6 ms·

US judge says FTX can sell its Anthropic shares; FTX invested $500M in 2021

tsunamifury 3y ago
I get what Sam did was wrong -- but uh... doesn't it look like everyone is going to get a return on their investment? Like -- uh -- weren't there far worse players through all this than Sam at the end of the game? For example the SPAC borderline scams that lost investors billions? Something smells really strange here...
- toomuchtodo 3y ago
  Martin Shkreli pulled off a similar feat, still went to jail for the fraud even though he made investors whole. https://www.nytimes.com/2017/07/26/business/dealbook/martin-shkreli-trial.html https://www.nytimes.com/2017/07/26/business/dealbook/martin-... | https://archive.today/gH2zT https://archive.today/gH2zT https://en.wikipedia.org/wiki/Martin_Shkreli#Criminal_conviction https://en.wikipedia.org/wiki/Martin_Shkreli#Criminal_convic...
- nfRfqX5n 3y ago
  Assets have been in limbo for over a year now. Won’t believe people are made whole until it actually happens.
- orionsbelt 3y ago
  If a store employee steals $500 from the till, gambles it on what he thinks is a sure bet, doubles the money, and returns $600 back to the till, that’s still theft, wrong, and punishable, even if the store happened to win in the end. Perhaps not an exact analogy, but seems reasonably close. It must be driving Sam insane though to think he could have made it all fine if he had hung on a few more months.
  - mandevil 3y ago
    Eh, he had made exactly these sorts of bets before and he won those. Because it is gambling, eventually you lose a bet or two. While experienced gamblers learn to manage risk- mostly by diversifying and betting small chunks of your pot on different, uncorrelated bets, SBF never did. He continually bet his entire net worth- and his freedom- in one big gamble again and again. And it worked for a while. Until it didn't. But if he did get this bet to pay off, then he would have done it again, clearly. And eventually, one of the gambles would break like this one did.
    - jcranmer 3y ago
      The crime isn't that FTX lost its gambles. The crime is that FTX was gambling with money it legally couldn't use for the gambles.
      - mandevil 3y ago
        Right. I was responding to the comment that "it must be driving Sam insane though to think he could have made it all fine if he had hung on a few more months." But the problem is, even if he had made this gamble pay off, by his very nature the man was determined to bet his freedom and net worth again and again on, at best, 51-49 bets. Because he wasn't actually a very good gambler.
      - webmaven 3y ago
        In effect, it was an unsecured high-stakes side-bet on whether he would get caught.
  - awongh 3y ago
    I feel like it must be true that there are many others out there that were able to hang on and now we merely know about them as a wealthy person, rather than as a criminal. The question is what the ratio is: one caught for every ten not caught?
    - c22 3y ago
      This is probably more rare than you think since very few fraudsters seem to know when to quit. Even after getting away with massive gains there is temptation to do it again (and now the risk seems even more justified due to past experience).
  - scosman 3y ago
    And they put the money back in the till years later, after the owner of the store lost their house.
- Etheryte 3y ago
  If you steal a million dollars, put it all on a lucky red turning that million into two, and then put the original million back, you still stole a million dollars at the start.
- Mistletoe 3y ago
  https://www.investopedia.com/why-ftx-plan-to-refund-90-percent-of-recovered-assets-doesnt-add-up-to-90-percent-of-what-customers-lost-8362556 https://www.investopedia.com/why-ftx-plan-to-refund-90-perce... > FTX expects to pay all customers in full, although it will calculate their repayment based on cryptocurrency prices from November 2022, when FTX filed for bankruptcy amid a prolonged slump in the crypto market, rather than at the present, higher value of crypto assets. November 2022 was a bottom they themselves created. Bitcoin has tripled in value since then so paying in USD is a huge loss for the affected customers. And let’s not neglect the massive fees that the bankruptcy lawyers for FTX have raked in. > The filings also show that FTX has paid lawyers a total of $350 million since bankruptcy proceedings began earlier this year and that from August to October, it shelled out somewhere in the region of $1.4 million per day. That was from Dec. 2023 I’m sure it is much more now. That money comes from somewhere.
  - hef19898 3y ago
    Yeah, that's what happens when a fraud, a crook ruins a business and bankruptcy lawyers have to take over to save whatever can be saved for victims of said fraud.
  - sidewndr46 3y ago
    Holy shit, $350 million? how the hell is that even possible?
  - Scoundreller 3y ago
    Trick is to be lucky like Bernie Madoff creditors. Then SIPC covers all the fees. > No funds recovered in the Madoff Recovery Initiative are used to pay costs associated with the recovery. All trustee, legal, and accounting fees, as well as administrative expenses, are paid by SIPC. https://www.sipc.org/news-and-media/news-releases/20231208 https://www.sipc.org/news-and-media/news-releases/20231208 Still chugging along doing collections and distributions, oh and of course billing, to this day 16 years later.
- johndhi 3y ago
  Honestly these prosecutions are really just driven by the media. They just are. The fact that sam was young and had a poluamorous house in the Bahamas meant this was front page material. This then meant that prosecutors feel they must do something about it to show the world you can't commit fraud AND be widely known and get away with it. People who commit fraud and aren't widely known aren't treated the same by our justice department.
  - gamblor956 3y ago
    You're right. People who commit fraud and aren't widely known don't get house arrest pending trial, they go straight to a federal holding facility. They don't get to access the internet or play video games all day, they get to look at 4 walls and contemplate the meaning of life. SBF benefited from being widely known. Most people aren't that lucky.
    - sidewndr46 3y ago
      He benefited from having a well connected family.
- nostrademons 3y ago
  The way punishment and deterrence works in the U.S. is that you pick a high profile villain and make an example out of them, and then hope that the publicity generated by their punishment works to deter similar actors. Enforcement agencies like the SEC and FBI are bureaucracies just like major corporations, and often have fewer resources and lower paid employees. They don't have the resources to go after every criminal. So they pick the most high-impact, hated, and sensational cases to go after, then rely on the media to amplify the deterrence value. Most SPACs never made headlines on the way up; therefore prosecuting them is not going to make headlines on the way down. They'd spend a lot of resources to gather evidence and prove a court case, but it would have zero deterrence value to other potential criminals, because nobody will ever hear about the successful prosecution. It is far more cost-effective to go after SBF and FTX, which was very prominent in the 2019/2020 crypto bull run and many Americans personally lost money in its collapse, and use that to send a message to the rest of the crypto sector.
  - latchkey 3y ago
    > many American politicians personally lost money in its collapse
    - nostrademons 3y ago
      That too, and it was a general embarrassment for the U.S. government because he was the largest donor for many politicians who remained in office. They couldn't afford to not prosecute him, because it'd make them look (even more) corrupt.
      - JumpCrisscross 3y ago
        > it was a general embarrassment for the U.S. government because he was the largest donor for many politicians who remained in office This was irrelevant. You’re describing political opportunity for legislative primary runs. Bankman-Fried was prosecuted. What made him a sitting duck was his high profile, the stupidity of his blow-up and his inability to not maintain that high profile after he’d combusted. It was an easy, juicy case that made careers.
- mouse_ 3y ago
  Maybe they're harder on conmen who buy super bowl ads.
- mandevil 3y ago
  A big part of why investors are being made whole is also that what they are owed froze into dollars at the moment of bankruptcy. If you had 1 BTC in FTX at the point of bankruptcy, and that was worth 20,000 on that day, you do not get 1 BTC back (or what 1 BTC is worth today)- you get cash for the amount it was worth on the day of bankruptcy. So as crypto prices have gone up again, the assets that FTX owned have gone up and the amount they owe has stayed constant. This is only possible because FTX is no longer a continuing operation- if they still owed that customer 1 BTC then the assets appreciating and the debts increasing does nothing to help them.
- pgodzin 3y ago
  What's being punished is the fraud, not the losses. We do not want to incentivize companies putting it all on red with customer funds they don't have a right to touch as long as they win the bet, we want to punish them for even trying, regardless of whether it happened to work this time.
  - tsunamifury 3y ago
    I get that, but whats the point of NO HARM is proven.
- tananaev 3y ago
  Most people won't get anything close to what they had. That's because bankruptcy claims are locked in USD on the date on the filing, which was pretty much the bottom of the market. And they certainly won't get any returns on the investment. Let's say you had 1 BTC at the time of bankruptcy which was worth $20k for the sake of example. Your claim is now $20k and you won't get more than that. And even if you get 100% of that, it's only 0.4 BTC at current prices.
  - fragmede 3y ago
    For people who's life savings was that $20k, that's still $20k that they'd previously written off. It's not $60k or whatever, but it's still better than $0.
fshbbdssbbgdd 3y ago
It’s looking more like FTX is going repay customers in full, with a cash value computed based on the value of crypto deposits when the company went bankrupt in November 2022. That was a time when the prices of crypto had fallen, and they’ve gone back up. If FTX has billions of dollars left over after paying depositors, FTX equity holders could end up getting paid too. If that happens, the outcome arguably would be pretty unfair. You’d have a situation where an insolvent FTX effectively managed to crash the crypto market, forcibly cash out all its customers at the low prices, but hold onto the other assets that it bought with customer money. In effect, capital gains that were earned with the capital of FTX customers are going to go FTX shareholders instead. Same happened with Mt Gox.
- peter422 3y ago
  It’s funny that this is getting downvoted when it is true. It is more complicated though, the bankruptcy lawyers had to come up with some system to pay people back, and if not for the huge run up in crypto prices, which happened mainly after the policy was locked in, it wouldn’t be so bad. Still though it does seem a very generous to the other FTX creditors (I doubt the equity holders are getting anything).
  - Scoundreller 3y ago
    > the bankruptcy lawyers had to come up with some system to pay people back I don’t think it’s a lawyer’s decision: per law, everyone’s unsecured debts get fixed at the date of bankruptcy filing converted into dollars.
- deleted 3y ago
  [deleted]
- Scoundreller 3y ago
  And this is reason 26366363 why it almost never makes sense to sell your creditor claim to a hedge fund. Unless you have 29% interest loans to pay down or you’re going to die soon without heirs, it makes sense to wait it out. The hedge funds (usually) discount the expected value by a ton when deciding how much to pay. I wonder what Miami Dade county sold their $17m claim for after the stadium naming agreement got cancelled: https://amp.miamiherald.com/news/local/community/miami-dade/article274981761.html https://amp.miamiherald.com/news/local/community/miami-dade/... (But I guess they did ok by re-selling the naming rights for more per year to Kaseya which somehow has a lot of cash after indirectly getting >1000 companies had their computers down after getting ransomware’d: https://en.m.wikipedia.org/wiki/Kaseya_VSA_ransomware_attack https://en.m.wikipedia.org/wiki/Kaseya_VSA_ransomware_attack )
cboswel1 3y ago
VC and private equity vultures have been buying up FTX debt at a loss since the collapse, with this being the singular reason why, to make a huge profit off the Anthropic shares. Any retail investor that sees this as a possibility of getting their money back is about to be disappointed once again.
- earthwalker99 3y ago
  Correct. Workers will never win at a game designed by capital. The only path forward is exercising labor power by withdrawing it for political ends.
  - ajhurliman 3y ago
    Even though this has been down voted into oblivion, I’ll bite: to what political ends would you propose the labor class exercise their power?
    - earthwalker99 3y ago
      To the same ends the capitalist class has if they choose. I think the risk is necessary to take, given how the alternative has worked out.
    - __loam 3y ago
      It's wild to me that tech workers will still downvote stuff like this after the season of layoffs we just had. Google is "trimming the fat" while making 18 billion a quarter. To what end? How about preserving the middle class and ending the monopoly power of these firms?
      - skulk 3y ago
        Because they're temporarily embarrassed founders who could _totally_ see themselves having to make a decision like this.
  - nrook 3y ago
PaywallBuster 3y ago
For anyone interested to follow the drama https://twitter.com/sunil_trades/status/1758750047296962913 https://twitter.com/sunil_trades/status/1758750047296962913 My lawyers Moskowitz and Boies have filed a 106 pg class lawsuit against Sullivan and Cromwell for FTX creditors Causes of Action: - Civil Conspiracy: S&C long relationship with FTX, entities and insiders - Aiding and Abetting Fraud - Aiding, Abetting Fiduciary breach FTX US - Fiduciary breach FTX - Federal RICO
neonate 3y ago
https://archive.md/l80A2 https://archive.md/l80A2

I get what Sam did was wrong -- but uh... doesn't it look like everyone is going to get a return on their investment? Like -- uh -- weren't there far worse players through all this than Sam at the end of the game? For example the SPAC borderline scams that lost investors billions? Something smells really strange here...

toomuchtodo 3y ago
Martin Shkreli pulled off a similar feat, still went to jail for the fraud even though he made investors whole. https://www.nytimes.com/2017/07/26/business/dealbook/martin-shkreli-trial.html https://www.nytimes.com/2017/07/26/business/dealbook/martin-... | https://archive.today/gH2zT https://archive.today/gH2zT https://en.wikipedia.org/wiki/Martin_Shkreli#Criminal_conviction https://en.wikipedia.org/wiki/Martin_Shkreli#Criminal_convic...
nfRfqX5n 3y ago
Assets have been in limbo for over a year now. Won’t believe people are made whole until it actually happens.
orionsbelt 3y ago
If a store employee steals $500 from the till, gambles it on what he thinks is a sure bet, doubles the money, and returns $600 back to the till, that’s still theft, wrong, and punishable, even if the store happened to win in the end. Perhaps not an exact analogy, but seems reasonably close. It must be driving Sam insane though to think he could have made it all fine if he had hung on a few more months.
- mandevil 3y ago
  Eh, he had made exactly these sorts of bets before and he won those. Because it is gambling, eventually you lose a bet or two. While experienced gamblers learn to manage risk- mostly by diversifying and betting small chunks of your pot on different, uncorrelated bets, SBF never did. He continually bet his entire net worth- and his freedom- in one big gamble again and again. And it worked for a while. Until it didn't. But if he did get this bet to pay off, then he would have done it again, clearly. And eventually, one of the gambles would break like this one did.
  - jcranmer 3y ago
    The crime isn't that FTX lost its gambles. The crime is that FTX was gambling with money it legally couldn't use for the gambles.
    - mandevil 3y ago
      Right. I was responding to the comment that "it must be driving Sam insane though to think he could have made it all fine if he had hung on a few more months." But the problem is, even if he had made this gamble pay off, by his very nature the man was determined to bet his freedom and net worth again and again on, at best, 51-49 bets. Because he wasn't actually a very good gambler.
    - webmaven 3y ago
      In effect, it was an unsecured high-stakes side-bet on whether he would get caught.
- awongh 3y ago
  I feel like it must be true that there are many others out there that were able to hang on and now we merely know about them as a wealthy person, rather than as a criminal. The question is what the ratio is: one caught for every ten not caught?
  - c22 3y ago
    This is probably more rare than you think since very few fraudsters seem to know when to quit. Even after getting away with massive gains there is temptation to do it again (and now the risk seems even more justified due to past experience).
- scosman 3y ago
  And they put the money back in the till years later, after the owner of the store lost their house.
Etheryte 3y ago
If you steal a million dollars, put it all on a lucky red turning that million into two, and then put the original million back, you still stole a million dollars at the start.
Mistletoe 3y ago
https://www.investopedia.com/why-ftx-plan-to-refund-90-percent-of-recovered-assets-doesnt-add-up-to-90-percent-of-what-customers-lost-8362556 https://www.investopedia.com/why-ftx-plan-to-refund-90-perce... > FTX expects to pay all customers in full, although it will calculate their repayment based on cryptocurrency prices from November 2022, when FTX filed for bankruptcy amid a prolonged slump in the crypto market, rather than at the present, higher value of crypto assets. November 2022 was a bottom they themselves created. Bitcoin has tripled in value since then so paying in USD is a huge loss for the affected customers. And let’s not neglect the massive fees that the bankruptcy lawyers for FTX have raked in. > The filings also show that FTX has paid lawyers a total of $350 million since bankruptcy proceedings began earlier this year and that from August to October, it shelled out somewhere in the region of $1.4 million per day. That was from Dec. 2023 I’m sure it is much more now. That money comes from somewhere.
- hef19898 3y ago
  Yeah, that's what happens when a fraud, a crook ruins a business and bankruptcy lawyers have to take over to save whatever can be saved for victims of said fraud.
- sidewndr46 3y ago
  Holy shit, $350 million? how the hell is that even possible?
- Scoundreller 3y ago
  Trick is to be lucky like Bernie Madoff creditors. Then SIPC covers all the fees. > No funds recovered in the Madoff Recovery Initiative are used to pay costs associated with the recovery. All trustee, legal, and accounting fees, as well as administrative expenses, are paid by SIPC. https://www.sipc.org/news-and-media/news-releases/20231208 https://www.sipc.org/news-and-media/news-releases/20231208 Still chugging along doing collections and distributions, oh and of course billing, to this day 16 years later.
johndhi 3y ago
Honestly these prosecutions are really just driven by the media. They just are. The fact that sam was young and had a poluamorous house in the Bahamas meant this was front page material. This then meant that prosecutors feel they must do something about it to show the world you can't commit fraud AND be widely known and get away with it. People who commit fraud and aren't widely known aren't treated the same by our justice department.
- gamblor956 3y ago
  You're right. People who commit fraud and aren't widely known don't get house arrest pending trial, they go straight to a federal holding facility. They don't get to access the internet or play video games all day, they get to look at 4 walls and contemplate the meaning of life. SBF benefited from being widely known. Most people aren't that lucky.
  - sidewndr46 3y ago
    He benefited from having a well connected family.
nostrademons 3y ago
The way punishment and deterrence works in the U.S. is that you pick a high profile villain and make an example out of them, and then hope that the publicity generated by their punishment works to deter similar actors. Enforcement agencies like the SEC and FBI are bureaucracies just like major corporations, and often have fewer resources and lower paid employees. They don't have the resources to go after every criminal. So they pick the most high-impact, hated, and sensational cases to go after, then rely on the media to amplify the deterrence value. Most SPACs never made headlines on the way up; therefore prosecuting them is not going to make headlines on the way down. They'd spend a lot of resources to gather evidence and prove a court case, but it would have zero deterrence value to other potential criminals, because nobody will ever hear about the successful prosecution. It is far more cost-effective to go after SBF and FTX, which was very prominent in the 2019/2020 crypto bull run and many Americans personally lost money in its collapse, and use that to send a message to the rest of the crypto sector.
- latchkey 3y ago
  > many American politicians personally lost money in its collapse
  - nostrademons 3y ago
    That too, and it was a general embarrassment for the U.S. government because he was the largest donor for many politicians who remained in office. They couldn't afford to not prosecute him, because it'd make them look (even more) corrupt.
    - JumpCrisscross 3y ago
      > it was a general embarrassment for the U.S. government because he was the largest donor for many politicians who remained in office This was irrelevant. You’re describing political opportunity for legislative primary runs. Bankman-Fried was prosecuted. What made him a sitting duck was his high profile, the stupidity of his blow-up and his inability to not maintain that high profile after he’d combusted. It was an easy, juicy case that made careers.
mouse_ 3y ago
Maybe they're harder on conmen who buy super bowl ads.
mandevil 3y ago
A big part of why investors are being made whole is also that what they are owed froze into dollars at the moment of bankruptcy. If you had 1 BTC in FTX at the point of bankruptcy, and that was worth 20,000 on that day, you do not get 1 BTC back (or what 1 BTC is worth today)- you get cash for the amount it was worth on the day of bankruptcy. So as crypto prices have gone up again, the assets that FTX owned have gone up and the amount they owe has stayed constant. This is only possible because FTX is no longer a continuing operation- if they still owed that customer 1 BTC then the assets appreciating and the debts increasing does nothing to help them.
pgodzin 3y ago
What's being punished is the fraud, not the losses. We do not want to incentivize companies putting it all on red with customer funds they don't have a right to touch as long as they win the bet, we want to punish them for even trying, regardless of whether it happened to work this time.
- tsunamifury 3y ago
  I get that, but whats the point of NO HARM is proven.
tananaev 3y ago
Most people won't get anything close to what they had. That's because bankruptcy claims are locked in USD on the date on the filing, which was pretty much the bottom of the market. And they certainly won't get any returns on the investment. Let's say you had 1 BTC at the time of bankruptcy which was worth $20k for the sake of example. Your claim is now $20k and you won't get more than that. And even if you get 100% of that, it's only 0.4 BTC at current prices.
- fragmede 3y ago
  For people who's life savings was that $20k, that's still $20k that they'd previously written off. It's not $60k or whatever, but it's still better than $0.

fshbbdssbbgdd 3y ago

It’s looking more like FTX is going repay customers in full, with a cash value computed based on the value of crypto deposits when the company went bankrupt in November 2022. That was a time when the prices of crypto had fallen, and they’ve gone back up. If FTX has billions of dollars left over after paying depositors, FTX equity holders could end up getting paid too. If that happens, the outcome arguably would be pretty unfair. You’d have a situation where an insolvent FTX effectively managed to crash the crypto market, forcibly cash out all its customers at the low prices, but hold onto the other assets that it bought with customer money. In effect, capital gains that were earned with the capital of FTX customers are going to go FTX shareholders instead. Same happened with Mt Gox.

peter422 3y ago
It’s funny that this is getting downvoted when it is true. It is more complicated though, the bankruptcy lawyers had to come up with some system to pay people back, and if not for the huge run up in crypto prices, which happened mainly after the policy was locked in, it wouldn’t be so bad. Still though it does seem a very generous to the other FTX creditors (I doubt the equity holders are getting anything).
- Scoundreller 3y ago
  > the bankruptcy lawyers had to come up with some system to pay people back I don’t think it’s a lawyer’s decision: per law, everyone’s unsecured debts get fixed at the date of bankruptcy filing converted into dollars.
deleted 3y ago
[deleted]
Scoundreller 3y ago
And this is reason 26366363 why it almost never makes sense to sell your creditor claim to a hedge fund. Unless you have 29% interest loans to pay down or you’re going to die soon without heirs, it makes sense to wait it out. The hedge funds (usually) discount the expected value by a ton when deciding how much to pay. I wonder what Miami Dade county sold their $17m claim for after the stadium naming agreement got cancelled: https://amp.miamiherald.com/news/local/community/miami-dade/article274981761.html https://amp.miamiherald.com/news/local/community/miami-dade/... (But I guess they did ok by re-selling the naming rights for more per year to Kaseya which somehow has a lot of cash after indirectly getting >1000 companies had their computers down after getting ransomware’d: https://en.m.wikipedia.org/wiki/Kaseya_VSA_ransomware_attack https://en.m.wikipedia.org/wiki/Kaseya_VSA_ransomware_attack )

cboswel1 3y ago

VC and private equity vultures have been buying up FTX debt at a loss since the collapse, with this being the singular reason why, to make a huge profit off the Anthropic shares. Any retail investor that sees this as a possibility of getting their money back is about to be disappointed once again.

earthwalker99 3y ago
Correct. Workers will never win at a game designed by capital. The only path forward is exercising labor power by withdrawing it for political ends.
- ajhurliman 3y ago
  Even though this has been down voted into oblivion, I’ll bite: to what political ends would you propose the labor class exercise their power?
  - earthwalker99 3y ago
    To the same ends the capitalist class has if they choose. I think the risk is necessary to take, given how the alternative has worked out.
  - __loam 3y ago
    It's wild to me that tech workers will still downvote stuff like this after the season of layoffs we just had. Google is "trimming the fat" while making 18 billion a quarter. To what end? How about preserving the middle class and ending the monopoly power of these firms?
    - skulk 3y ago
      Because they're temporarily embarrassed founders who could _totally_ see themselves having to make a decision like this.
- nrook 3y ago

PaywallBuster 3y ago

For anyone interested to follow the drama https://twitter.com/sunil_trades/status/1758750047296962913 https://twitter.com/sunil_trades/status/1758750047296962913 My lawyers Moskowitz and Boies have filed a 106 pg class lawsuit against Sullivan and Cromwell for FTX creditors Causes of Action: - Civil Conspiracy: S&C long relationship with FTX, entities and insiders - Aiding and Abetting Fraud - Aiding, Abetting Fiduciary breach FTX US - Fiduciary breach FTX - Federal RICO

neonate 3y ago

https://archive.md/l80A2 https://archive.md/l80A2