GUESS is that since he's being prosecuted for fraud, et al, they can't say these were illegally obtained (innocent until proven guilty) and therefore they can't seize the funds yet. And if the lawyers are in on it, they're over billing and keeping building an escrow fund that would go back to one of them at the end. The scumminess is rather impressive.

nradov 4y ago
Prosecutors might not be able to immediately seize assets, however if they have evidence that those assets were obtained through criminal activity then they can ask the court to freeze the assets pending the outcome of a criminal trial.
TacticalCoder 4y ago
> And if the lawyers are in on it, they're over billing and keeping building an escrow fund that would go back to one of them at the end. The ones in charge of the bankruptcy are also bleeding the customers and investors dry. They charged $700 million in the Madoff case. There are $10 bn missing here. It's not unthinkable they'll steal 10% of that. They are vermins, just as scummy as SBF. But it's legal.
hgsgm 4y ago
Civil forfeiture law says the money can be seized on mere suspicion of being involved in a crime.

danso 4y ago

(tangent) Ok this confuses me: > (in December, their $1.8 million Palo Alto home was used to secure a $250 million bail package after Bankman-Fried was released on a personal recognizance bond. Their Palo Alto home is worth only $1.8M? Do they live in a 1BR/0.5BA shed? edit: Apparently the assessed value (for property taxes) is $1.8M. But realtor sites estimate it at $3.1M, and it was apparently renting for $12,000/month back in 2013. Still cheaper than I thought for a 4-br home on Stanford's Dish https://sfstandard.com/business/inside-sam-bankman-frieds-parents-beautiful-historic-home/ https://sfstandard.com/business/inside-sam-bankman-frieds-pa...

dragonwriter 4y ago
Looking right now at listings in Palo Alto, the few things in that range ($1.5M-$2M) are 2-3 bedroom, 1-3 bath, 1,200-1,900 sq. ft.
jibe 4y ago
The house is on the Stanford campus, and is under Stanford’s control. It can only be sold to Stanford employees, so it limits the value.
- cdolan 4y ago
  I think you make a great point and I agree, but to play devils advocate for a second... Do we think Stanford is lacking in people willing to live there? I bet it may even increase the chance (so long as the HOA is not all that bad!)
  - mattheww 4y ago
    You're right, the thing limiting the value is not demand - there are more than enough faculty and high-level staff that want to live there. The thing limiting the value is the other restrictions that Stanford imposes on these houses - namely they essentially control the price the houses sell for because they all have to be financed through a Stanford-controlled lending program.
- bee_rider 4y ago

eternalban 4y ago

Forbes has carved a uniquely slimely niche for itself. (These days I almost look at a Forbes promotion of a startup as a negative signal.) At the bottom of that article there are "more from Forbes" stories on the (now) 'bad bad' Sam. Search for Forbes articles from before the reveal for "more from Forbes" stories which I guess they didn't have room to link to in the bottom. (Naturally pointing out Forbes' role in pimping Sam Bankman-Fried in no way is supporting the 'wunderkind' or his & co.'s fraud.)

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jayess 4y ago

The FTX bankruptcy trustee will be able to claw it back as an avoidable transaction.

shapefrog 4y ago
The FTX bankruptcy trustee will charge $18 million in fees to claw back that 10 mil
- vkou 4y ago
  The FTX bankruptcy trustee is charging $18 million in fees (or however much he's charging) to run a team of people who have been auditing and unfucking FTX's and Alameda's books for the past four months, and will continue to for a long, long while going forward. He's not paid $18 million to deal with any single problem with the money of a firm that kept no ~books, but had >100 offshore shell companies to conceal the flow of money, and a million people screaming at it that they are owed money. He and his team is paid to deal with the whole thing. Also, about $10 million of that has been legal fees. [1] [1] https://www.cnbc.com/2023/02/08/ftx-bankruptcy-fees-near-20-million-for-51-days-of-work.html https://www.cnbc.com/2023/02/08/ftx-bankruptcy-fees-near-20-...
- TacticalCoder 4y ago
  > The FTX bankruptcy trustee will charge $18 million in fees to claw back that 10 mil $18 m? I thought they charged $700 m to claw back money in the Madoff case. (I may be off by one order of magnitude though). People in charge of these claw backs are thieves too and they go for easy money, legally, with the benediction of the state, at the expense of people who've been scammed.

AlbertCory 4y ago

As far as I understand the law, not being an actual lawyer, this is the "rationale" behind asset seizure: prevent a criminal from funding his or her defense with the proceeds of criminal activity. Obviously in the poster-child case, they haven't been convicted of anything yet. I'm not defending asset seizure: it's become a way for the government to steal assets without trial. But SBF cleverly made it what lawyers like to call a "close legal question" by funneling the money to his father as a gift.

gumby 4y ago

There's an interesting ethical dilemma and it must apply to lots of cases. It seems obvious that nobody should benefit from the results of their crime.* But if the accused is innocent until convicted, shouldn't it be OK to spend the ill gotten gains on their defense? After all, if they win the gains were legitimate, and by induction they were legit until conviction. How is this circle squared in practice? * this principle is more easily stated than enforced. Some places don't allow convicted criminals to earn any money from writing a book about their crimes (this rule seems reasonable) but where does it end? Apparently Bernie Madoff got respect in prison for the magnitude of his theft. That was a benefit of sorts...

njovin 4y ago
This is basically what civil forfeiture is designed for (although it's being severely abused). The cops arrest you and seize all assets that are suspected of being used in or obtained by the suspected crime. This has been heavily abused in California and elsewhere [1][2] to seize assets from marijuana dispensaries or "suspected drug criminals". Cops seize product and money, never file charges, and then let the business owners fight for months/years to get their property back (often times with the seized product having long since expired), despite no charges having been filed. IMO it's an egregious violation of the 4th amendment and it's maddening that more isn't being done to stop the practice. [1] https://reason.com/2022/02/04/a-california-sheriff-remains-free-to-rob-armored-cars-carrying-money-from-state-licensed-marijuana-businesses/ https://reason.com/2022/02/04/a-california-sheriff-remains-f... [2] https://www.newyorker.com/magazine/2013/08/12/taken https://www.newyorker.com/magazine/2013/08/12/taken
- dragonwriter 4y ago
  > This is basically what civil forfeiture is designed for (although it’s being severely abused). No, this is basically what criminal forfeiture, and freezing assets potentially subject to it, is designed for. Civil forfeiture was designed for trade protectionism in the British Empire, but then it became an end-run around criminal process in the US, particularly around Prohibition.
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sshine 4y ago

Portfolio diversification

AlexandrB 4y ago

The real Effective Altruism is the altruism we gave ourselves along the way.

deleted 4y ago
[deleted]

jmyeet 4y ago

Here are 2 questions I have about this whole FTX saga: 1. How is it that a supposed $250 million bond was secured with (according to news articles) significantly less value than that in assets? How does that work? The collateral seems to be his parents' house, a few hundred thousand in cash assets and little else beyond that. Huh? So what makes this a $250 million bond? 2. The government can (and routinely does) seize assets without the owner being convicted of anything. Hell, they do it when the owner never gets even charged with anything. To me, this is a clear 4A violation and should be unconstitutional but the 4A holds no sway over current judicial politics so here we are. In this case we have clear evidence of fraud. Pretty much anything SBF touched with FTX or Alameda money can quite reasonably be presumed to be the proceeds of crime. Why on Earth in this case is the government not seizing, well, everything? Bear in mind that the legal standard for this is quite broad. If you buy a $1 million home with $100,000 of fruad proceeds and $900,000 of your own money, those fraud proceeds taint the entire asset, not just the portion directly tied to fraud. As such, any money given by SBF to anyone poisons pretty much every asset the gift-receiver owns. The government would be well within its right to seize or at least freeze pretty much everything. So how have SBF's parents escaped the government's seizure net? If you think about it, it's the equivalent of robbing a bank and then using those stolen funds to pay for your bond and lawyer. The government wouldn't stand for that in the case of armed robbery. Why are they here?

dragonwriter 4y ago
> How is it that a supposed $250 million bond was secured with (according to news articles) significantly less value than that in assets? How does that work? That’s…just the way federal bail tend to work [0]. > So what makes this a $250 million bond? Because that’s what SBF and his parents have consented to become jointly and severally liable for, with essentially no available defense (bail forfeiture is essentially an automatic default judgement) if he fails to appear, etc. The “bond” is the agreement to be subject to that liability. Security for the bond is a separate thing, and unlike many state systems, full-value security or the involvement of a licensed bail agent isn’t a norm that applies. > The government can (and routinely does) seize assets without the owner being convicted of anything. Hell, they do it when the owner never gets even charged with anything. To me, this is a clear 4A violation and should be unconstitutional but the 4A holds no sway over current judicial politics so here we are. > In this case we have clear evidence of fraud. Pretty much anything SBF touched with FTX or Alameda money can quite reasonably be presumed to be the proceeds of crime. Why on Earth in this case is the government not seizing, well, everything? Believe it or not, even if you don’t like the process, there is legal process involved in seizures of assets suspected to be proceeds of a crime (including if they are not going through civil forfeiture, but being held as subject to future criminal forfeiture, which seems more likely in this case). “It appeared in a news article” does not fulfill the procedural requirements on its own. [0] actually, its more of a mixed bag, IIRC, because the individual districts have their own practice, but its how federal bail often works, and in SDNY particulary.

Overtonwindow 4y ago

This guy just won't quit. It's a circle firing squad of a mess. Even the cynic in me, who from the beginning of this affair thought he would never go to prison, is starting to gain hope that he actually will..

indigodaddy 4y ago

There is a sick irony in this