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I don't think SBF was a scammer in the Bernie Madoff sense. I don't think he set out to intentionally scam anyone. I just think he was so arrogant that he thoug

by Zanni 3y ago

I don't think SBF was a scammer in the Bernie Madoff sense. I don't think he set out to intentionally scam anyone. I just think he was so arrogant that he thought he could do whatever he wanted. He thinks he's smart and the rest of the world is dumb. He thinks the legal system is just something to "route around." Not because he wants to steal money but because, if there's money in "his" account, does it really matter if it technically belongs to a customer? He seeemed genuinely surprised at the verdict, and he's acted all along as if he were, not exactly innocent but undeserving of all this bother.

RandomLensman 3y ago
How does using a random number generator in sizing the insurance fund fit into that view?
- sirclueless 3y ago
  Like every other decision SBF would prefer you not examine: It fits because the ends justify the means. It's important for the business that the insurance fund is safe. If you look closely you will find that it is unsafe. But if people believe it is safe you won't need the insurance fund, so do whatever you need to to inspire confidence in the insurance fund.
  - RandomLensman 3y ago
    The safety (or not) of the insurance fund is not related to the need for it. The need would come from a counterparty defaulting - which is generally unrelated.
- Nextgrid 3y ago
  That's typical startup shenanigans, not specific to FTX. Lying to customers and embellishing the truth is business as usual. I'm sure they hoped that at one point they'd turn this into a real insurance fund.
  - Cheezewheel 3y ago
    If that is the case then the standard operating procedures of startups is fraud, not that Sam isn't somehow a deliberate scammer and con artist.
- bambax 3y ago
  FTX had "infinite money", so the actual insurance fund was that supply of money; having a pretend number on the front page was simpler than actually implementing it; in a sense it was a favor to investors, because it saved on operational costs. (All things SBF may have told himself.)
camgunz 3y ago
Yeah, Madoff was a scammer, SBF is a megalomaniac. He thought he couldn't fail, and thus the rules didn't apply to him. So, when he did (predictably) fail his reaction as basically a big "I didn't mean to do anything wrong, therefore I shouldn't be punished" makes sense. But hey you know what, this is why we have rules. Not following the rules was actually the wrong thing, not losing people's money, which--crucially--he couldn't have done had he followed the rules. I feel like justice is being done here, but there's a sense in which SBF and his cohort are the victims here. A world of zero interest rate incentives/people, a trendy money machine in crypto, a general sense that old people/regulations are impoverishing us all with their nervous sclerosis, all created an environment where--in hindsight--this was inevitable. If not FTX then someone else. I think people are 100% right to call out the press/publications/investors/regulators who flat out encouraged this charade to continue well beyond the point where it was an obvious scam, and I think we really need to examine the VC culture of "find (or create) a young megalomaniac, give them tons of money, ... profit". How do we think these things will turn out? Will we spend billions of dollars building Uber, which at this point is an app that shows you ads and incidentally hails a cab? Will we spend billions of dollars building trash companies that scam people? Will we spend billions of dollars building Airbnb, which was pretty ruinous for cities and at this point not even a good business? Will we spend billions of dollars building e-scooter companies that exist essentially to create tons of e-waste that litters our sidewalks and landfills? It's nuts. Please just fund day care.
bambax 3y ago
Yes, I agree with that. It's undeniable he committed fraud, repeatedly lied to his clients and tried to make them give him money by telling them tales that weren't true. But it also seems likely he thought he was clever/lucky enough that it would all work out in the end. That makes the intent different, and culpability is always about intent. In fact SBF reminds me more of Billy McFarland (of Fyre Festival fame) than of Madoff.
- itsoktocry 3y ago
  >It's undeniable he committed fraud, repeatedly lied to his clients and tried to make them give him money by telling them tales that weren't true. What on earth is the difference between this and Madoff? >But it also seems likely he thought he was clever/lucky enough that it would all work out in the end. What on earth is the difference between this and Madoff? >That makes the intent different Why do you assume bad intent in one case and none in the other? SBF stole customer money and used it for political donations during one of the most heated, divisive, controversial elections in recent American history. He's the sitting President's largest donator, and he's going to prison for fraud. The potential consequences here are massive.
  - bambax 3y ago
    There's a possibility that the customers of FTX recover most or all of their money, thanks to SBF's investments. Those investments were fraudulent because they were made without the consent of the people providing the money, but they were investments nonetheless: SBF was buying assets, not just pissing money away in jets and catering (although he also did that). In Madoff's case there were no assets at all. It was not possible for Madoff to convince himself he was doing something that may become viable, given enough time. It was possible for SBF. I think that's a pretty big difference. (Also, campaign finance violations are not part of the trial that just ended, at all.)
jcranmer 3y ago
SBF strikes me as someone who firmly believes ends-justify-the-means, and as such, if all his victims could be made whole, then he couldn't have committed any fraud. However, Matt Levine put it best: > You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.

by Zanni 3y ago

RandomLensman 3y ago

How does using a random number generator in sizing the insurance fund fit into that view?

sirclueless 3y ago
Like every other decision SBF would prefer you not examine: It fits because the ends justify the means. It's important for the business that the insurance fund is safe. If you look closely you will find that it is unsafe. But if people believe it is safe you won't need the insurance fund, so do whatever you need to to inspire confidence in the insurance fund.
- RandomLensman 3y ago
  The safety (or not) of the insurance fund is not related to the need for it. The need would come from a counterparty defaulting - which is generally unrelated.
Nextgrid 3y ago
That's typical startup shenanigans, not specific to FTX. Lying to customers and embellishing the truth is business as usual. I'm sure they hoped that at one point they'd turn this into a real insurance fund.
- Cheezewheel 3y ago
  If that is the case then the standard operating procedures of startups is fraud, not that Sam isn't somehow a deliberate scammer and con artist.
bambax 3y ago
FTX had "infinite money", so the actual insurance fund was that supply of money; having a pretend number on the front page was simpler than actually implementing it; in a sense it was a favor to investors, because it saved on operational costs. (All things SBF may have told himself.)

camgunz 3y ago

Yeah, Madoff was a scammer, SBF is a megalomaniac. He thought he couldn't fail, and thus the rules didn't apply to him. So, when he did (predictably) fail his reaction as basically a big "I didn't mean to do anything wrong, therefore I shouldn't be punished" makes sense. But hey you know what, this is why we have rules. Not following the rules was actually the wrong thing, not losing people's money, which--crucially--he couldn't have done had he followed the rules. I feel like justice is being done here, but there's a sense in which SBF and his cohort are the victims here. A world of zero interest rate incentives/people, a trendy money machine in crypto, a general sense that old people/regulations are impoverishing us all with their nervous sclerosis, all created an environment where--in hindsight--this was inevitable. If not FTX then someone else. I think people are 100% right to call out the press/publications/investors/regulators who flat out encouraged this charade to continue well beyond the point where it was an obvious scam, and I think we really need to examine the VC culture of "find (or create) a young megalomaniac, give them tons of money, ... profit". How do we think these things will turn out? Will we spend billions of dollars building Uber, which at this point is an app that shows you ads and incidentally hails a cab? Will we spend billions of dollars building trash companies that scam people? Will we spend billions of dollars building Airbnb, which was pretty ruinous for cities and at this point not even a good business? Will we spend billions of dollars building e-scooter companies that exist essentially to create tons of e-waste that litters our sidewalks and landfills? It's nuts. Please just fund day care.

bambax 3y ago

Yes, I agree with that. It's undeniable he committed fraud, repeatedly lied to his clients and tried to make them give him money by telling them tales that weren't true. But it also seems likely he thought he was clever/lucky enough that it would all work out in the end. That makes the intent different, and culpability is always about intent. In fact SBF reminds me more of Billy McFarland (of Fyre Festival fame) than of Madoff.

itsoktocry 3y ago
>It's undeniable he committed fraud, repeatedly lied to his clients and tried to make them give him money by telling them tales that weren't true. What on earth is the difference between this and Madoff? >But it also seems likely he thought he was clever/lucky enough that it would all work out in the end. What on earth is the difference between this and Madoff? >That makes the intent different Why do you assume bad intent in one case and none in the other? SBF stole customer money and used it for political donations during one of the most heated, divisive, controversial elections in recent American history. He's the sitting President's largest donator, and he's going to prison for fraud. The potential consequences here are massive.
- bambax 3y ago
  There's a possibility that the customers of FTX recover most or all of their money, thanks to SBF's investments. Those investments were fraudulent because they were made without the consent of the people providing the money, but they were investments nonetheless: SBF was buying assets, not just pissing money away in jets and catering (although he also did that). In Madoff's case there were no assets at all. It was not possible for Madoff to convince himself he was doing something that may become viable, given enough time. It was possible for SBF. I think that's a pretty big difference. (Also, campaign finance violations are not part of the trial that just ended, at all.)

jcranmer 3y ago

SBF strikes me as someone who firmly believes ends-justify-the-means, and as such, if all his victims could be made whole, then he couldn't have committed any fraud. However, Matt Levine put it best: > You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.