11 ms·

Sam Bankman-Fried testifies, says he "skimmed over" FTX terms of service

29 points by notamy 3y ago

robertlagrant 3y ago
When Coffeezilla got him to say on air[0] that the money treated as high risk / no risk the same in terms of repayments, that was a huge moment. [0] https://www.youtube.com/watch?v=4o_jPzBZSIo&t=573s https://www.youtube.com/watch?v=4o_jPzBZSIo&t=573s
chubot 3y ago
Michael Lewis makes an appearance in the courtroom ... Everyone's saying he seems to support Bankman-Fried What happened there ??? The guy who calls out a lot of fraud, now can't see it? I'm disappointed because I found his books enjoyable ... although maybe in retrospect I can't remember that much from them. Maybe he was never really calling them out, but just liked the story. I know there have been a bunch of articles about this -- but what's the tl;dr ? I guess he was always up close and personal with everyone, because that's how he got access to tell these interesting tales. And then you sort of compromise your own viewpoint
- danpalmer 3y ago
  I haven't read the book, I have read reviews and been listening to his podcast. It seems that he likes SBF on a personal level, which I think is reasonable, but then it seems that he falls short of making strong statements about the fraud. I think people have interpreted this combination as an implicit support of SBF, where it could in fact just be that, publishing before the trial, Lewis didn't want to "call it" the wrong way and limit the relevance of his book.
  - hef19898 3y ago
    I already found it odd to publish before the trial, the trial wpupd have been the perfect final chapter.
    - InitialLastName 3y ago
      I suspect that to his (and his publishers' minds) the collapse itself is the finale, and the trial is a marketing campaign. The more press the trial gets, the more people are going to get curious to learn about the background and judge for themselves, and just in time a book about the company/SBF by an author who is notable for his ability to explain and humanize complicated business concepts to a general audience is right there on the front shelf at Barnes and Noble. If anything, when the trial is over they re-release with an epilogue evaluating the trial.
    - rand846633 3y ago
      There were at least 2 other books in the making, all by authors interested in SBF. There was no time to wait if one wanted to be first to market.
    - Doctor_Fegg 3y ago
      There'll be a revised edition. I suspect Lewis was in court partly to gather first-hand impressions for the new chapters on the trial.
    - chubot 3y ago
      Yes exactly! If he's going to pure entertainment value ... I mean this article itself is case in point. It would probably be more than a chapter of material too.
- steveBK123 3y ago
  I think since the GFC he has taken a bit of a turn in that he sees the traditional economy/financial markets/players as rigged against the little guy.. and taken a sort of oppositional defiance disorder approach to the whole thing. So any Don Quixote will look like Robin Hood to him. Flash Boys was just taking sides in a dispute with no real good guys, but the upstart/little guy to him was default "good guy". He took some more explicitly political positions in some of his other books. And now his SBF/FTX fanboyism falls under the same category that "the little guy" has to be the good guy. The Big Short is probably his last great book / and film.
  - tomjakubowski 3y ago
    > the same category that "the little guy" has to be the good guy. Definitely present in Moneyball where the A's are the good guys - they play a similar role as Burry, exploiting inefficiencies in the market created by the big, bad guys (e.g. the Yankees, or housing lenders), for profit.
    - steveBK123 3y ago
      Yes that's a fair assessment. Through line of his books seem to be "little guy is good". In many of the stories the little guy he valorizes is just another neutral actor in a zero sum game. The Big Short it just so happens that the "little guy" who was right got to make money off fairly bad actors! I wouldn't say they were themselves "good", rather more neutral players in a financial market. He now seems to have chosen a little guy (SBF/FTX) who were explicitly bad actors. Also interesting questions in the whole Blind Side story now.
- new2this 3y ago
  Listen to his podcast (Against the Rules) from today and you can hear his take on the trial. I also recommend his interview of Matt Levine (5 episodes ago) to get a good TLDR of the book. Here's my TLDR on the book after finishing it, which mirrors Levine's closely: Michael Lewis sees that Sam thinks he's above the rules and acted with wild disregard for risk because he thought he was smarter than everyone else. It was all illegal and will land him in jail for a long time. But, he did it because he thinks he's the smartest man who ever lived and has the best intentions, not because he sees himself as a crook. It's a minor nuance, but an important one. It speaks more to the ego of founders and children of privilege, than to a criminal conspiracy. The articles you've read don't like that nuance, and call Lewis soft. >What happened there ??? The guy who calls out a lot of fraud, now can't see it? He calls it Fraud many times in his book and in his podcast. He just doesn't call it theft.
- denton-scratch 3y ago
  > Maybe he was never really calling them out, but just liked the story. Hasn't Lewis said as much? I haven't read his books, but I think he writes about people that he basically admires. He doesn't set out to destroy his subjects.
xwdv 3y ago
Ever since I saw that stupid TikTok video about being so “smart” for being a crypto billionaire at age 20 something, I have wished, perhaps even willed into existence, the day Sam Bankman-Fried would go to prison.
system16 3y ago
The most surprising thing about this is how bumbling and incoherent SBF appears. Crooked or not I would expect anybody to be able to convince corporate level execs to invest millions would at least be able to sound like they know what they are talking about.
- xyst 3y ago
  He didn’t “convince” them of anything. He used family connections and those initial investors didn’t do any DD. Other investors noticed those investors put in some money and did the same. Cryptocurrency was also a buzzword so it was an easy sell. It was less of a “con” and more of privilege. And taking advantage of greed. Same thing happened with that one woman that ran “Theranos”. Just know the right people. Although I think she was a slightly better public speaker. The yoda voice shit was weird though.
  - steveBK123 3y ago
    It's disappointing seeing how many of these startup frauds are basically connections laundering at inception. Makes you wonder what % of successful startups are the same (far from 0).
- wnevets 3y ago
  Just shows the power of crypto buzzwords had over an non-technical audience.
- bragr 3y ago
  Not really surprising. When he was on his apology tour before getting arrested, he basically fell apart like this anytime someone asked him good questions and forced him off script. He ended up running from public Twitter Spaces several times because of that. Well you can't bail from the witness stand.
- tennisflyi 3y ago
  Same difference/bell-curve meme. You get punished for succinct answers.
- 3y ago
steveBK123 3y ago
What's crazy to me is that his parents are lawyers and they both acquiesced or abetted his illegal behavior and now his atrocious defense of said illegal behavior. Not to mention that they benefited from it the whole way. They all belong in jail.
- kranke155 3y ago
  His parents seem low level sociopaths, asking him for money (they must have known was stolen) and using each other as a way to get him to comply (according to leaked emails). Sam is just a massive sociopath, born out of this.
  - codehalo 3y ago
    They are far far from low level sociopaths. His father drafted tax legislation for Elizabeth Warren.
    - stcroixx 3y ago
      Is this sarcasm or do you really not think it’s possible that a sociopath could draft tax legislation for Elizabeth Warren ?
      - doubled112 3y ago
        High level is far far from low level, or at least that was my interpretation.
      - momirlan 3y ago
        it doesn't work even as sarcasm. that fact can only say they are competent professionally, nothing about their personality, ethics or morals.
- callalex 3y ago
  They are doing a great job of proving what we already knew: Stanford as an institution is corrupt to its core, from the leadership to the professors, to the alumni. How they continue to have any semblance of a positive reputation is beyond me.
p4bl0 3y ago
I strongly suggest following Molly White's (of web3 is going great fame) coverage of this trial for additional fun. She's here on Mastodon https://hachyderm.io/@molly0xfff https://hachyderm.io/@molly0xfff and also did live stream on her YouTube channel https://www.youtube.com/@molly0xfff/streams https://www.youtube.com/@molly0xfff/streams.
kaycebasques 3y ago
> Sassoon brought out the terms of service Bankman-Fried had testified to and asked him to point out where in the agreement it specified that FTX was permitted to spend customer funds. The court sat in absolute silence for more than a minute... Finally, Bankman-Fried said, “I am not a lawyer” and definitely said a lot of words, none of which made much sense. Sasson asked the same question again, drawing an objection from Cohen, which Kaplan overruled — because Bankman-Fried had not answered her question. The line Bankman-Fried eventually pointed to was that funds were “held and / or transferred by provider.” Check > Bankman-Fried’s defense, in the direct testimony, was trying to put blame on the lawyers: FTX chief regulatory officer Dan Friedberg... A significant thrust of questions was about a bank account controlled by Alameda Research that did not bear Alameda’s name; it was instead called North Dimension, it came into existence around 2020 — that is, while Bankman-Fried was still Alameda’s CEO — and it was where FTX customers were told to wire their funds. Bankman-Fried said that the North Dimension bank account was all Friedberg’s idea. Sassoon asked if Bankman-Fried, as Friedberg’s boss, had given him any direction, or if Friedberg just popped ideas across Bankman-Fried’s desk. The word-salad began again, interrupted only by the judge saying things like “So I take it the answer is you don’t remember; is that about it?” or “Listen to the question and answer the question directly.” ... Then Sassoon did what I had been waiting for: pointed out that Bankman-Fried had been the one who hired Friedberg in 2020. She asked if he’d been hesitant to hire a general counsel. He said he had been hesitant to hire the wrong general counsel — “I did want a general counsel who was comfortable with reasonable risks.” Sassoon then asked if Bankman-Fried was aware of Friedberg’s history of working at a company that had an insider trading scandal? (The company in question, by the way, is UltimateBet.) That there had been a criminal scandal? “Were you aware that Dan Friedberg used illegal narcotics with your employees?” Checkmate
- treis 3y ago
  Not really. SBF didn't write the TOS and doing drugs with coworkers doesn't mean you committed fraud. Obviously SBF did but both of these lines of arguments are distractions to make him look guilty without really proving anything.
chasing 3y ago
Maybe it's because I've mostly become aware of SBF after the shit hit the fan, but I feel I've never seen this guy communicate in a clear and cogent way. It's all just mumbling, dithering, and dissembling. Even reports of how he ran his businesses sound like noise and chaos. He's clearly "smart" in the sense that he knows how to read a book and operate a computer, but we need to stop treating him as anything other than a middling dude who stumbled into a grift.
denton-scratch 3y ago
I thought this guy was supposed to be super-bright. He's decided to face cross-examination, so the judge held this session to check that his defence doesn't include saying stuff that's inadmissible. But from this account, it doesn't sound as if he's got anything interesting to say at all; and I find it surprising that someone supposedly so bright talks in "word salad", i.e. can't construct a coherent sentence. I suspect the story about him being bright comes from people who believe wealth is proof of intelligence.
- tim333 3y ago
  He did physics as MIT so has to be fairly bright. Also his (in)famous explanation of yield farming was the first time I'd heard anyone explain what was going on there. This court case stuff is a different skill set though and also I think it would be beyond almost anyone to talk themselves out of his situation.
ctvo 3y ago
Imagine being told you're very smart since a young age and internalizing it so heavily that you think you can talk your way out of everything. What you really end up internalizing is that other people are stupid. And this is why Sam is going to prison. Other people really aren't that stupid. Some of them are even very smart and competent, like the team prosecuting this.
deleted 3y ago
[deleted]
AlbertCory 3y ago
Let's not forget that Elizabeth Holmes testified in her own defense, too. https://www.bbc.com/news/world-us-canada-65625526 https://www.bbc.com/news/world-us-canada-65625526
xyst 3y ago
It’s like this guy is just begging to get the book thrown at him. Maximum sentence. Federal prison.
foobarian 3y ago
The title highlighting the "skimming over" TOS seems a bit alarmist to me. I bet there are very rare CEOs who could even say that much. As a result my "we don't like this guy so we'll talk up any minor negative thing we find" detectors start to go off. I think he just took money from the wrong people, kinda like Madoff.
- pb7 3y ago
  Good. Maybe we shouldn’t treat a billionaire fraudster with kiddie gloves.
- infecto 3y ago
  1) Not sure how we can take Madoff's ponzi to the level of "he just took money from the wrong people". 2) TOS in financial sectors are generally very well thought out and would not surprise me at the startup level that executive leadership should have a solid understanding of what it does. In this case the TOS in question would allow/disallow FTX the exchange from lending money to sister org Alameda. This seems like a pretty crucial thing that the CEO, SBF, should know.
  - orionsbelt 3y ago
    At the level of FTX's operations, I don't think Sam should have been expected to read the TOS at all. That said: 1. A CEO obviously should have a basic understanding of the rules on using customer assets regardless of whether he read the TOS. It's like Sam claiming he didn't know he had to pay taxes since he never read the tax code. 2. More importantly, when issues arise, a non-criminal organization would have called up legal and said "can we do this?", and waited for them to review the TOS, respond with an answer, and follow that. Sam seems to have purposefully avoided oversight, building out a Board, building out legal, sharing information, etc.
    - infecto 3y ago
      Agree. I care less about the actual TOS and more that he has no idea how to answer the question around customer assets.
nabla9 3y ago
Both testifying and “advice of counsel” defense are very risky hail Mary strategies. He is probably going against the advice of his lawyers because he thinks he is smarter than them. Defendants shouldn’t take the stand in fraud trials. Testifying opens SBF to cross-examination. He is so arrogant that he thinks he will ace it, but evidence points towards him fumbling it. “advice of counsel” defense waives the right to attorney-client privilege.
- HideousKojima 3y ago
  >"advice of counsel” defense waives the right to attorney-client privilege. Does it also remove his ability to appeal on a "competence of counsel" basis or is that only if he goes full-blown self-representation?
nabla9 3y ago
Both testifying and “advice of counsel” defense are very risky hail Mary strategies. Defendants shouldn’t take the stand in fraud trials. He is probably going against the advice of his lawyers because he thinks he is smarter than them. Testifying opens SBF to cross-examination. He is so arrogant that he thinks he will ace it, but evidence points towards him fumbling it. “advice of counsel” defense waives the right to attorney-client privilege.
- actionablefiber 3y ago
  > He is probably going against the advice of his lawyers because he thinks he is smarter than them. I think it's a hail Mary. All his buddies were offered deals to flip on him because he was the big fish. There's no bigger fish for him to flip on, so prosecutors will throw the book at him, no reason to go easy. A conviction is pretty certain and would be pretty bad, so any strategy that could make things better but can't make things worse is ideal.
VHRanger 3y ago
True effective altruism at play here. He's valuing the entertainment of millions above years of his own freedom.
- mseepgood 3y ago
  I don't think freedom is an option for him anymore.
  - VHRanger 3y ago
    No, but testifying unsuccesfully can certainly make him get the higher range of sentencing guidelines
- SpaceManNabs 3y ago
  > True effective altruism at play here. Ngl, I feel terrible for all the people that lost FTX money, but it is kinda amazing to see the world see what a terrible mess and how irreducibly dumb most of the effective altruists are. Kinda like when gwern went off on his eugenics rant and people went: are all of these "rationalists" libertarian lunatics?
  - VHRanger 3y ago
    (yes they are)
- generj 3y ago
  I genuinely chuckled out loud, thank you. More substantively I wonder if he will try to argue his use of the money towards effective altruism made fraud OK during sentencing - surely the money was better spent on charity rather than remaining with the credulous. Why he’s a modern day Robin Hood! And who could be more deserving of charity than himself?
  - A4ET8a8uTh0 3y ago
    More than that. Think of how many fraud and AML careers he managed to catapult. All of a sudden, more AML directors know what python is!
flutas 3y ago
> The word-salad began again, interrupted only by the judge saying things like “So I take it the answer is you don’t remember; is that about it?” or “Listen to the question and answer the question directly.” It was like watching someone get run over by a very slow-moving steam roller. This line encapsulates everything I've thought about this trial. Feels like watching the man scream at the steam roller in Austin Powers.[0] He just can't keep his feet out of his own mouth. At this point I can't tell if it's hubris, or just straight ineptitude. [0]: https://www.youtube.com/watch?v=y_PrZ-J7D3k https://www.youtube.com/watch?v=y_PrZ-J7D3k
- danpalmer 3y ago
  I think it's a combination of a few things. Firstly that he's smart enough that he's got plenty of experience of getting his way just by being smart around people, and yet he's naive enough that he thinks that will work in court under the eye of the whole media. Secondly though he seems to have quickly latched on to a specific sort of messaging that's built around "honesty" and admitting his own failings, not in a real way it seems though. I think he's seen a bunch of people get "cancelled" in recent years and seen that this sort of admission of guilt tends to work well for people. What he doesn't realise though is that this isn't him being accused in the court of public opinion about something the public don't agree fully on, it's a legal accusation in court about specifics that the law is clear on. I'd say this was just bad advice he was being given, but it seemed to happen so quickly that I think it's just his own bad take on the best way out.
  - DriverDaily 3y ago
    > he's naive enough that he thinks that will work in court under the eye of the whole media I mean his publicity tour immediately after FTX went under worked pretty well for a while. He got Kevin O’ Leary to blame CZ in front of congress. And Michael Lewis painted a pretty positive picture. He talked to everyone he could and the vast majority of the media were not sure if he did or did not commit a crime. All he has to do is convince the jury to have a reasonable doubt.
    - 3y ago
rtkwe 3y ago
I feel like this has been known for a while. Months ago he essentially admitted to the core of the charges on a morning show and refused to stop after that. The Serious Trouble podcast, hosted by former (I think?) Twitter legal commentarian PopeHat/Ken White, has covered it a lot and just how much he's screwed his own legal defense. This was even before the bouts of witness tampering attempts that landed him in jail instead of plush house arrest.
- matthewdgreen 3y ago
  The best (non-serious) theory I’ve heard is that his parents are coordinating his conviction to get themselves off the hook. To be clear that’s dark humor and not a serious claim, but it sure explains his defense a lot better than any alternative.
  - rtkwe 3y ago
    The best theory I've heard is he's banking on a hung jury. Only have to convince/persuade one person to get off and he's been able to weasel his way through life so far. As for the pretrial stuff I think that's just not realizing he's in real trouble not just trying to convince an investor to give him money to play with.
    - danpalmer 3y ago
      What's the long game on banking on a hung jury? That would typically lead to a retrial, especially given the publicity and amount of money involved here – the prosecution aren't going to let him off from one hung jury. I feel like he'd need a game plan, either waiting for something additional his team can bring in, or seriously thinking that the practice run would result in a higher likelihood of a not guilty verdict. I don't think either of these is likely, and think the prosecution would likely do better out of the practice run.
      - dylan604 3y ago
        A hung jury does not automatically mean a retrial. The prosecutor has to re-evaluate the situation. If SBF could convince 1 person on this jury, what does the prosecution need to do to prevent that from happening again? Is the expense of a second trial worth trying to put a single non-violent person in jail?
dist-epoch 3y ago
He's a pretty smart guy. Which is why it's so bizarre that he expected to get away with blatantly "borrowing" billions of dollars without permission. Even if he didn't lost one penny he would still have gone to prison for many years.
- lawn 3y ago
  > He's a pretty smart guy. Really? It seems to me all evidence points to the opposite.
- lukev 3y ago
  The tendency of the tech community to view "smartness" as a single axis variable is a major achilles heel. Clearly, it is possible for the same person to be both quite smart and deeply, profoundly stupid. To use a relatable metaphor, there's a reason D&D splits mental stats into separate components: intelligence, wisdom, charisma and alignment aren't the same! Except in real life there's probably way more variables even than those and they're often correlated or anti-correlated in various ways. This is the primary reason conversations on HN involving SBF, Elon Musk, Peter Thiel, Steve Jobs, Eliezer Yudkowsky etc can be so tedious.
  - cmrdporcupine 3y ago
    I wouldn't say this is unique to the world of tech. In fact I suspect that most people working as software engineers are well aware that there's different "kinds" of intelligence, and you'll instead find this single-axis thinking more among the "general population." It is certainly something everyone needs to be reminded of. Being (or sounding) smart on one subject doesn't make you smart on others by definition. As someone who has surfed the Dunning-Kruger wave myself many times, I'm super cautious of looking out for other people doing the same.
    - lukev 3y ago
      Eh, maybe. The tech community seems predisposed to a certain kind of hero worship based on perceived intellect that I don't really see in the rest of society.
rwmj 3y ago
Can someone explain why they did this "practice run" (I guess?) without the jury? It says the judge wanted to find out what answers would be admissible but it's unclear what that means or how the practice run will help here. When they bring the jury back will they do through the whole set of questioning again?
- generj 3y ago
  The main issue at play, from what I read in this story [0], is worry he will gum up the trail by saying everything was on the advice of his lawyers. Which would then require hauling the lawyers in and clarifying they of course never told their client to commit fraud or “borrow” billions of dollars of customer money. >> One decision for Kaplan is whether Bankman-Fried will be allowed to blame FTX lawyers when the jury is back in the courtroom. As we previously wrote, this is called an "advice-of-counsel defense" in which SBF could argue that he sought advice from company lawyers, received advice that his conduct was legal, and "relied on that advice in good faith." [0] https://arstechnica.com/tech-policy/2023/10/sam-bankman-fried-begins-testifying-in-risky-bid-to-beat-ftx-fraud-charges/ https://arstechnica.com/tech-policy/2023/10/sam-bankman-frie...
  - GCA10 3y ago
    It's worth reading Judge Kaplan's earlier rulings related to the "advice of counsel" defense. As the judge writes, you can only invoke this if you "made a complete disclosure to counsel," right at the beginning, of what you planned to do. Sounds like the kind of situation where, once on trial, you'd need to produce an original "Memo to Lawyers" spelling out all of the intended FTX/Alameda games. Once that's on the the table, then you need to have asked the lawyers: can we do this? And then you need a clear response from the lawyers (i.e. a memo) saying: "Yep!" SBF's testimony, peeling away some of the word haze, amounts to: "I think the lawyers were loosely aware of at least some of this stuff and I don't exactly remember them telling me we couldn't do it." That's miles short of the standard (Kaplan-summarized) test. https://storage.courtlistener.com/recap/gov.uscourts.nysd.590939/gov.uscourts.nysd.590939.303.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.59...
- 3y ago
neilv 3y ago
> Unless he pulls out of testifying, the jury is in for a once-in-a-lifetime shitshow. Wouldn't it be better if these journalists stopped coaching the accused? The only other effect I see is prejudicial rubbernecking entertainment.
- erehweb 3y ago
  SBF is undoubtedly getting all the coaching he could use from his lawyers - I doubt that journalists will make a difference here.
  - denton-scratch 3y ago
    > getting all the coaching he could use from his lawyers I imagine he's had good legal advice from good, smart lawyers. But I doubt SBF thinks they're as smart as he is - oh, no!

29 points by notamy 3y ago

When Coffeezilla got him to say on air[0] that the money treated as high risk / no risk the same in terms of repayments, that was a huge moment. [0] https://www.youtube.com/watch?v=4o_jPzBZSIo&t=573s https://www.youtube.com/watch?v=4o_jPzBZSIo&t=573s

chubot 3y ago

Michael Lewis makes an appearance in the courtroom ... Everyone's saying he seems to support Bankman-Fried What happened there ??? The guy who calls out a lot of fraud, now can't see it? I'm disappointed because I found his books enjoyable ... although maybe in retrospect I can't remember that much from them. Maybe he was never really calling them out, but just liked the story. I know there have been a bunch of articles about this -- but what's the tl;dr ? I guess he was always up close and personal with everyone, because that's how he got access to tell these interesting tales. And then you sort of compromise your own viewpoint

danpalmer 3y ago
I haven't read the book, I have read reviews and been listening to his podcast. It seems that he likes SBF on a personal level, which I think is reasonable, but then it seems that he falls short of making strong statements about the fraud. I think people have interpreted this combination as an implicit support of SBF, where it could in fact just be that, publishing before the trial, Lewis didn't want to "call it" the wrong way and limit the relevance of his book.
- hef19898 3y ago
  I already found it odd to publish before the trial, the trial wpupd have been the perfect final chapter.
  - InitialLastName 3y ago
    I suspect that to his (and his publishers' minds) the collapse itself is the finale, and the trial is a marketing campaign. The more press the trial gets, the more people are going to get curious to learn about the background and judge for themselves, and just in time a book about the company/SBF by an author who is notable for his ability to explain and humanize complicated business concepts to a general audience is right there on the front shelf at Barnes and Noble. If anything, when the trial is over they re-release with an epilogue evaluating the trial.
  - rand846633 3y ago
    There were at least 2 other books in the making, all by authors interested in SBF. There was no time to wait if one wanted to be first to market.
  - Doctor_Fegg 3y ago
    There'll be a revised edition. I suspect Lewis was in court partly to gather first-hand impressions for the new chapters on the trial.
  - chubot 3y ago
    Yes exactly! If he's going to pure entertainment value ... I mean this article itself is case in point. It would probably be more than a chapter of material too.
steveBK123 3y ago
I think since the GFC he has taken a bit of a turn in that he sees the traditional economy/financial markets/players as rigged against the little guy.. and taken a sort of oppositional defiance disorder approach to the whole thing. So any Don Quixote will look like Robin Hood to him. Flash Boys was just taking sides in a dispute with no real good guys, but the upstart/little guy to him was default "good guy". He took some more explicitly political positions in some of his other books. And now his SBF/FTX fanboyism falls under the same category that "the little guy" has to be the good guy. The Big Short is probably his last great book / and film.
- tomjakubowski 3y ago
  > the same category that "the little guy" has to be the good guy. Definitely present in Moneyball where the A's are the good guys - they play a similar role as Burry, exploiting inefficiencies in the market created by the big, bad guys (e.g. the Yankees, or housing lenders), for profit.
  - steveBK123 3y ago
    Yes that's a fair assessment. Through line of his books seem to be "little guy is good". In many of the stories the little guy he valorizes is just another neutral actor in a zero sum game. The Big Short it just so happens that the "little guy" who was right got to make money off fairly bad actors! I wouldn't say they were themselves "good", rather more neutral players in a financial market. He now seems to have chosen a little guy (SBF/FTX) who were explicitly bad actors. Also interesting questions in the whole Blind Side story now.
new2this 3y ago
Listen to his podcast (Against the Rules) from today and you can hear his take on the trial. I also recommend his interview of Matt Levine (5 episodes ago) to get a good TLDR of the book. Here's my TLDR on the book after finishing it, which mirrors Levine's closely: Michael Lewis sees that Sam thinks he's above the rules and acted with wild disregard for risk because he thought he was smarter than everyone else. It was all illegal and will land him in jail for a long time. But, he did it because he thinks he's the smartest man who ever lived and has the best intentions, not because he sees himself as a crook. It's a minor nuance, but an important one. It speaks more to the ego of founders and children of privilege, than to a criminal conspiracy. The articles you've read don't like that nuance, and call Lewis soft. >What happened there ??? The guy who calls out a lot of fraud, now can't see it? He calls it Fraud many times in his book and in his podcast. He just doesn't call it theft.
denton-scratch 3y ago
> Maybe he was never really calling them out, but just liked the story. Hasn't Lewis said as much? I haven't read his books, but I think he writes about people that he basically admires. He doesn't set out to destroy his subjects.

xwdv 3y ago

Ever since I saw that stupid TikTok video about being so “smart” for being a crypto billionaire at age 20 something, I have wished, perhaps even willed into existence, the day Sam Bankman-Fried would go to prison.

system16 3y ago

The most surprising thing about this is how bumbling and incoherent SBF appears. Crooked or not I would expect anybody to be able to convince corporate level execs to invest millions would at least be able to sound like they know what they are talking about.

xyst 3y ago
He didn’t “convince” them of anything. He used family connections and those initial investors didn’t do any DD. Other investors noticed those investors put in some money and did the same. Cryptocurrency was also a buzzword so it was an easy sell. It was less of a “con” and more of privilege. And taking advantage of greed. Same thing happened with that one woman that ran “Theranos”. Just know the right people. Although I think she was a slightly better public speaker. The yoda voice shit was weird though.
- steveBK123 3y ago
  It's disappointing seeing how many of these startup frauds are basically connections laundering at inception. Makes you wonder what % of successful startups are the same (far from 0).
wnevets 3y ago
Just shows the power of crypto buzzwords had over an non-technical audience.
bragr 3y ago
Not really surprising. When he was on his apology tour before getting arrested, he basically fell apart like this anytime someone asked him good questions and forced him off script. He ended up running from public Twitter Spaces several times because of that. Well you can't bail from the witness stand.
tennisflyi 3y ago
Same difference/bell-curve meme. You get punished for succinct answers.
3y ago

steveBK123 3y ago

What's crazy to me is that his parents are lawyers and they both acquiesced or abetted his illegal behavior and now his atrocious defense of said illegal behavior. Not to mention that they benefited from it the whole way. They all belong in jail.

kranke155 3y ago
His parents seem low level sociopaths, asking him for money (they must have known was stolen) and using each other as a way to get him to comply (according to leaked emails). Sam is just a massive sociopath, born out of this.
- codehalo 3y ago
  They are far far from low level sociopaths. His father drafted tax legislation for Elizabeth Warren.
  - stcroixx 3y ago
    Is this sarcasm or do you really not think it’s possible that a sociopath could draft tax legislation for Elizabeth Warren ?
    - doubled112 3y ago
      High level is far far from low level, or at least that was my interpretation.
    - momirlan 3y ago
      it doesn't work even as sarcasm. that fact can only say they are competent professionally, nothing about their personality, ethics or morals.
callalex 3y ago
They are doing a great job of proving what we already knew: Stanford as an institution is corrupt to its core, from the leadership to the professors, to the alumni. How they continue to have any semblance of a positive reputation is beyond me.

p4bl0 3y ago

I strongly suggest following Molly White's (of web3 is going great fame) coverage of this trial for additional fun. She's here on Mastodon https://hachyderm.io/@molly0xfff https://hachyderm.io/@molly0xfff and also did live stream on her YouTube channel https://www.youtube.com/@molly0xfff/streams https://www.youtube.com/@molly0xfff/streams.

kaycebasques 3y ago

> Sassoon brought out the terms of service Bankman-Fried had testified to and asked him to point out where in the agreement it specified that FTX was permitted to spend customer funds. The court sat in absolute silence for more than a minute... Finally, Bankman-Fried said, “I am not a lawyer” and definitely said a lot of words, none of which made much sense. Sasson asked the same question again, drawing an objection from Cohen, which Kaplan overruled — because Bankman-Fried had not answered her question. The line Bankman-Fried eventually pointed to was that funds were “held and / or transferred by provider.” Check > Bankman-Fried’s defense, in the direct testimony, was trying to put blame on the lawyers: FTX chief regulatory officer Dan Friedberg... A significant thrust of questions was about a bank account controlled by Alameda Research that did not bear Alameda’s name; it was instead called North Dimension, it came into existence around 2020 — that is, while Bankman-Fried was still Alameda’s CEO — and it was where FTX customers were told to wire their funds. Bankman-Fried said that the North Dimension bank account was all Friedberg’s idea. Sassoon asked if Bankman-Fried, as Friedberg’s boss, had given him any direction, or if Friedberg just popped ideas across Bankman-Fried’s desk. The word-salad began again, interrupted only by the judge saying things like “So I take it the answer is you don’t remember; is that about it?” or “Listen to the question and answer the question directly.” ... Then Sassoon did what I had been waiting for: pointed out that Bankman-Fried had been the one who hired Friedberg in 2020. She asked if he’d been hesitant to hire a general counsel. He said he had been hesitant to hire the wrong general counsel — “I did want a general counsel who was comfortable with reasonable risks.” Sassoon then asked if Bankman-Fried was aware of Friedberg’s history of working at a company that had an insider trading scandal? (The company in question, by the way, is UltimateBet.) That there had been a criminal scandal? “Were you aware that Dan Friedberg used illegal narcotics with your employees?” Checkmate

treis 3y ago
Not really. SBF didn't write the TOS and doing drugs with coworkers doesn't mean you committed fraud. Obviously SBF did but both of these lines of arguments are distractions to make him look guilty without really proving anything.

chasing 3y ago

Maybe it's because I've mostly become aware of SBF after the shit hit the fan, but I feel I've never seen this guy communicate in a clear and cogent way. It's all just mumbling, dithering, and dissembling. Even reports of how he ran his businesses sound like noise and chaos. He's clearly "smart" in the sense that he knows how to read a book and operate a computer, but we need to stop treating him as anything other than a middling dude who stumbled into a grift.

denton-scratch 3y ago

I thought this guy was supposed to be super-bright. He's decided to face cross-examination, so the judge held this session to check that his defence doesn't include saying stuff that's inadmissible. But from this account, it doesn't sound as if he's got anything interesting to say at all; and I find it surprising that someone supposedly so bright talks in "word salad", i.e. can't construct a coherent sentence. I suspect the story about him being bright comes from people who believe wealth is proof of intelligence.

tim333 3y ago
He did physics as MIT so has to be fairly bright. Also his (in)famous explanation of yield farming was the first time I'd heard anyone explain what was going on there. This court case stuff is a different skill set though and also I think it would be beyond almost anyone to talk themselves out of his situation.

ctvo 3y ago

Imagine being told you're very smart since a young age and internalizing it so heavily that you think you can talk your way out of everything. What you really end up internalizing is that other people are stupid. And this is why Sam is going to prison. Other people really aren't that stupid. Some of them are even very smart and competent, like the team prosecuting this.

deleted 3y ago

[deleted]

AlbertCory 3y ago

Let's not forget that Elizabeth Holmes testified in her own defense, too. https://www.bbc.com/news/world-us-canada-65625526 https://www.bbc.com/news/world-us-canada-65625526

xyst 3y ago

It’s like this guy is just begging to get the book thrown at him. Maximum sentence. Federal prison.

foobarian 3y ago

The title highlighting the "skimming over" TOS seems a bit alarmist to me. I bet there are very rare CEOs who could even say that much. As a result my "we don't like this guy so we'll talk up any minor negative thing we find" detectors start to go off. I think he just took money from the wrong people, kinda like Madoff.

pb7 3y ago
Good. Maybe we shouldn’t treat a billionaire fraudster with kiddie gloves.
infecto 3y ago
1) Not sure how we can take Madoff's ponzi to the level of "he just took money from the wrong people". 2) TOS in financial sectors are generally very well thought out and would not surprise me at the startup level that executive leadership should have a solid understanding of what it does. In this case the TOS in question would allow/disallow FTX the exchange from lending money to sister org Alameda. This seems like a pretty crucial thing that the CEO, SBF, should know.
- orionsbelt 3y ago
  At the level of FTX's operations, I don't think Sam should have been expected to read the TOS at all. That said: 1. A CEO obviously should have a basic understanding of the rules on using customer assets regardless of whether he read the TOS. It's like Sam claiming he didn't know he had to pay taxes since he never read the tax code. 2. More importantly, when issues arise, a non-criminal organization would have called up legal and said "can we do this?", and waited for them to review the TOS, respond with an answer, and follow that. Sam seems to have purposefully avoided oversight, building out a Board, building out legal, sharing information, etc.
  - infecto 3y ago
    Agree. I care less about the actual TOS and more that he has no idea how to answer the question around customer assets.

nabla9 3y ago

Both testifying and “advice of counsel” defense are very risky hail Mary strategies. He is probably going against the advice of his lawyers because he thinks he is smarter than them. Defendants shouldn’t take the stand in fraud trials. Testifying opens SBF to cross-examination. He is so arrogant that he thinks he will ace it, but evidence points towards him fumbling it. “advice of counsel” defense waives the right to attorney-client privilege.

HideousKojima 3y ago
>"advice of counsel” defense waives the right to attorney-client privilege. Does it also remove his ability to appeal on a "competence of counsel" basis or is that only if he goes full-blown self-representation?

nabla9 3y ago

Both testifying and “advice of counsel” defense are very risky hail Mary strategies. Defendants shouldn’t take the stand in fraud trials. He is probably going against the advice of his lawyers because he thinks he is smarter than them. Testifying opens SBF to cross-examination. He is so arrogant that he thinks he will ace it, but evidence points towards him fumbling it. “advice of counsel” defense waives the right to attorney-client privilege.

actionablefiber 3y ago
> He is probably going against the advice of his lawyers because he thinks he is smarter than them. I think it's a hail Mary. All his buddies were offered deals to flip on him because he was the big fish. There's no bigger fish for him to flip on, so prosecutors will throw the book at him, no reason to go easy. A conviction is pretty certain and would be pretty bad, so any strategy that could make things better but can't make things worse is ideal.

VHRanger 3y ago

True effective altruism at play here. He's valuing the entertainment of millions above years of his own freedom.

mseepgood 3y ago
I don't think freedom is an option for him anymore.
- VHRanger 3y ago
  No, but testifying unsuccesfully can certainly make him get the higher range of sentencing guidelines
SpaceManNabs 3y ago
> True effective altruism at play here. Ngl, I feel terrible for all the people that lost FTX money, but it is kinda amazing to see the world see what a terrible mess and how irreducibly dumb most of the effective altruists are. Kinda like when gwern went off on his eugenics rant and people went: are all of these "rationalists" libertarian lunatics?
- VHRanger 3y ago
  (yes they are)
generj 3y ago
I genuinely chuckled out loud, thank you. More substantively I wonder if he will try to argue his use of the money towards effective altruism made fraud OK during sentencing - surely the money was better spent on charity rather than remaining with the credulous. Why he’s a modern day Robin Hood! And who could be more deserving of charity than himself?
- A4ET8a8uTh0 3y ago
  More than that. Think of how many fraud and AML careers he managed to catapult. All of a sudden, more AML directors know what python is!

flutas 3y ago

> The word-salad began again, interrupted only by the judge saying things like “So I take it the answer is you don’t remember; is that about it?” or “Listen to the question and answer the question directly.” It was like watching someone get run over by a very slow-moving steam roller. This line encapsulates everything I've thought about this trial. Feels like watching the man scream at the steam roller in Austin Powers.[0] He just can't keep his feet out of his own mouth. At this point I can't tell if it's hubris, or just straight ineptitude. [0]: https://www.youtube.com/watch?v=y_PrZ-J7D3k https://www.youtube.com/watch?v=y_PrZ-J7D3k

danpalmer 3y ago
I think it's a combination of a few things. Firstly that he's smart enough that he's got plenty of experience of getting his way just by being smart around people, and yet he's naive enough that he thinks that will work in court under the eye of the whole media. Secondly though he seems to have quickly latched on to a specific sort of messaging that's built around "honesty" and admitting his own failings, not in a real way it seems though. I think he's seen a bunch of people get "cancelled" in recent years and seen that this sort of admission of guilt tends to work well for people. What he doesn't realise though is that this isn't him being accused in the court of public opinion about something the public don't agree fully on, it's a legal accusation in court about specifics that the law is clear on. I'd say this was just bad advice he was being given, but it seemed to happen so quickly that I think it's just his own bad take on the best way out.
- DriverDaily 3y ago
  > he's naive enough that he thinks that will work in court under the eye of the whole media I mean his publicity tour immediately after FTX went under worked pretty well for a while. He got Kevin O’ Leary to blame CZ in front of congress. And Michael Lewis painted a pretty positive picture. He talked to everyone he could and the vast majority of the media were not sure if he did or did not commit a crime. All he has to do is convince the jury to have a reasonable doubt.
  - 3y ago

rtkwe 3y ago

I feel like this has been known for a while. Months ago he essentially admitted to the core of the charges on a morning show and refused to stop after that. The Serious Trouble podcast, hosted by former (I think?) Twitter legal commentarian PopeHat/Ken White, has covered it a lot and just how much he's screwed his own legal defense. This was even before the bouts of witness tampering attempts that landed him in jail instead of plush house arrest.

matthewdgreen 3y ago
The best (non-serious) theory I’ve heard is that his parents are coordinating his conviction to get themselves off the hook. To be clear that’s dark humor and not a serious claim, but it sure explains his defense a lot better than any alternative.
- rtkwe 3y ago
  The best theory I've heard is he's banking on a hung jury. Only have to convince/persuade one person to get off and he's been able to weasel his way through life so far. As for the pretrial stuff I think that's just not realizing he's in real trouble not just trying to convince an investor to give him money to play with.
  - danpalmer 3y ago
    What's the long game on banking on a hung jury? That would typically lead to a retrial, especially given the publicity and amount of money involved here – the prosecution aren't going to let him off from one hung jury. I feel like he'd need a game plan, either waiting for something additional his team can bring in, or seriously thinking that the practice run would result in a higher likelihood of a not guilty verdict. I don't think either of these is likely, and think the prosecution would likely do better out of the practice run.
    - dylan604 3y ago
      A hung jury does not automatically mean a retrial. The prosecutor has to re-evaluate the situation. If SBF could convince 1 person on this jury, what does the prosecution need to do to prevent that from happening again? Is the expense of a second trial worth trying to put a single non-violent person in jail?

dist-epoch 3y ago

He's a pretty smart guy. Which is why it's so bizarre that he expected to get away with blatantly "borrowing" billions of dollars without permission. Even if he didn't lost one penny he would still have gone to prison for many years.

lawn 3y ago
> He's a pretty smart guy. Really? It seems to me all evidence points to the opposite.
lukev 3y ago
The tendency of the tech community to view "smartness" as a single axis variable is a major achilles heel. Clearly, it is possible for the same person to be both quite smart and deeply, profoundly stupid. To use a relatable metaphor, there's a reason D&D splits mental stats into separate components: intelligence, wisdom, charisma and alignment aren't the same! Except in real life there's probably way more variables even than those and they're often correlated or anti-correlated in various ways. This is the primary reason conversations on HN involving SBF, Elon Musk, Peter Thiel, Steve Jobs, Eliezer Yudkowsky etc can be so tedious.
- cmrdporcupine 3y ago
  I wouldn't say this is unique to the world of tech. In fact I suspect that most people working as software engineers are well aware that there's different "kinds" of intelligence, and you'll instead find this single-axis thinking more among the "general population." It is certainly something everyone needs to be reminded of. Being (or sounding) smart on one subject doesn't make you smart on others by definition. As someone who has surfed the Dunning-Kruger wave myself many times, I'm super cautious of looking out for other people doing the same.
  - lukev 3y ago
    Eh, maybe. The tech community seems predisposed to a certain kind of hero worship based on perceived intellect that I don't really see in the rest of society.

rwmj 3y ago

Can someone explain why they did this "practice run" (I guess?) without the jury? It says the judge wanted to find out what answers would be admissible but it's unclear what that means or how the practice run will help here. When they bring the jury back will they do through the whole set of questioning again?

generj 3y ago
The main issue at play, from what I read in this story [0], is worry he will gum up the trail by saying everything was on the advice of his lawyers. Which would then require hauling the lawyers in and clarifying they of course never told their client to commit fraud or “borrow” billions of dollars of customer money. >> One decision for Kaplan is whether Bankman-Fried will be allowed to blame FTX lawyers when the jury is back in the courtroom. As we previously wrote, this is called an "advice-of-counsel defense" in which SBF could argue that he sought advice from company lawyers, received advice that his conduct was legal, and "relied on that advice in good faith." [0] https://arstechnica.com/tech-policy/2023/10/sam-bankman-fried-begins-testifying-in-risky-bid-to-beat-ftx-fraud-charges/ https://arstechnica.com/tech-policy/2023/10/sam-bankman-frie...
- GCA10 3y ago
  It's worth reading Judge Kaplan's earlier rulings related to the "advice of counsel" defense. As the judge writes, you can only invoke this if you "made a complete disclosure to counsel," right at the beginning, of what you planned to do. Sounds like the kind of situation where, once on trial, you'd need to produce an original "Memo to Lawyers" spelling out all of the intended FTX/Alameda games. Once that's on the the table, then you need to have asked the lawyers: can we do this? And then you need a clear response from the lawyers (i.e. a memo) saying: "Yep!" SBF's testimony, peeling away some of the word haze, amounts to: "I think the lawyers were loosely aware of at least some of this stuff and I don't exactly remember them telling me we couldn't do it." That's miles short of the standard (Kaplan-summarized) test. https://storage.courtlistener.com/recap/gov.uscourts.nysd.590939/gov.uscourts.nysd.590939.303.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.59...
3y ago

neilv 3y ago

> Unless he pulls out of testifying, the jury is in for a once-in-a-lifetime shitshow. Wouldn't it be better if these journalists stopped coaching the accused? The only other effect I see is prejudicial rubbernecking entertainment.

erehweb 3y ago
SBF is undoubtedly getting all the coaching he could use from his lawyers - I doubt that journalists will make a difference here.
- denton-scratch 3y ago
  > getting all the coaching he could use from his lawyers I imagine he's had good legal advice from good, smart lawyers. But I doubt SBF thinks they're as smart as he is - oh, no!