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$8B Sam Bankman-Fried criminal trial starts today

145 points by perihelions 3y ago

tombert 3y ago
I'm generally against punishment as a whole, as I don't think it works generally, but considering how little responsibility SBF has taken for stealing all this money I think there's a reasonable chance that he'll just turn around and do the same scam again if he's not thrown in jail, or at the very least having the SEC monitoring every single thing he does. Granted, I'm a victim of the Gemini Earn unregistered security scam [1], and so maybe I cannot be an impartial judge here, but SBF is kind of the only non-violent offender that I can think of right now that I honestly feel should be locked up and throw away the key. [1] Before you give me a lecture about how I should have known better and how you'd never fall for such a scam and how Gemini's claims of FDIC insurance would never fool anyone smart, just rest assured I've heard it from the denizens of HN and my peers. I know I was stupid to have done anything with cryptocurrency, and even more stupid to think that Gemini wasn't misleading people about their Gemini Earn program. Just to be clear though, it's not my accusation to called Gemini Earn an unregistered security, it's the SEC's (https://www.sec.gov/news/press-release/2023-7 https://www.sec.gov/news/press-release/2023-7).
- knorker 3y ago
  Punishment, deterrence for others, and deterrence for the individual themselves, are three important parts of why the state has consequences for bad deeds. The US is pretty punishment-heavy. As a non-US person it even looks sadistic. It's "now I got you, you son of a bitch" social game from "Games People Play". Since you're against "punishment as a whole", I assume you by "punishment" mean "I want them to suffer for what they did"? Giving more than (say) 20 years to most 20-year-old murderer is no different from 120, from either deterrence perspective. When they're 40 they'll be a different person. 120 years of terrible prison conditions does not make anyone better off, compared to 20. Except for the victim's "sense of justice". But man, 20 years? No year more than that will bring your loved one back. Anyway, I agree that we need both types of deterrence for SBF. Otherwise what's to stop people counting on getting "only" 10 years. Steal a billion dollars, hide it in cryptocurrencies, and when you get out of prison you're older, sure, but you are super rich. We need deterrence from him doing it again. And we need deterrence for everyone like him, and everyone who would be remotely involved him people like him. People need to know that if you help this kind of scam, there are dire consequences. Which is why his parents should face the full weight of the harm they caused, to show that it will all be taken away. But I don't see that as "punishment". Not in the way I think you mean it.
  - matt004 3y ago
    [flagged]
    - tigeroil 3y ago
      In what sense doesn't it work though? Because from a re-offending rate it unequivocally does work. In terms of preventing new crimes from being committed, I think the honest answer is "it depends". I think early intervention and preventing crime in the first place is always going to beat punishing people for crimes after the fact.
    - bumby 3y ago
      I don't think this type of dichotomy of thinking is helpful. Given that the research seems to suggest that "heavy punitive sentencing" doesn't reduce crime, I think the take away is that human behavior is difficult to change.
    - freedomben 3y ago
      What? Citation is definitely needed for that claim about Scandinavia. Restorative justice may not "work" for every single person in every single situation but neither does punitive sentencing. If you look at recidivism for whether it "works" then restorative justice performs way better in the majority of cases. Then we should consider the moral/ethical correctness of what the justice system is and what it should do.
    - knorker 3y ago
      But then it's not punishment for punishment's sake, but for deterrence's sake. I read the comment as talking about retribution, to make the victim feel good, not about deterrence. Are you saying you have data to show that 20 years for murder has a different deterrent effect than 120 years for murder?
  - nineplay 3y ago
    > When they're 40 they'll be a different person. Is there any evidence of that? I say this with sympathy as I suspect some number of violent individuals have as-yet-undetected genetic abnormalities that would make them 'blameless' for their actions if we could track it down. However that wouldn't change their behavior. My son has a non-violent known genetic abnormality and in 20/40/60 years his behavior wouldn't change unless some effective treatment is found. So I think there needs to be some realism injected into this discussion. There are people I would not want as next door neighbors even after they've served a long prison sentence.
- monero-xmr 3y ago
  You are against the concept of punishment as a whole? Or just for financial crimes? I don’t think without the threat of jail - which is society taking away your time - some violent people would avoid crime.
  - hypeit 3y ago
    The threat of punishment doesn't stop people from committing violent crime. Even if you totally eliminated the threat of prison, the actual threat of committing violent crime is that someone will retaliate/defend themselves against you. If you're willing to put your life on the line to rob someone, whether or not you might get put in jail isn't even going to register. Non-violent and financial crime is a different story. SBF should go to prison for life and maybe that would dissuade others from trying to pull of scams of this scale. Every politician who accepted money from SBF should also go to prison if they don't return 100% of the money given to them.
    - gmerc 3y ago
      That’s an awfully certain statement. I don’t know man, it seem likely that some people will be dissuaded from pursuing non passion driven violent crime by appropriate risk of punishment. Sounds like a perfect solution fallacy.
      - hypeit 3y ago
        It's not a perfect solution but it's also not believable that what's stopping people from committing violence is the law and not the violence itself. If you're willing to commit premeditated violence, you're already far beyond the influence of the law. If someone carjacks a car they are willing to accept the risk that the person they're robbing may have a gun. They are literally willing to put their life at risk, something only someone with nothing to lose would do. Do think maybe getting caught by the police and spending 10 years in prison is as big of a threat to this person as being shot and killed (a risk they've already decided to take)?
        3y ago
- simplicio 3y ago
  "we shouldn't lock people up for non-violent crimes except for ones similar to the one I was a victim of" seems like kind of a..limited view? I don't think there's anything particular about SBF that makes him more likely to re-offend (And even if he wanted to, one would hope he'd have a hard time convincing folks to hand over another 8 billion for him to embezzle a second time). Which isn't to say that I don't think he should go to jail (he definitely should!), just that I don't think he's any more jail worthy then people who engage in other forms of non-violent theft and/or fraud.
  - gmerc 3y ago
    Can you say this with a straight face while seeing so many people over and over pay Donald Trumps legal fees by donating to the latest cause.
    - tombert 3y ago
      I'm not a fan of Donald Trump at all, but he's never actually been convicted of fraud has he? I'm not disputing that he's committed fraud, but I think that a lot of his followers can do a lot of mental gymnastics and convince themselves that he never actually did anything illegal, in no small part because he's never directly been convicted.
      - hermanradtke 3y ago
        > he's never actually been convicted of fraud has he? His corporation was given the death penalty for wildly overstating the value of assets.
      - hotpotamus 3y ago
        Isn't he banned from operating a nonprofit in New York now, and didn't Trump University get a civil judgement (I'm aware you might not call that a fraud conviction) that disbanded it? That's just from memory - if not technically a criminal, he's quite certifiably crooked, but people will still throw money at him, and I'll never understand people. The other figure that comes to mind is Adam Nuemann (and I'm not alleging anything criminal against him), but apparently he just has a personality that draws VCs with dumptrucks full of money like moths to a flame. Clearly people just have tons of money they don't need these days.
- jjtheblunt 3y ago
  Do you think punishment is an ineffective deterrent?
  - tombert 3y ago
    I do not think punishment is a good deterrent, no; I think the data more or less says that as well. If you look at Scandinavia, where they generally have a much higher emphasis on reform instead of "punishment for punishment's sake", and they also have a substantially lower recidivism rate compared to the US. Now obviously, I'll fully acknowledge that it's not completely apples to apples; there almost certainly a million differences between the US and Scandinavia that contribute to differences in crime statistics, but I think it does demonstrate that reducing emphasis on punishment doesn't turn the world into this post apocalyptic dystopia.
    - throttlebody 3y ago
      You better have another look a the Swedish gang murder rate, it's staggering (in Swedish terms). The world is changing.....
      - InitialLastName 3y ago
        From [0]: > More than 60 people died in shootings last year in Sweden, the highest figure on record. This may be a lot of people for Sweden (~0.5 death per ~100K people); it's not a lot of people in the general sense. Per [1], 19,000 people died from gun homicides in the US in the same year (5 per 100K people). Not exactly a sign that Sweden's system is failing relative to the US. [0] https://apnews.com/article/sweden-shooting-explosion-deadliest-9fd423ed2aaec4ecff2c885f8c48ed55 https://apnews.com/article/sweden-shooting-explosion-deadlie... [1] https://publichealth.jhu.edu/2023/cdc-provisional-data-gun-suicides-reach-all-time-high-in-2022-gun-homicides-down-slightly-from-2021 https://publichealth.jhu.edu/2023/cdc-provisional-data-gun-s...
        Kiro 3y ago
        I can assure you that every single Swede agrees that it's failing. People are horrified at what's happening. Anyway, bringing up Scandinavia as one unit doesn't work anymore when there's such a big difference between Sweden and for example Norway where restorative justice is still successful.
- JumpCrisscross 3y ago
  Consider adding corruption and large-scale fraud to your list. Punishment has three purposes: deterrence, incapacitation and retribution. The first two are simple. The last seems irrational. Yet if you ignore it, you wind up with people executing a parallel system of justice (i.e. taking matters into their own hands) and generally losing trust in society. Within the category of crimes that maximise the need for that last element, it’s wide-scale actions that harm a lot of people, visibly, done by a member of or someone perceived to be proximate to the elite.
  - ajkjk 3y ago
    aside: I see "retribution" on these lists a lot and usually these days it's disgarded. IMO it's discarded prematurely. The sort of retribution that is like "X hurt me, so punish them" is the one everybody seems to no longer believe in, and that's fine. But there is another sense of retribution that I think is very valuable, which is "maintaining the status quo that people who commit crimes are punished for them". It's not personal retribution but more of a "belief that the system will handle retribution", and it is important because it helps us believe that there is a legitimate criminal justice system that takes care of justice for us and which we can delegate justice to. You alluded to this in your comment when you said "losing trust in society". Mostly I just want to observe that to me it feels like it deserves a separate bullet-point instead of being lumped in with "retribution".
    - bluefishinit 3y ago
      I would rather have a belief that the system will find the root causes of crime and take actions to fix them then believe the system will punish those who break the rules. Punishment causes damage to society beyond just the individual being punished. Criminals have jobs, families and relationships with people who haven't broken the law. Punishment should be used sparingly as the cost to all of society is high. I also believe we'd have lower crime if the massive budgets currently being used on police would be instead used to improve the health and welfare of high crime communities.
      - 3y ago
- oooyay 3y ago
  IANAL but I'm curious if intent is the deciding factor. Maddoff got 150 years because he knowingly operated a criminal enterprise and admitted to the whole thing eventually. His sons even testified against him when they found out. Maddoff went to great extents to construct his criminal enterprise, operating a small boiler room out of the front office. If prosecutors can show that actual malice and intent were part of his motive then logic would follow he'd get a Maddoff-like sentence. If he's just the worlds biggest bumbling idiot that people put too much faith and money in then it'd be lesser. I'm not quite caught up to when SBF knew he'd started a criminal enterprise versus when he was making reckless decisions.
rootusrootus 3y ago
Can someone knowledgable chime in with the realistic possible penalty for SBF? The news is saying "over 100 years" which I assume has only a tenuous relationship with reality.
- jandrese 3y ago
  I assume that is just the journalist summing up all of the possible maximum sentences as they usually do. It's really hard to say. On one hand he's a privileged white guy. On the other he stole from a lot of rich people. Bernie Madoff was sentenced to 150 years, but in reality anything over 20 was a life sentence for him. I'm kind of expecting the court to throw the book at SBF simply because he was so brazen about it. When you get that far out of line people want to make an example out of you.
  - rsynnott 3y ago
    "Conrad Black. The first rich person to go to prison in 300 years." But yes. If you're a rich guy, best to avoid stealing from other rich people; it does seem to be one of the few things that results in them going to prison.
  - youmeantj 3y ago
    [flagged]
  - 3seashells 3y ago
    Mostly though to discourage the court from going after themselves for knowingly investing into a scam that collapsed to early.
- badrequest 3y ago
  He bamboozled as much money from rich people as he did from poors, they're throwing the book at him.
  - 3seashells 3y ago
    Can't fraud the original fraudsters.
rendall 3y ago
Patrick Boyle lays out the evidence that SBF's parents were intimately involved in the scam and likely attempted to hide assets. If true, they should be tried as well: https://youtu.be/gLvOT2AldwM?si=QCQv4j1VUrDX_cyf https://youtu.be/gLvOT2AldwM?si=QCQv4j1VUrDX_cyf
- greenyoda 3y ago
  Thanks, this was a very good analysis of the roles of SBF's parents. Here's a direct link to the FTX debtors complaint against the parents (PDF): https://storage.courtlistener.com/recap/gov.uscourts.deb.188450/gov.uscourts.deb.188450.2642.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.deb.188... The Preliminary Statement begins with: > This action seeks to recover millions of dollars in fraudulently transferred and misappropriated funds from the parents of FTX Founder Samuel Bankman-Fried (“Bankman- Fried”): his father, Defendant Allan Joseph Bankman (“Bankman”), and his mother, Defendant Barbara Fried (“Fried”). As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 Cases (the “Debtors” or the “FTX Group”) and their creditors.
- amanj41 3y ago
  The email from Sam's dad to Sam whining about his 200k salary was disturbing. It's no surprise that Sam ended up the way he did
  - 71a54xd 3y ago
    His brother briefly worked at Jane Street. Right out of college he made $300k, next year $600k - his bosses liked his perf and said he'd be on track to make $5-7M per year if he stayed on for another 2-4 years. Supposedly he still felt inadequate and hated his life...
    - nequo 3y ago
      Those numbers are surprising. Do you have a source for them?
chollida1 3y ago
One thing that the financial press is looking at is where the courts draw the line between incompetence and outright fraud. Everyone agrees that FTX funneled money from FTX customers accounts to Alemada. The government is claiming this is fraud, SBF is claiming it was just allowing Alemeda to have more leverage than other clients. Everyone agrees that FTX gave SBF's parents $30M in real estate. The government is claiming this was fraud, SBF is claiming that it was just payment for work done by his parents for FTX. Everyone agrees that a large part of Alemeda's balance sheet were coins that only had value because they held almost all of them and only they transacted in them, thereby allowing them to keep the price high. The government claims this is accounting fraud and SBF claims this was just a bad marking of their price. Everyone agrees that FTX bought around $100 million in Bahamian realestate. The government says this was stealing from FTX's customers, while SBF is claiming this was just to house FTX employees. Everyone agrees that FTX paid $100's of millions to celebrity endorsers and arena naming deals. The government claims the source of these funds were customers money. SBF claims that both FTX's own cash and customers funds were just one big pool that he just didn't have enough accounting and risk management rules enforced on that large pool of resources to know that FTX ran out of money and he was using customers funds to buy things. I'm not an expert in case law but one thing that stand out to me is just how many of SBF's "friends" and partners have fully turned on him and will testify against him. Caroline Ellison, the CEO of Alameda, Gary Wang, the CTO of FTX and Nishad Singh, FTX' engineering director have all signed cooperation agreements. Also rumours are that SBF will testify, which short of Trump testifying , seems like the worst possible person to take the stand. The winners in this will be the bankruptcy lawyers and people who had cash on had to buy FTX customer claims for 20-30% on the dollar. I think funds that had the forsight to buy these claims and create a side car for their investment will do very well. The yield on this trade though will be determined mostly by the recovery rate and probably more so by the time it takes the lawyers to pay out claims as I've never met a bankruptcy lawyer who was in a hurry to part with the cash and lucrative billing rates they make. One other thing i'm watching but not related to the trials is how far back FTX's bankruptcy lawyers go after people who withdrew money from FTX. With Maddoff the bankruptcy lawyers went after anyone who took money out going back many years. Supposedly there were a few larger hedge funds who took money out of FTX weeks before it went under and stopped withdrawls. There is plenty of precedence for the trustees to go after those funds to ask for the withdrawls back.
matt004 3y ago
[flagged]
matt004 3y ago
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- wmf 3y ago
  He's white enough.
- outside1234 3y ago
  [flagged]
  - matt004 3y ago
    [flagged]
- wincy 3y ago
  Having whitish skin is pretty much the only criteria for whiteness in the modern world.
seydor 3y ago
[flagged]
- shapefrog 3y ago
  [flagged]
- itsoktocry 3y ago
  >To what extent is Sbf used as a scapegoat by the media The guy who pretended he was running a legit exchange and hedge fund, lied to lenders, spent customer's funds, acted like an altruist (while laughing about it being bullshit) and made dark political donations is a "scapegoat by the media"?
  - eastbound 3y ago
    Yes. All of those should have required proof, they are required to require proof. In the normal world, it is not possible to commit even 10k$ fraud without the signoff of 5 people, so why is a billion dollars in the hands of a 26-year-old different.
- dehrmann 3y ago
  I wouldn't call SBF a scapegoat. Lots of startups took VC money and didn't go on to allegedly commit fraud. Startups' business models might have been overly optimistic and VCs didn't pay enough attention, but that's not really on trial, here.
- hypeit 3y ago
  > To what extent is Sbf used as a scapegoat by the media. 0%, in fact 60 Minutes just did a puff piece hagiography for him on Sunday: https://www.cbs.com/shows/video/SLLumNQElCg4KvRF7GUbpKX8_VAJaL72/ https://www.cbs.com/shows/video/SLLumNQElCg4KvRF7GUbpKX8_VAJ...
- mcpackieh 3y ago
  The point of scapegoats is that the scapegoat is actually sinless, and the sins of others are transferred onto the goat to be sacrificed. SBF is not sinless, he's getting what he deserves. He will be punished for his own crimes, not for the crimes of others. In no conceivable way is he a scapegoat. Other exchanges run by other people also committed crimes, but those crimes aren't what SBF is on trial for. He's on trial for his own crimes.
rurcliped 3y ago
Suppose you have office space in the jail, and give him (or anyone else) the opportunity to apply for remote jobs at anyplace willing to hire him - with the caveat that he loses office access unless he demonstrates that he's maximizing his potential to earn money, all of which will go directly to compensating victims. (Assume that he can't have Zoom calls with arbitrary colleagues of his choice. He can only have Zoom calls with Bill Lumbergh.)
- syndicatedjelly 3y ago
  Yes, companies will be lining up at his cell door to hire a convicted fraudster.
Biologist123 3y ago
I’ve really come to doubt human ability to exercise free will in all but the rarest of cases. I wonder if SBF really had a moment where a stop/go decision was meaningfully available to him. If we’re all automatons, what’s the point of prison? I’ve been reading Michael Lewis’ account of SBF: he genuinely sounds unhinged.
- timfsu 3y ago
  Are you saying you don't think deterrence works? I am curious what you're learning about SBF though.
- strangattractor 3y ago
  Wouldn't being "automatons" be a good argument for prisons? If people's behavior is automatic then removing them from the rest of us seems like the only solution. If you believe in redemption, rehabilitation and change then a complicated system like we have seems inevitable. Sorry I've been binging "Inside the Worlds Toughest Prisons" https://www.imdb.com/title/tt6322264/ https://www.imdb.com/title/tt6322264/
- austinprete 3y ago
  If we’re all automatons, there’s no _point_ in prison, but it also doesn’t matter. It’s just something we (automatically) place certain people in so they don’t (automatically) perform actions that society as a whole (automatically) disagrees with. But there’s no point arguing it because in your hypothetical free will-less world we don’t have a choice in the matter. But also we might argue it anyway because we don’t have a choice not to :)
- bloppe 3y ago
  It really doesn't matter if free will exists (however you want to define it). Harming others for personal gain must be punished, otherwise society breaks down.
- kryptiskt 3y ago
  We're even less kind to malfunctioning machinery than bad humans, so I don't think being treated as an automaton sounds like a desirable outcome for a criminal.
artursapek 3y ago
Fun story, I was in a Telegram room with SBF once when my team at another company was listing FTX data on our platform. This was 2021. I asked where their headquarters was (a standard piece of data we listed for each venue) and none of their team knew what to say. Eventually he chimed in with “let’s just go with Antigua” I remember thinking wow how strange, I wonder if these guys are doing sketchy shit. Little did I know.
- jowea 3y ago
  From what I heard they weren't all that good at hiding the sketchiness when you got anywhere close. Even the outside investors saw the unprofessionalism and decided that yes playing LoL in the middle of meeting is actually a positive and bad accounting was not a disqualifier. Thinking about it it's crazy to me that the simple fact of avoiding being headquartered in the US to evade financial regulations is not enough to be treated as a highly suspect enterprise and being restricted from advertising to US consumers on TV.
  - HWR_14 3y ago
    I don't see how bad accounting wasn't a red flag. Accounting is a core competency for an exchange.
    - jowea 3y ago
      To be honest I think I misremembered about the accounting. It was very bad but I can't remember if any external investor noticing, it was just weird that none of them asked for a seat on the board and also failed to conduct enough due diligence to notice how bad it was. In a way, it's like Theranos, it wouldn't be that hard to conduct just enough due diligence to notice something amiss, like the machine barely worked...
diamondfist25 3y ago
I had most of my networth in FTX and it all went down with it. 20 yrs of work, savings, and TSLA + NVIDIA winnings gone just like that It didn’t make any sense what ftx was doing at the time. It’s one thing to steal and embezzle, it’s another to rob the thing wholesale from top to bottom. Its almost like someone schemed all this out, just to funnel people’s money to politicians I’m afraid we won’t ever get to the truth of it, kind of like the Epstein case
- nabogh 3y ago
  I'm sorry this happened to you but why on earth did you take on so much risk?
- jowea 3y ago
  I'm guessing here, and the wanton corporate expenses for the benefit of corporate employees and officers were a big problem, but for the main problem I feel that from their point of view they convinced themselves they were not stealing and embezzling. They had Alameda "invest" with the consumer's money, but they could sincerely thought they were winners, and that the clients would get their money. It's not like with some other cryptocurrency scams where they grabbed the loot and ran. Like seriously, if SBF was thinking of robbing the thing wholesale why didn't he have an escape plan? Where is Ruja Ignatova?
- SnorkelTan 3y ago
  Sounds like you're looking at 7-8 figure sum. You'll probably get something back in bankruptcy.
- ecshafer 3y ago
  Why in the world would you keep your whole net worth in a shady crypto startup like FTX? What's wrong with Vanguard, Blackrock, Fidelity, etc.?
- nocoiner 3y ago
  I can’t believe you were of working age (or close to it) at the tail end of Enron and this pattern doesn’t seem familiar to you.
- 3y ago
AlexanderTheGr8 3y ago
I find such white-collar crimes very interesting because of the math between crime and punishment. For the crime that SBF is alleged to have committed, we can reasonably expect 20 yrs (he will be out in 10-12). But if he had committed a murder, he would be in prison for life (no parole). Mathematically speaking, this implies that a life is worth more than fraud worth 8 billion dollars. We can make a very reasonable assumption that the govt can save 1 additional life using a million dollars (giving necessary treatment to drug addicts / suicidal people / etc). Out of the 8 billion dollars from SBF, government would have got at least 50 million dollars from taxes (this is a lower bound). Out of that 50 million, maybe the govt puts 10-20 million back for public good. So the govt could have saved at least 10-20 people from the money that SBF is alleged to have defrauded. Based on the above, can we say that SBF indirectly killed 10-20 people? What would be the punishment for someone who kills 10-20 people? Surely more than 20 years. This balance between the scale of crime and the severity of punishment can be very interesting. Should someone defrauding 2 billion dollars suffer twice the punishment of someone defrauding 1 billion dollars? What about 2 murders to 1 murder? What about numbers on scale that can change an economy (what SBF did)? More fundamentally, is our legal system scalable?
- Apofis 3y ago
  People aren't money, it's rather simple.
  - AlexanderTheGr8 3y ago
    ?? The basis of my argument was that the govt can save 1 person with a million dollars (by helping drug addicts, people with mental health issues, suicidal people, etc). People aren't money but money can be converted to saved lives.
    - Apofis 3y ago
      Economists love putting numbers on lives, but at the end of the day even if it was a lot of funny money it was funny money in an unregulated and uninsured market that the investors risked investing fully knowing those risks. It’s not really murder and it’s not really going to save any lives either because it would never have been used for that purpose. I get the sentiment, but it just doesn’t work that way.

145 points by perihelions 3y ago

I'm generally against punishment as a whole, as I don't think it works generally, but considering how little responsibility SBF has taken for stealing all this money I think there's a reasonable chance that he'll just turn around and do the same scam again if he's not thrown in jail, or at the very least having the SEC monitoring every single thing he does. Granted, I'm a victim of the Gemini Earn unregistered security scam [1], and so maybe I cannot be an impartial judge here, but SBF is kind of the only non-violent offender that I can think of right now that I honestly feel should be locked up and throw away the key. [1] Before you give me a lecture about how I should have known better and how you'd never fall for such a scam and how Gemini's claims of FDIC insurance would never fool anyone smart, just rest assured I've heard it from the denizens of HN and my peers. I know I was stupid to have done anything with cryptocurrency, and even more stupid to think that Gemini wasn't misleading people about their Gemini Earn program. Just to be clear though, it's not my accusation to called Gemini Earn an unregistered security, it's the SEC's (https://www.sec.gov/news/press-release/2023-7 https://www.sec.gov/news/press-release/2023-7).

knorker 3y ago
Punishment, deterrence for others, and deterrence for the individual themselves, are three important parts of why the state has consequences for bad deeds. The US is pretty punishment-heavy. As a non-US person it even looks sadistic. It's "now I got you, you son of a bitch" social game from "Games People Play". Since you're against "punishment as a whole", I assume you by "punishment" mean "I want them to suffer for what they did"? Giving more than (say) 20 years to most 20-year-old murderer is no different from 120, from either deterrence perspective. When they're 40 they'll be a different person. 120 years of terrible prison conditions does not make anyone better off, compared to 20. Except for the victim's "sense of justice". But man, 20 years? No year more than that will bring your loved one back. Anyway, I agree that we need both types of deterrence for SBF. Otherwise what's to stop people counting on getting "only" 10 years. Steal a billion dollars, hide it in cryptocurrencies, and when you get out of prison you're older, sure, but you are super rich. We need deterrence from him doing it again. And we need deterrence for everyone like him, and everyone who would be remotely involved him people like him. People need to know that if you help this kind of scam, there are dire consequences. Which is why his parents should face the full weight of the harm they caused, to show that it will all be taken away. But I don't see that as "punishment". Not in the way I think you mean it.
- matt004 3y ago
  [flagged]
  - tigeroil 3y ago
    In what sense doesn't it work though? Because from a re-offending rate it unequivocally does work. In terms of preventing new crimes from being committed, I think the honest answer is "it depends". I think early intervention and preventing crime in the first place is always going to beat punishing people for crimes after the fact.
  - bumby 3y ago
    I don't think this type of dichotomy of thinking is helpful. Given that the research seems to suggest that "heavy punitive sentencing" doesn't reduce crime, I think the take away is that human behavior is difficult to change.
  - freedomben 3y ago
    What? Citation is definitely needed for that claim about Scandinavia. Restorative justice may not "work" for every single person in every single situation but neither does punitive sentencing. If you look at recidivism for whether it "works" then restorative justice performs way better in the majority of cases. Then we should consider the moral/ethical correctness of what the justice system is and what it should do.
  - knorker 3y ago
    But then it's not punishment for punishment's sake, but for deterrence's sake. I read the comment as talking about retribution, to make the victim feel good, not about deterrence. Are you saying you have data to show that 20 years for murder has a different deterrent effect than 120 years for murder?
- nineplay 3y ago
  > When they're 40 they'll be a different person. Is there any evidence of that? I say this with sympathy as I suspect some number of violent individuals have as-yet-undetected genetic abnormalities that would make them 'blameless' for their actions if we could track it down. However that wouldn't change their behavior. My son has a non-violent known genetic abnormality and in 20/40/60 years his behavior wouldn't change unless some effective treatment is found. So I think there needs to be some realism injected into this discussion. There are people I would not want as next door neighbors even after they've served a long prison sentence.
monero-xmr 3y ago
You are against the concept of punishment as a whole? Or just for financial crimes? I don’t think without the threat of jail - which is society taking away your time - some violent people would avoid crime.
- hypeit 3y ago
  The threat of punishment doesn't stop people from committing violent crime. Even if you totally eliminated the threat of prison, the actual threat of committing violent crime is that someone will retaliate/defend themselves against you. If you're willing to put your life on the line to rob someone, whether or not you might get put in jail isn't even going to register. Non-violent and financial crime is a different story. SBF should go to prison for life and maybe that would dissuade others from trying to pull of scams of this scale. Every politician who accepted money from SBF should also go to prison if they don't return 100% of the money given to them.
  - gmerc 3y ago
    That’s an awfully certain statement. I don’t know man, it seem likely that some people will be dissuaded from pursuing non passion driven violent crime by appropriate risk of punishment. Sounds like a perfect solution fallacy.
    - hypeit 3y ago
      It's not a perfect solution but it's also not believable that what's stopping people from committing violence is the law and not the violence itself. If you're willing to commit premeditated violence, you're already far beyond the influence of the law. If someone carjacks a car they are willing to accept the risk that the person they're robbing may have a gun. They are literally willing to put their life at risk, something only someone with nothing to lose would do. Do think maybe getting caught by the police and spending 10 years in prison is as big of a threat to this person as being shot and killed (a risk they've already decided to take)?
      - 3y ago
simplicio 3y ago
"we shouldn't lock people up for non-violent crimes except for ones similar to the one I was a victim of" seems like kind of a..limited view? I don't think there's anything particular about SBF that makes him more likely to re-offend (And even if he wanted to, one would hope he'd have a hard time convincing folks to hand over another 8 billion for him to embezzle a second time). Which isn't to say that I don't think he should go to jail (he definitely should!), just that I don't think he's any more jail worthy then people who engage in other forms of non-violent theft and/or fraud.
- gmerc 3y ago
  Can you say this with a straight face while seeing so many people over and over pay Donald Trumps legal fees by donating to the latest cause.
  - tombert 3y ago
    I'm not a fan of Donald Trump at all, but he's never actually been convicted of fraud has he? I'm not disputing that he's committed fraud, but I think that a lot of his followers can do a lot of mental gymnastics and convince themselves that he never actually did anything illegal, in no small part because he's never directly been convicted.
    - hermanradtke 3y ago
      > he's never actually been convicted of fraud has he? His corporation was given the death penalty for wildly overstating the value of assets.
    - hotpotamus 3y ago
      Isn't he banned from operating a nonprofit in New York now, and didn't Trump University get a civil judgement (I'm aware you might not call that a fraud conviction) that disbanded it? That's just from memory - if not technically a criminal, he's quite certifiably crooked, but people will still throw money at him, and I'll never understand people. The other figure that comes to mind is Adam Nuemann (and I'm not alleging anything criminal against him), but apparently he just has a personality that draws VCs with dumptrucks full of money like moths to a flame. Clearly people just have tons of money they don't need these days.
jjtheblunt 3y ago
Do you think punishment is an ineffective deterrent?
- tombert 3y ago
  I do not think punishment is a good deterrent, no; I think the data more or less says that as well. If you look at Scandinavia, where they generally have a much higher emphasis on reform instead of "punishment for punishment's sake", and they also have a substantially lower recidivism rate compared to the US. Now obviously, I'll fully acknowledge that it's not completely apples to apples; there almost certainly a million differences between the US and Scandinavia that contribute to differences in crime statistics, but I think it does demonstrate that reducing emphasis on punishment doesn't turn the world into this post apocalyptic dystopia.
  - throttlebody 3y ago
    You better have another look a the Swedish gang murder rate, it's staggering (in Swedish terms). The world is changing.....
    - InitialLastName 3y ago
      From [0]: > More than 60 people died in shootings last year in Sweden, the highest figure on record. This may be a lot of people for Sweden (~0.5 death per ~100K people); it's not a lot of people in the general sense. Per [1], 19,000 people died from gun homicides in the US in the same year (5 per 100K people). Not exactly a sign that Sweden's system is failing relative to the US. [0] https://apnews.com/article/sweden-shooting-explosion-deadliest-9fd423ed2aaec4ecff2c885f8c48ed55 https://apnews.com/article/sweden-shooting-explosion-deadlie... [1] https://publichealth.jhu.edu/2023/cdc-provisional-data-gun-suicides-reach-all-time-high-in-2022-gun-homicides-down-slightly-from-2021 https://publichealth.jhu.edu/2023/cdc-provisional-data-gun-s...
      - Kiro 3y ago
        I can assure you that every single Swede agrees that it's failing. People are horrified at what's happening. Anyway, bringing up Scandinavia as one unit doesn't work anymore when there's such a big difference between Sweden and for example Norway where restorative justice is still successful.
JumpCrisscross 3y ago
Consider adding corruption and large-scale fraud to your list. Punishment has three purposes: deterrence, incapacitation and retribution. The first two are simple. The last seems irrational. Yet if you ignore it, you wind up with people executing a parallel system of justice (i.e. taking matters into their own hands) and generally losing trust in society. Within the category of crimes that maximise the need for that last element, it’s wide-scale actions that harm a lot of people, visibly, done by a member of or someone perceived to be proximate to the elite.
- ajkjk 3y ago
  aside: I see "retribution" on these lists a lot and usually these days it's disgarded. IMO it's discarded prematurely. The sort of retribution that is like "X hurt me, so punish them" is the one everybody seems to no longer believe in, and that's fine. But there is another sense of retribution that I think is very valuable, which is "maintaining the status quo that people who commit crimes are punished for them". It's not personal retribution but more of a "belief that the system will handle retribution", and it is important because it helps us believe that there is a legitimate criminal justice system that takes care of justice for us and which we can delegate justice to. You alluded to this in your comment when you said "losing trust in society". Mostly I just want to observe that to me it feels like it deserves a separate bullet-point instead of being lumped in with "retribution".
  - bluefishinit 3y ago
    I would rather have a belief that the system will find the root causes of crime and take actions to fix them then believe the system will punish those who break the rules. Punishment causes damage to society beyond just the individual being punished. Criminals have jobs, families and relationships with people who haven't broken the law. Punishment should be used sparingly as the cost to all of society is high. I also believe we'd have lower crime if the massive budgets currently being used on police would be instead used to improve the health and welfare of high crime communities.
    - 3y ago
oooyay 3y ago
IANAL but I'm curious if intent is the deciding factor. Maddoff got 150 years because he knowingly operated a criminal enterprise and admitted to the whole thing eventually. His sons even testified against him when they found out. Maddoff went to great extents to construct his criminal enterprise, operating a small boiler room out of the front office. If prosecutors can show that actual malice and intent were part of his motive then logic would follow he'd get a Maddoff-like sentence. If he's just the worlds biggest bumbling idiot that people put too much faith and money in then it'd be lesser. I'm not quite caught up to when SBF knew he'd started a criminal enterprise versus when he was making reckless decisions.

rootusrootus 3y ago

Can someone knowledgable chime in with the realistic possible penalty for SBF? The news is saying "over 100 years" which I assume has only a tenuous relationship with reality.

jandrese 3y ago
I assume that is just the journalist summing up all of the possible maximum sentences as they usually do. It's really hard to say. On one hand he's a privileged white guy. On the other he stole from a lot of rich people. Bernie Madoff was sentenced to 150 years, but in reality anything over 20 was a life sentence for him. I'm kind of expecting the court to throw the book at SBF simply because he was so brazen about it. When you get that far out of line people want to make an example out of you.
- rsynnott 3y ago
  "Conrad Black. The first rich person to go to prison in 300 years." But yes. If you're a rich guy, best to avoid stealing from other rich people; it does seem to be one of the few things that results in them going to prison.
- youmeantj 3y ago
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- 3seashells 3y ago
  Mostly though to discourage the court from going after themselves for knowingly investing into a scam that collapsed to early.
badrequest 3y ago
He bamboozled as much money from rich people as he did from poors, they're throwing the book at him.
- 3seashells 3y ago
  Can't fraud the original fraudsters.

rendall 3y ago

Patrick Boyle lays out the evidence that SBF's parents were intimately involved in the scam and likely attempted to hide assets. If true, they should be tried as well: https://youtu.be/gLvOT2AldwM?si=QCQv4j1VUrDX_cyf https://youtu.be/gLvOT2AldwM?si=QCQv4j1VUrDX_cyf

greenyoda 3y ago
Thanks, this was a very good analysis of the roles of SBF's parents. Here's a direct link to the FTX debtors complaint against the parents (PDF): https://storage.courtlistener.com/recap/gov.uscourts.deb.188450/gov.uscourts.deb.188450.2642.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.deb.188... The Preliminary Statement begins with: > This action seeks to recover millions of dollars in fraudulently transferred and misappropriated funds from the parents of FTX Founder Samuel Bankman-Fried (“Bankman- Fried”): his father, Defendant Allan Joseph Bankman (“Bankman”), and his mother, Defendant Barbara Fried (“Fried”). As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 Cases (the “Debtors” or the “FTX Group”) and their creditors.
amanj41 3y ago
The email from Sam's dad to Sam whining about his 200k salary was disturbing. It's no surprise that Sam ended up the way he did
- 71a54xd 3y ago
  His brother briefly worked at Jane Street. Right out of college he made $300k, next year $600k - his bosses liked his perf and said he'd be on track to make $5-7M per year if he stayed on for another 2-4 years. Supposedly he still felt inadequate and hated his life...
  - nequo 3y ago
    Those numbers are surprising. Do you have a source for them?

chollida1 3y ago

One thing that the financial press is looking at is where the courts draw the line between incompetence and outright fraud. Everyone agrees that FTX funneled money from FTX customers accounts to Alemada. The government is claiming this is fraud, SBF is claiming it was just allowing Alemeda to have more leverage than other clients. Everyone agrees that FTX gave SBF's parents $30M in real estate. The government is claiming this was fraud, SBF is claiming that it was just payment for work done by his parents for FTX. Everyone agrees that a large part of Alemeda's balance sheet were coins that only had value because they held almost all of them and only they transacted in them, thereby allowing them to keep the price high. The government claims this is accounting fraud and SBF claims this was just a bad marking of their price. Everyone agrees that FTX bought around $100 million in Bahamian realestate. The government says this was stealing from FTX's customers, while SBF is claiming this was just to house FTX employees. Everyone agrees that FTX paid $100's of millions to celebrity endorsers and arena naming deals. The government claims the source of these funds were customers money. SBF claims that both FTX's own cash and customers funds were just one big pool that he just didn't have enough accounting and risk management rules enforced on that large pool of resources to know that FTX ran out of money and he was using customers funds to buy things. I'm not an expert in case law but one thing that stand out to me is just how many of SBF's "friends" and partners have fully turned on him and will testify against him. Caroline Ellison, the CEO of Alameda, Gary Wang, the CTO of FTX and Nishad Singh, FTX' engineering director have all signed cooperation agreements. Also rumours are that SBF will testify, which short of Trump testifying , seems like the worst possible person to take the stand. The winners in this will be the bankruptcy lawyers and people who had cash on had to buy FTX customer claims for 20-30% on the dollar. I think funds that had the forsight to buy these claims and create a side car for their investment will do very well. The yield on this trade though will be determined mostly by the recovery rate and probably more so by the time it takes the lawyers to pay out claims as I've never met a bankruptcy lawyer who was in a hurry to part with the cash and lucrative billing rates they make. One other thing i'm watching but not related to the trials is how far back FTX's bankruptcy lawyers go after people who withdrew money from FTX. With Maddoff the bankruptcy lawyers went after anyone who took money out going back many years. Supposedly there were a few larger hedge funds who took money out of FTX weeks before it went under and stopped withdrawls. There is plenty of precedence for the trustees to go after those funds to ask for the withdrawls back.

matt004 3y ago

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matt004 3y ago

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wmf 3y ago
He's white enough.
outside1234 3y ago
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- matt004 3y ago
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wincy 3y ago
Having whitish skin is pretty much the only criteria for whiteness in the modern world.

seydor 3y ago

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shapefrog 3y ago
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itsoktocry 3y ago
>To what extent is Sbf used as a scapegoat by the media The guy who pretended he was running a legit exchange and hedge fund, lied to lenders, spent customer's funds, acted like an altruist (while laughing about it being bullshit) and made dark political donations is a "scapegoat by the media"?
- eastbound 3y ago
  Yes. All of those should have required proof, they are required to require proof. In the normal world, it is not possible to commit even 10k$ fraud without the signoff of 5 people, so why is a billion dollars in the hands of a 26-year-old different.
dehrmann 3y ago
I wouldn't call SBF a scapegoat. Lots of startups took VC money and didn't go on to allegedly commit fraud. Startups' business models might have been overly optimistic and VCs didn't pay enough attention, but that's not really on trial, here.
hypeit 3y ago
> To what extent is Sbf used as a scapegoat by the media. 0%, in fact 60 Minutes just did a puff piece hagiography for him on Sunday: https://www.cbs.com/shows/video/SLLumNQElCg4KvRF7GUbpKX8_VAJaL72/ https://www.cbs.com/shows/video/SLLumNQElCg4KvRF7GUbpKX8_VAJ...
mcpackieh 3y ago
The point of scapegoats is that the scapegoat is actually sinless, and the sins of others are transferred onto the goat to be sacrificed. SBF is not sinless, he's getting what he deserves. He will be punished for his own crimes, not for the crimes of others. In no conceivable way is he a scapegoat. Other exchanges run by other people also committed crimes, but those crimes aren't what SBF is on trial for. He's on trial for his own crimes.

rurcliped 3y ago

Suppose you have office space in the jail, and give him (or anyone else) the opportunity to apply for remote jobs at anyplace willing to hire him - with the caveat that he loses office access unless he demonstrates that he's maximizing his potential to earn money, all of which will go directly to compensating victims. (Assume that he can't have Zoom calls with arbitrary colleagues of his choice. He can only have Zoom calls with Bill Lumbergh.)

syndicatedjelly 3y ago
Yes, companies will be lining up at his cell door to hire a convicted fraudster.

Biologist123 3y ago

I’ve really come to doubt human ability to exercise free will in all but the rarest of cases. I wonder if SBF really had a moment where a stop/go decision was meaningfully available to him. If we’re all automatons, what’s the point of prison? I’ve been reading Michael Lewis’ account of SBF: he genuinely sounds unhinged.

timfsu 3y ago
Are you saying you don't think deterrence works? I am curious what you're learning about SBF though.
strangattractor 3y ago
Wouldn't being "automatons" be a good argument for prisons? If people's behavior is automatic then removing them from the rest of us seems like the only solution. If you believe in redemption, rehabilitation and change then a complicated system like we have seems inevitable. Sorry I've been binging "Inside the Worlds Toughest Prisons" https://www.imdb.com/title/tt6322264/ https://www.imdb.com/title/tt6322264/
austinprete 3y ago
If we’re all automatons, there’s no _point_ in prison, but it also doesn’t matter. It’s just something we (automatically) place certain people in so they don’t (automatically) perform actions that society as a whole (automatically) disagrees with. But there’s no point arguing it because in your hypothetical free will-less world we don’t have a choice in the matter. But also we might argue it anyway because we don’t have a choice not to :)
bloppe 3y ago
It really doesn't matter if free will exists (however you want to define it). Harming others for personal gain must be punished, otherwise society breaks down.
kryptiskt 3y ago
We're even less kind to malfunctioning machinery than bad humans, so I don't think being treated as an automaton sounds like a desirable outcome for a criminal.

artursapek 3y ago

Fun story, I was in a Telegram room with SBF once when my team at another company was listing FTX data on our platform. This was 2021. I asked where their headquarters was (a standard piece of data we listed for each venue) and none of their team knew what to say. Eventually he chimed in with “let’s just go with Antigua” I remember thinking wow how strange, I wonder if these guys are doing sketchy shit. Little did I know.

jowea 3y ago
From what I heard they weren't all that good at hiding the sketchiness when you got anywhere close. Even the outside investors saw the unprofessionalism and decided that yes playing LoL in the middle of meeting is actually a positive and bad accounting was not a disqualifier. Thinking about it it's crazy to me that the simple fact of avoiding being headquartered in the US to evade financial regulations is not enough to be treated as a highly suspect enterprise and being restricted from advertising to US consumers on TV.
- HWR_14 3y ago
  I don't see how bad accounting wasn't a red flag. Accounting is a core competency for an exchange.
  - jowea 3y ago
    To be honest I think I misremembered about the accounting. It was very bad but I can't remember if any external investor noticing, it was just weird that none of them asked for a seat on the board and also failed to conduct enough due diligence to notice how bad it was. In a way, it's like Theranos, it wouldn't be that hard to conduct just enough due diligence to notice something amiss, like the machine barely worked...

diamondfist25 3y ago

I had most of my networth in FTX and it all went down with it. 20 yrs of work, savings, and TSLA + NVIDIA winnings gone just like that It didn’t make any sense what ftx was doing at the time. It’s one thing to steal and embezzle, it’s another to rob the thing wholesale from top to bottom. Its almost like someone schemed all this out, just to funnel people’s money to politicians I’m afraid we won’t ever get to the truth of it, kind of like the Epstein case

nabogh 3y ago
I'm sorry this happened to you but why on earth did you take on so much risk?
jowea 3y ago
I'm guessing here, and the wanton corporate expenses for the benefit of corporate employees and officers were a big problem, but for the main problem I feel that from their point of view they convinced themselves they were not stealing and embezzling. They had Alameda "invest" with the consumer's money, but they could sincerely thought they were winners, and that the clients would get their money. It's not like with some other cryptocurrency scams where they grabbed the loot and ran. Like seriously, if SBF was thinking of robbing the thing wholesale why didn't he have an escape plan? Where is Ruja Ignatova?
SnorkelTan 3y ago
Sounds like you're looking at 7-8 figure sum. You'll probably get something back in bankruptcy.
ecshafer 3y ago
Why in the world would you keep your whole net worth in a shady crypto startup like FTX? What's wrong with Vanguard, Blackrock, Fidelity, etc.?
nocoiner 3y ago
I can’t believe you were of working age (or close to it) at the tail end of Enron and this pattern doesn’t seem familiar to you.
3y ago

AlexanderTheGr8 3y ago

I find such white-collar crimes very interesting because of the math between crime and punishment. For the crime that SBF is alleged to have committed, we can reasonably expect 20 yrs (he will be out in 10-12). But if he had committed a murder, he would be in prison for life (no parole). Mathematically speaking, this implies that a life is worth more than fraud worth 8 billion dollars. We can make a very reasonable assumption that the govt can save 1 additional life using a million dollars (giving necessary treatment to drug addicts / suicidal people / etc). Out of the 8 billion dollars from SBF, government would have got at least 50 million dollars from taxes (this is a lower bound). Out of that 50 million, maybe the govt puts 10-20 million back for public good. So the govt could have saved at least 10-20 people from the money that SBF is alleged to have defrauded. Based on the above, can we say that SBF indirectly killed 10-20 people? What would be the punishment for someone who kills 10-20 people? Surely more than 20 years. This balance between the scale of crime and the severity of punishment can be very interesting. Should someone defrauding 2 billion dollars suffer twice the punishment of someone defrauding 1 billion dollars? What about 2 murders to 1 murder? What about numbers on scale that can change an economy (what SBF did)? More fundamentally, is our legal system scalable?

Apofis 3y ago
People aren't money, it's rather simple.
- AlexanderTheGr8 3y ago
  ?? The basis of my argument was that the govt can save 1 person with a million dollars (by helping drug addicts, people with mental health issues, suicidal people, etc). People aren't money but money can be converted to saved lives.
  - Apofis 3y ago
    Economists love putting numbers on lives, but at the end of the day even if it was a lot of funny money it was funny money in an unregulated and uninsured market that the investors risked investing fully knowing those risks. It’s not really murder and it’s not really going to save any lives either because it would never have been used for that purpose. I get the sentiment, but it just doesn’t work that way.