4 ms·

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) significant

by 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.
danso 4y ago
> 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? I believe it boils down to "making a statement". Even if SBF's friends and family were only able to offer up $2.5m in assets (i.e. 1% of a $250M bond, instead of the more common 10% threshold), it's still (according to the court) a massive disincentive for SBF to flee. But the court still wants to assert that he's accused of crimes that merit such a massive bond. From Bloomberg: https://www.bnnbloomberg.ca/sbf-s-250-million-bail-is-one-of-the-largest-in-us-history-it-doesn-t-mean-he-has-that-much-1.1862803 https://www.bnnbloomberg.ca/sbf-s-250-million-bail-is-one-of... > Such bonds also signal the seriousness of the crime being charged, and federal prosecutor Nicholas Roos made that point in court. > “Mr. Bankman-Fried perpetuated a fraud of epic proportions stealing billions for customers lenders and defrauding investors,” Roos said. That said, with the revelation in today's Forbes story, I wonder if knowing that Mr. Bankman had $10M worth of gift money from his son was known to the court at the time, or relevant to the bond agreement? i.e. would the court have demanded that money be stashed as collateral along with SBF's home? At the time the bail was announced, SBF was claiming his personal assets were in the $100,000 range
- dragonwriter 4y ago
  > Even if SBF’s friends and family were only able to offer up $2.5m in assets (i.e. 1% of a $250M bond, instead of the more common 10% threshold) The “more common 10% ‘threshold’” isn’t actually a threshold for security pledged to the court, It’s the fee paid to a licensed bail agent (very often, legislated as the fixed or minimum fee for that service in state law) to stand as surety as an alternative to the defendant offering full value security. But, again, that’s a common feature of state bail systems, not the federal system, which can be much more flexible. > That said, with the revelation in today’s Forbes story, I wonder if knowing that Mr. Bankman had $10M worth of gift money from his son was known to the court at the time, or relevant to the bond agreement If it wasn’t (or if the evidence that it was stolen hasn’t already been reviewed and considered by prosecutors), I would expect further action related to bail conditions and possibly freezing/seizure of that money in the near future.

by jmyeet 4y ago

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.

danso 4y ago

> 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? I believe it boils down to "making a statement". Even if SBF's friends and family were only able to offer up $2.5m in assets (i.e. 1% of a $250M bond, instead of the more common 10% threshold), it's still (according to the court) a massive disincentive for SBF to flee. But the court still wants to assert that he's accused of crimes that merit such a massive bond. From Bloomberg: https://www.bnnbloomberg.ca/sbf-s-250-million-bail-is-one-of-the-largest-in-us-history-it-doesn-t-mean-he-has-that-much-1.1862803 https://www.bnnbloomberg.ca/sbf-s-250-million-bail-is-one-of... > Such bonds also signal the seriousness of the crime being charged, and federal prosecutor Nicholas Roos made that point in court. > “Mr. Bankman-Fried perpetuated a fraud of epic proportions stealing billions for customers lenders and defrauding investors,” Roos said. That said, with the revelation in today's Forbes story, I wonder if knowing that Mr. Bankman had $10M worth of gift money from his son was known to the court at the time, or relevant to the bond agreement? i.e. would the court have demanded that money be stashed as collateral along with SBF's home? At the time the bail was announced, SBF was claiming his personal assets were in the $100,000 range

dragonwriter 4y ago
> Even if SBF’s friends and family were only able to offer up $2.5m in assets (i.e. 1% of a $250M bond, instead of the more common 10% threshold) The “more common 10% ‘threshold’” isn’t actually a threshold for security pledged to the court, It’s the fee paid to a licensed bail agent (very often, legislated as the fixed or minimum fee for that service in state law) to stand as surety as an alternative to the defendant offering full value security. But, again, that’s a common feature of state bail systems, not the federal system, which can be much more flexible. > That said, with the revelation in today’s Forbes story, I wonder if knowing that Mr. Bankman had $10M worth of gift money from his son was known to the court at the time, or relevant to the bond agreement If it wasn’t (or if the evidence that it was stolen hasn’t already been reviewed and considered by prosecutors), I would expect further action related to bail conditions and possibly freezing/seizure of that money in the near future.