Putting aside the circumstances specific to SBF/FTX (being in the Bahamas, involving crypto, SBF's political connections, etc), there's not much reason to expect that SBF should have been arrested 5-6 weeks after FTX's collapse:
- Enron blew up in Dec. 2001. It wasn't until mid-July 2004 that Jeffrey Skilling and Kenneth Lay were finally arrested.
- The WSJ expose on Theranos was in 2015, Holmes wasn't indicted until 2018.
- Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.
Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.
Whether SBF is getting exceptionally soft treatment will be easier to discern in retrospect, but it might be many months or even years before he's indicted.
Just another data point. Billy McFarland was arrested by FBI agents Monday following the Fyre Festival for defrauding investors. He did not confess prior to his arrest.
Billy raised $20m with fake financials. SBF raised close to a $1B, and I’m sure he didn’t disclose the fact that customer deposits flowed to a hedge fund he controlled exclusively.
Harm caused to consumers and investors is just as obvious, if not more obvious in SBF’s case, when compared to Billy’s festival.
That's a great data point, especially because it reaffirms (at least for me, personally) how easy it is to lose track of even recent infamous history.
Just skimming the Wikipedia entry, so maybe I'm missing something, but wasn't McFarland arrested 2 months after Fyre? This May 2017 [0] article, about a month after, describes McFarland still running his company as the first civil lawsuits are filed. This June 30 article [1] is about his arrest. It sounded like the civil suits against McFarland helped push along the wire fraud charge; AFAIK, SBF is named in a couple of investor suits so far, so it'll be interesting what things look like next month.
If you read the indictment, they also had McFarland dead-to-rights: two investors and an employee cooperated to demonstrate specific instances where McFarland knowingly misrepresented basic facts, including forged ScottTrade statements, to get investment for the festival.
McFarland had an investor call him and asked for a percentage of his investment back or things would be over of McFarland. It’s believed this investor turned him in.
The harm may be obvious, but that’s not the same thing as proving criminal guilt beyond a reasonable doubt. Not sure why anyone would think FTX/Alameda would be as easy to investigate as the Fyre Festival.
People don’t get arrested when they’ve done something bad. People get arrested (for federal crimes) when a prosecutor gets a grand jury to believe there’s probable cause they’ve committed a crime.
By all accounts, convicting grand jury is super easy. They will stamp whatever prosecution wants. But, getting ready for actual court takes time and early arrest don't always matter
Grand juries don't convict. But yes, there's the old "I can indict a ham sandwich" line. Even so, the process still takes time, and even then, you don't get an indictment unless you think you've got a case you can win. What evidence does DOJ have at the moment?
I wonder if this collapse didn't happen, which happened exclusively by being found out, that once his books were eventually audited that the criminal handling of deposits would have caughth up to him eventually.
I tell my gambling friends that if they bet the farm and win big, their wives will be horrified at the risk they tool even though it worked out. It's a moral loss regardless of the outcome.
I used to work in risk management at an investment bank. When things went wrong, and the result was a gain, we incorporated it into our models as if it was a loss of the same magnitude.
If you be once and win you then can roll the money into lower return legitimate enterprises and sail off into the sunset.
I'd wager that most businesses that start as a single person doing something (be it investing money or detailing cars) start as off the books, under the table, zero regard for regulatory compliance type businesses. It's only when they've made enough on that initial investment outside the rules that they turn around and incur the cost of compliance.
> their wives will be horrified at the risk they tool even though it worked out.
Whenever we participated in auctions for housing sites, my wife would stop me at a certain number. The number of times we were the second highest bidder ...
> I don’t know that the two situations are comparable as a result.
Why or why not? Should the amount of publicity matter for the justice system? What distinguishes a "humanitarian disaster" from a bunch of rich kids having to sleep rough on a beach near a resort town for a few days?
Hey now. I heard the rich kids also had to eat sandwiches with just bread and cheese. It was a real humanitarian crisis I tell you, right up there with the Ethiopian famine!
my impression of prosecutors is that they are a narcissist bunch who are in that role because tough-on-crime reputation they earn by putting ppl in prison gives them a leg up in future political career. so more publicity a case gets and less resources the defendant has, more attractive the case is to prosecutors i would think.
State attorneys general and district attorney offices are much, much more mired in politics than the comparable Federal offices. The former are more often staging points for moving up the political ladder; whereas the Federal positions are more often filled by career legal lifers, and act as staging points for moving to the private sector, to judicial appointments, or retirement.
That said, the SEC, which AFAIU would normally take the lead, is poorly staffed. The SEC leans heavily on automation, intimidation, and rapid plea deals in order to avoid resource intensive investigations and prosecutions; much more so than run-of-the-mill criminal cases that more immediately can benefit from the huge staffs at the FBI, ATF, DoJ, etc. So when prosecution and a prerequisite comprehensive investigation is clearly warranted and necessary, there seems to be considerable inconsistency in process and outcome. And that's before accounting for the fact that financial crimes can be very difficult to prove at trial, both factually and legally--just ask Donald Trump or the Church of Scientology, white whales renowned for beating countless financial related prosecutions and civil suits.
> That said, the SEC, which AFAIU would normally take the lead
The SEC only has civil enforcement authority, ie lawsuits. Criminal complaints must be referred to DOJ. They also tend to be much less creative than Justice at finding jurisdiction over non-US entities.
The entire reason crypto companies incorporate outside the US is to avoid SEC jurisdiction. But crimes against US persons are crimes wherever the company is located.
But still the SEC is usually in the lead initially, before referral to the DoJ, and thus the SEC would be the gatekeeper and pace setter, especially this early on. They're in the best position to begin gathering and analyzing evidence, afterall, as well as determining impact and priority. (But please correct me if I'm wrong. The closest I've ever been to such types of investigations is hearing war stories from a law professor who had worked either at the IRS, or at the DoJ on some cases referred from the IRS. Other than that, I just follow the news and interesting legal cases.)
Perhaps the DoJ has already starting formally looking at FTX, et al, on their own. OTOH, I actually had never heard of FTX or Bankman-Fried before recently, and honestly still don't get what the hubbub is about. I'm skeptical how impactful the collapse truly is, beyond the rarified world of crypto enthusiasts, wealthy tech investors, etc. And given that its overseas, I really wouldn't expect (either pragmatically or idealistically) the SEC or DoJ to rapidly shift significant resources and attention to FTX; certainly not on the order of days or weeks.
The SEC collects billions of dollars in fines every year, typically with several individual fines of over $100M.
While some actions (like a minor player doing thousands of dollars in insider trading) may be paint-by-numbers, my impression is that substantial resources go into the types of investigations that can lead to massive settlements.
Although, in a case like FTX, it’s hard to get blood from a stone.
They’ll be able to rake back some of the paid-out funds though. Should be able to pay some big fines/penalties.
I suspect something similar is going on with the quadriga bankruptcy in Canada. CRA (Canadian IRS) did an audit and shared its results with the creditors’ lawyers months ago but nobody has heard anything about it yet: they probably didn’t like the penalties they’re being asked to pay.
I’m not sure it’s the publicity that matters so much as the immediate threat to human life & safety. In society that tends to be prioritized over financial misdeeds with more ambiguous long term consequences.
I think pessimizer is implying that spending a night or two on the beach in the tropics within walking distance of a town is perhaps not actually that risky.
We still operate as the primitive creatures we are. People are more terrified if they see some people potentially dying of hunger vs. many people losing digits in some computer. The first one can trigger panic. Prosecution being as primitive as we are will hurry for the first case.
Another point: $10bn+ is a lot of money and probably caused lots of damage (ie: suicide). But if someone pulled a knife in Time Square, the police will be quick to apprehend him and the prosecution very willing to charge him. There was no harm done and yet resources will be deployed. But SBF might be even more dangerous yet no one is panicking yet (except some people here who might appreciate how dangerous he is)
Everything is relative. "just money" is how it is for any one not homeless or below the poverty line.
Who was at actual risk during Fyre Festival? I watched one of the docs. It was an absolute shit show and people were super uncomfortable for a while. Actual risk that's an order of magnitude worse seems like an overreach.
People kill themselves over “just money”. People find their circumstances markedly reduced. Retirements ruined, health suffering due to stress, working longer, being unable to afford good care…
It’s likely this affects tens or hundreds of thousands of people around the world. It’s a different sort of crisis, but it’s still a crisis.
That might be a reasonable expectation if FTX only allowed deposits by accredited investors, but I don’t think “professional investors” were the target audience of their Super Bowl ads starring Tom Brady.
Same can be said of all Ponzi scheme, that doesn’t make the crimes less severe or the harm caused to the innocent any less painful, and it certainly doesn’t mean that the criminals should be able to escape justice.
That's not quite true, there's plenty of precedent for fast prosecution. As an unfortunate example, take the Aaron Swartz case:
- September 25, 2010: Swartz begins using MIT network to pull JSTOR articles.
- Throughout September through December, a cat-and-mouse game ensues where JSTOR blocks access to certain MIT IPs, and then downloading starts again from a different range.
- January 5, 2011: MIT locates the laptop in a closet that Swartz had been using.
- January 6, 2011: Aaron Swartz is arrested.
- July 11, 2011: Swartz is indicted by a federal grand jury.
Additional indictments followed in November 2011 and September 2012. In Swartz's case, the judicial apparatus moved swiftly. As far as I understand, law enforcement became involved in late December 2010 or early January 2011. The timeline to arrest and indictment was short.
I would expect to see a reasonably quick (i.e. on the order of months) indictment of SBF. While other posters are correct to point out that there's a huge morass of complexity and murkiness around FTX/Alameda, my view is that this creates not one, but several cases -- some of them very straightforward and where I'd surely expect the DOJ to put a preliminary case together in a few months.
Swartz wasn't arrested in January by the FBI for the downloading - but by MIT police for breaking and entering. He couldn't have been arrested by the Feds before the indictment or criminal complaint was filed, which didn't take place until 6 months later. I suspect you're right on the timing though, especially with all of the whining about how he hasn't been charged yet. It'll be a politically savvy move for the Feds to file something quickly here and then supersede it eventually when the full scope is clear.
That's correct, though federal law enforcement was involved perhaps earlier than that account suggests. Swartz was initially arrested by the MIT Police and a member of the Secret Service. The United States Attorney Office was in touch with JSTOR almost immediately afterwards. (http://docs.jstor.org/summary.html)
I agree with the final comment; I think the DOJ would be well-served by filing something (and that should be pretty tractable, seeing the staggering scope of apparent misdeeds) to extradite SBF as quickly as possible, and then to file amended/superseded charges in the following 12-24 months.
>> It'll be a politically savvy move for the Feds to file something quickly here and then supersede it eventually when the full scope is clear.
That's likely true.
However, it may also be a more savvy move to let SBF and other execs think little is pending in order to gather more information. Other than reputation of the justice system (which already has a justified slow reputation; "The wheels of justice turn slowly, but they grind exceedingly fine."), this might be the greater consideration...
If they don't rapidly indict, it'll be interesting to see if SBF ever voluntarily returns to US territory before an indictment.
To add to what u/mikeyouse comment, I tried to limit comparisons to incidents involving financial/wire fraud, since they often require a longer/wider investigative scope, and, unfortunately, seem to have a much-too high standard when it comes to actual prosecution (e.g. 2008 financial crisis)
Having been born into an affluent family, a well-known programmer and entrepreneur who at the time had no job because he was able to live off the sale of his company (Reddit) to Condé Nast "wasn't rich".
> Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.
Not only did he confess, saying it's "basically a giant Ponzi scheme," he also said that he planned to distribute the remaining $200-$300M in funds to family, friends, and employees in the next week.
And -- as the article points out -- Madoff was in the United States when he confessed. I rather doubt SBF will ever voluntarily set foot on US soil again.
Which may also be why we aren't seeing a warrant. Maybe SBF is playing for sympathy. But maybe he's just delusional. If the latter is the case, there is no need to tip him off with a performative warrant.
Sympathy or presidential pardon. It is astonishing the sort of kid gloves he has been treated with so far in the liberal media. I am no conspiracy theorist but this is suspicious.
> Fleeing to Dubai might mess with his "it was just an honest mistake" PR tour.
Not in any way that would matter. If it was an honest mistake, fleeing to Dubai (or anywhere) is still the right thing to do. Which means doing so doesn't undermine the idea that it was an honest mistake.
Unless the PR tour is some weird plan to buy time while he gets his ducks in a row to arrange his escape and amass his assets. Could also be playing himself off as dumb/broke naive guy until local police get lazy and then trivially board some random yacht.
Isn't there a statute of limitations for these types of crimes?
(Not sure for the US here, but...)
If all the data is spread to the winds, if everyone hits ground, can they even file charges? I suppose so, but if there is no evidence pointing to wrongdoing...
To be honest, I'm not even sure what he supposedly did wrong. He took investments, in an unregulated sector, and backed those investments and lost?
If he were a bank, that's 100% legit. No bank I know of, has 100% of investor funds backed by anything. Even in Canada, land of give-a-fuck-sorta, there used to be a requirement for banks to have hard currency (gold, cash) in a vault somewhere, 5% worth of account holder's value, which was inspected annually by the government. Yet the last time I read the bank act, it was removed as a requirement.
If banks don't need any sort of banking for account holders in CAD, why would an unregulated exchange need that?
(Again, I can imagine there are all sorts of things I'm missing... but?!)
When does it become criminal to skip the step of establishing an accounting system....prior employees say they didn't even know their cash, liability, or trading positions.
FTX customer deposits went into Alameda bank account. Could be that they stayed there and somebody just kept a spreadsheet of deposits?
My point is that the astounding lack of records and systems may make it very difficult to prosecute him. For example, trades and payments were executed just on verbal orders so it will be hard to pin specifics on SBF.
Probably testimony of insiders will be the most compelling evidence against him.
Oh I suspect he had lots of records for himself (just as one example each real estate transaction had records) and the ‘stunning lack of records’ is yet another lie (along with his lies about not understanding anything), in an attempt to cover up fraud with perceived incompetence. Suddenly, it seems nobody knew anything, how convenient!
He stole money and enriched himself and his family at the expense of others. He and everyone else involved including his parents, higher up employees and investors should feel deep shame.
The FTX network of companies (see the consolidated bankruptcy filings) includes more than 100 companies, some of which are American, all of which were ultimately controlled by SBF, most of which had what records they had commingled, and most of which seem to have been tools in the same set of international frauds.
He is only fleeing prosecution, if he is unavailable.
For example, he can easily be contacted for interviews, with an email or phone call, or even by visiting te Bahamas. Thus he is not fleeing, or hiding from contact, and I even presume he has a lawyer, whom the police can contact.
This feels like the judicial equivalent of a product manager asking an engineer why hasn't the feature been shipped yet. Everyone's been talking about the PRD for over a week!
To take the analogy further, violent criminals are arrested much more quickly, which is like a product manager asking for the pricing on the pricing page to be changed.
One thing about SBF and the FTX debacle is the record keeping and overall story seems incredibly confused and incomplete.
That a crime occurred seems very certain, but which exact crime is a lot less clear, and until a lot of digging and cross referencing of records happens, that’s likely to continue to be the case. To arrest, they need to be able to identify a specific crime with identified specific elements in a specific jurisdiction.
It seems like they have had an equivalent of a dump truck load of legos dropped in their lap, and it won’t be hard to assemble a Lego airplane out of it (probably), but yikes.
Though this may be sloppiness as a legal defense. If you haven't actually jumped through the hoop of claiming that you won't just take the money and run, you really kind of can just take the money and run.
If you promise one thing, take their money, and then do another thing and it ends up in your pocket somewhere (which seems to have happened), then that’s fraud or embezzlement, depending.
This is basically what the OP is saying: it's not something specific to SBF or related to his political connections, but a more general issue in prosecuting white-collar crimes.
OP is saying it's a natural side effect of this sort of complicated crime, it's not just an issue with how it's prosecuted.
Although rerouting the massive amounts of money + human capital in non-violent crimes (drugs) to white collar would help... and probably pay for itself in recovered money (via tax revenue and reduced government corruption).
That probably still wouldn't result in SBF-type criminals being arrested right away though.
I also think it's a problem of underinvestment. The NYC police department alone has 5 times the budget of the SEC. That seems disproportionate. If we spent more money on enforcement and hired more investigators, I suspect these investigations would be able to proceed much faster.
The NYC police can't file criminal charges either; they just investigate and then send cases off to the local DA. The SEC does the same thing; the SEC does the investigative work, but they refer criminal cases to the Justice Department for prosecution.
The SEC is basically captured at this point. Who is going to vote to give the SEC more funding and power? Our leaders who are insider trading themselves?
Raphael Bostic insider trading as president of the Atlanta Fed was practically a non-story.
> Madoff was arrested after he confessed privately to his own family
Including stating his imminent intent to surrender to authorities, he also admitted to massive fraud when interviewed by the FBI immediately after that, and before the arrest.
It would be nice if things could go a little faster. 3 years are a significant percentage of the average remaining life of an adult. The onus should be on the legal system to hurry up a little and streamline the process; these 3 years are quite unpleasant if you are accused of a crime, and have to wait and prepare for a trial, no? If you are guilty the time should be counted as served sentence (maybe at 50%), the innocent should be compensated for unreasonable extra waiting time.
It would be great if these things were faster - in fact, we cared so much to make it so that it's included as part of our 6th amendment. In practice, it's almost exclusively not the case, even if higher profile cases. Two bits of personal anecdata, a death of a friend's brother due to fentanyl lead to the arrest of a drug dealer (with priors, and found in possession of illegal weapons). Open and closed case, right? Still took a year. Similarly, the exact same thing happened to my brother's friend - three years on, the trial just concluded. Several bigger cases in my area, the Rittenhouse and more recently Brooks cases also took a year.
I'm not sure what you mean with your second half though, are you suggesting detaining people during this period and pro-rating their sentence and/or paying them? Or are you saying that they should wait outside of jail, but still have it counted towards their sentence? I don't quite follow exactly. Edit: seems the latter. I'm not sure my opinion, having a case looming over you seems potentially difficult, especially if you're later found innocent, but should the government (/citizens) foot the bill for that?
It's mostly a thought experiment but the general idea is to
- consider the actual effects on someone to be involved in a legal process; for lawyers it's just a workday but for people it's heavy to be accused of a crime and to wait for something awful (jail) to happen.
- define some time reasonable time constraints for everything, in order to give some incentives for the process to speed up. Prosecutors could be measured by how efficient cases go, and paying out some money could be an option.
I think living wherever you want and spending millions of other people's dollars for three years is not 50% as bad as being in prison. It's better than most innocent people get to do out of prison.
Except when they don't, which generally is the case for the rich. They just need to arrest some schmuck every now and then to give they illusion that it turns for them too.
They turn slowly for some crimes. If I was to find the prosecutor or judge who would one day be involved in indicting SBF and punch them in the face, I bet the wheels would turn pretty quick for me.
It is interesting to think about the effect that coalitions of criminals have had on the criminal justice system.
Impulsive face-punchers don't tend to have sophisticated attorneys, and at least many of them probably agree that face-punching should be illegal in general, even if they had their reasons in this case.
Contrast with finance criminals. Many of them probably convince themselves they're in the right, and they have access to the best justice money can buy. So over time they've managed to raise the costs of prosecution so high that we see this - it takes multiple years to nail down a solid prosecution.
There are other aspects of course - some financial crime really is difficult to prove. But what I mean is that if all the accounting frauds before Ken Lay had depended on overworked public defenders, prosecuting him would have been much simpler.
Exactly. This isn't really that difficult to figure out that untangling a giant ponzi and money laundering scheme is several orders of magnitude more complex than assault.
No, you're completely on topic : the phenomenon you describe of privatised systematic perpetrator defensive hurdles is called self regulation, which is precisely what SBF was most avidly lobbying for.
Right, because getting a judge to approve a warrant to arrest someone for assault is trivial if you have a witness, because that's the kind of thing that is clear and obvious.
Even finding a lawyer capable of writing a warrant application for fraud like FTX is difficult, partly because the evidence is hard to find and hard to understand and frankly just because financial criminal law is a mess. Add to that that if you mess that part up you jeopardize the whole case (because any evidence that you collect with a bad warrant becomes subject to being thrown out, obviously).
No one wants to get that wrong just to get a perp walk. Remember that what people are demanding here isn't punishment, it's just "an arrest". People who are arrested spend a few hours (maybe a day or two) being held before arraignment and then walk right back out of the jail.
> Right, because getting a judge to approve a warrant to arrest someone for assault is trivial if you have a witness, because that's the kind of thing that is clear and obvious.
And, more to the point:
(1) its easy to convict on that kind of assault (delays are more often due to prosecutors not starting a case they dob’t feel adequate confidence they can win than prosecutors being unable to meet the much lower bar of probable cause),
(2) prosecuting on such a case early is much less likely to foreclose other charges or obstruct attempts to identify and action on other crimes or recoverable property tied to them.
> (2) prosecuting on such a case early is much less likely to foreclose other charges or obstruct attempts to identify and action on other crimes or recoverable property tied to them.
Please go into this more.
Lets say an omniscient person can come up with 40 charges that could be brought against SBF. You the prosecutor only know of 3 of them right now. Why can't you charge SBF for the 3 you have, convict them, and while SBF is in prison figure out the other 37? While SBFs in prison I bet its 1000% times harder for him to hide stuff from you too.
With programming, it's commit early and commit often. Why is the prosector trying to make a giant pull request over 3 years to shove through in a year? Target the low hanging fruit for a quick commit and get the restitution process going.
> You the prosecutor only know of 3 of them right now. Why can’t you charge SBF for the 3 you have, convict them, and while SBF is in prison figure out the other 37?
If any of the 3 would be lesser included offenses of any of the 37, those of the 37 for which that would be true could not later be charged, because the application of the federal Constitutional prohibition against double jeopardy forecloses this.
For state charges, this is may be even more restrictive, as many states exclude not only conviction in the same or separate prosecutions for “nested” offenses, but also preclude separate prosecutions after a conviction for the same conduct, or in some jurisdictions even for distinct conduct that forms part of the same transaction.
> With programming, it’s commit early and commit often
Criminal justice is very much not programming, and even to the extent they are loosely analogous, initiating a criminal prosecution isn’t analogous to a commit.
EDIT: To make the reasoning more explicit, since even initiating such a prosecution impacts liberty interests, there a very significant reasons for rules against repeated add-on prosecution that states have, and there are even stronger reasons (because criminal penalties for greater offenses necessarily encompass any lesser included offenses) for the federal rule (also applicable to the states) preventing cumulative punishment for both a lesser included offense and an offense within which it is included.
Programming doesn't have a fifth amendment double jeopardy clause. Imagine if your debugger locked you out if you failed to fix the bug on your first try.
Prosecutors are conservative because our justice system is (for very good reasons) tilted strongly against the state, in favor of the accused. We've collectively decided that it's better on the whole to have some criminals go without punishment than to tolerate innocent people in jail. (Pause while everyone points out that innocent people get locked up all the time, which is true, but it's still something the constitution is trying to prevent)
> Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.
This doesn't seem like a good example. The way I understood the story, Shkreli ran an effort that collapsed. Then, he ran another effort that was very successful. Then, he took money from the successful effort and used it to pay back everyone who invested in the flop.
By that accounting, it doesn't really matter when the flop collapsed, because at that point he hadn't done anything wrong.
all of the whistleblowers and internal critics that they fired and blackballed, all the times they ignored anyone who pointed out flaws in their models, all the ways they ignored the conflict of interest for ratings agencies being paid to rate garbage securities as AAA, etc etc etc.
> all of the whistleblowers and internal critics that they fired and blackballed
Interesting, I'd never heard of Lehman firing a whistle blower. Can you provide a link?
It seems like it would be tough to fire them given that Lehman went bankrupt. Also not sure how Lehman would blackball someone given that, again, they went bankrupt.
Are you maybe talking bout a different company?
> all the times they ignored anyone who pointed out flaws in their models
This isnt' a crime.
> all the ways they ignored the conflict of interest for ratings agencies being paid to rate garbage securities as AAA, etc etc etc.
Again, not a crime committed by Lehman.
I get that you are angry, but you really don't have any point here by the looks of things.
SBF will NOT go to jail. He is too politically connected and even his on/off gf is very deeply politically connected to MIT and other politicians. At this point its extremely naive to believe that he might get something more than a slap on the wrist, even if that.
He was on the same event with Janet Yellen whose signature will be on all US currencies.
Charitably, I think what OP was getting at is that there was no pressure to arrest / prosecute Shkreli quickly because his actions hadn’t in actuality physically or monetarily harmed people, unlike, e.g., Theranos.
Its a technically because that is not what brought him to public attention, he made himself a target so they went looking into his life for something to charge him with.
If you look hard enough through anyone's phone and online history you will find something to put them away for - no exception.
I say he should not belong on the list because his company was not scam company its still alive to this day - the ethics aside of hiking drug prices.
Investors were but complaining, it was the state that was after him. It's obviously different from owing billions of dollars that don't exist anymore like Bankman did.
1. Sam Bankman Fried is in the Bahamas
2. Sam Bankman Fried was Tether’s biggest customer and banked with Deltec, Tether’s bank
3. The attorney general of the Bahamas, the man with the power to arrest Sam, is Deltec’s former lawyer
The US system is probably content to watch while Sam confesses, but they can’t directly arrest him and Sam appears to have captured the local judicial apparatus.
You forget he was also the 2nd largest donor to the Democratic Party last year, and allegedly gave plenty to Republicans as "dark money" (though he only said that after the Democratic donations came out, so it could be a lie to save face).
If you won your election with SBF funds, it undermines the will to prosecute, or to view him as the conman he is instead of a stupid young guy.
I keep seeing comments like this on HN and it's disappointing. His co-CEO donated $20 million to Republican causes as well. There is no conspiracy here. It isn't even proper to say that there's the normal favoritism shown to business that donate to both parties. There's no evidence of any favoritism at all yet and comments like these just play into the tribalism that's greatly damaged the US over the last few decades.
I see mostly Dem and Dem-leaning celebrities been talking up crypto, and a conservative side more educated and knowledgeable about dysfunction in the financial sector as a whole. So even without any stats on the donations, it seems fairly logical to suggest party favoritism is at play.
Genuinely ludicrous to say that cryptocurrency has historically been talked up by Democrats; similarly, Republicans have historically been vastly more trusting of the financial industry
I mean ludicrous that since 2009 it's Democratic thinking to bail out the banks, sweep inflation concerns under the rug, spend more money, funding unprofitable tech companies etc. I never said Republicans aren't in on the deal, just that it's obvious one side leading the charge on those things.
It's an opinion about democratic thinking, and a general assessment in correlating level of education in finance/econ to party bases. I have no idea what "facts" you are referring to. Just wow.
The bank bailout was 2008, proposed and lobbied for by the Bush administration. It passed the House with support from 45% of Republicans and the Senate with support from 69% of Republicans. Generally considered bipartisan, it almost certainly saved the financial industry. It's not clear what you mean by "a general assessment in correlating level of education in finance/econ to party bases".
Yep, and so began the golden age of fraud we now experience, and the backdrop for this SBF story. 100% agree that the bailout was bi-partisan and necessary though.
> I mean ludicrous that since 2009 it's Democratic thinking to bail out the banks, sweep inflation concerns under the rug,
Again, more ludicrous tribalism. The Great Recession bailout was all orchestrated under Bush. Trump famously was hounding Powell to lower rates before the pandemic, which would have had even more disastrous inflation consequences, just to make the stock market go up.
I think your mistake is to look at bought-and-paid-for politicians, I'm talking about the general public. My guess is you don't know many republican voters and therefore unqualified to to make the comparison. Most democrats I know think the bailout "paid for itself" lol
You’re trying to apply logic to articles you’ve read on the internet. This isn’t like you read a cake recipe on the internet and then tried it out in your kitchen. Or read an article about some web framework and tried it out by making a blog. Or read about mathematical topology and tried it out on some problem you’ve been working on.
Maybe, if only maybe, you should make political donations illegal. That would pretty much solve it for the legal part of business. But money is free speech whatever that may mean (I know what it means legally, you can still ban it).
If donations is a factor, it would be more logical for politicians to consider the likelihood of future donations rather than past ones. In fact, if the chance of future donations is close to zero, there is a certain appeal in making an example of SBF to "prove" that donations do not matter in this way.
(I'm still mulling whether they do or not; just commenting on the game theory.)
On the other hand it's not good when they embarrass you, regardless of how much they might have put in. If you make it clear that being hung out to dry will be the punishment for embarrassment, maybe you'll get fewer of those donations.
No, I’m not forgetting that. You’re ignoring my comment.
SBF was a donor to those politicians, but a conspirator with the attorney general. Whole other level of involvement.
The US can put in an extradition request and it will be handled…by the same attorney general who is in on it.
Re: your link, getting SBT to testify would be a win, especially if he was physically travels to the US to do so, where he could be arrested. The general legal strategy when under threat is to say nothing that can be used against you.
This ignores the parent comment. Whether or not members of the democratic party want to throw him in jail is irrelevant since they are not able to so long as he is in a different country. If he can convince the bahamas not to prosecute, nothing else really matters.
It's a good rule of thumb that if you are hacking you should target victims in another country other than your own. I think the Netherlands (say) could get you extradited from the US, but it is a lot of work and the whole process of investigation leading up to to that extradition is going to be slowed down since the police won't be able to use the same powers they could do if you were in their jurisdiction. Most likely they'll go prosecute some easier case and only go after you if the results of your hack are particularly larger, visible and embarrassing.
Even better, escape to England, appeal against the conditions of the US prison system:
"In January 2021, a British judge ruled Australian-born Assange should not be extradited, saying his mental health meant he would be at risk of suicide if convicted and held in a maximum security prison.
But that decision was overturned after an appeal by U.S. authorities who gave a package of assurances, including a pledge he could be transferred to Australia to serve any sentence."
@LegitShady It delayed his extradition for years while court cases and appeals worked out - and, if it goes through, he'll escape to an Australian prison instead of an American one. Worked as well as it could compared to alternatives.
Yeah, but they can't just go there and arrest him. Right now, the US and the bahamas seem to be in dispute over where to hold the bankruptcy. So there's some territorial beef. It's entirely in the hands of the Bahamas to arrest him and turn him over, if they decide to turn him over at all. In any case, it's common for extradition to take months or even years.
Being a prospective future donor is what gets you special treatment, not being a past donor. SBF is not going to be making big donations to anyone anytime soon, so all his donations will get him nothing.
He got high on his own supply and put too much into the scheme. He can't exactly threaten to stop donating if he has no money to spare for it. Absent that, the PR value of being able to frame it as fighting corrupt business practices is enormous.
Even if we're assuming political corruption is in play, what drives improper political favors is the potential for future money. SBF is broke and will be for many years to come. If anything, politicians will be lining up to throw him under the bus because they've got all they money they're going to get from him and there's political capital to be had from him going to jail.
> If you won your election with SBF funds, it undermines the will to prosecute
This reasoning doesn't make sense to me, they already accepted and spent the money, if anything that's an incentive to prosecute in order to cultivate a perception of distance from his wrongdoing.
Wouldn't those open contributions not encourage any implicated Dems to go hard on him, as a measure of self-preservation to prove to the electorate they weren't being bought (whether or not that was the original intention)?
Many (but not all) corporations and wealthy people donate to both political parties because it gives them access and influence, generally with the idea of furthering their own specific goals as opposed to advancing a broad policy agenda.
Is this really a more convincing explanation than, these things take time? FTX filed for bankruptcy less than a month ago. It's a complex white collar case across multiple jurisdictions. Whether or not this Bahamian AG was corrupt - why would we expect an arrest by this point?
If the case doesn't develop over the next, say, 11 months, I'll be as suspicious as anyone else. But at this point it feels like jumping at shadows.
I agree with this explanation too and think it's complementary. The US system is pretty happy to let people blabber on and incriminate themselves. That they can't immediately arrest him isn't a huge hurdle while they build their case and let SBF talk.
> The US system is probably content to watch while Sam confesses, but they can’t directly arrest him
The US has directly apprehended people in foreign countries for criminal prosecution in the US, including countries with whom they have extradition treaties, and the target being corruptly linked to and protected by local law enforcement has been a factor in favor of such action when it has occurred.
Can you provide comparable to SBF example? I can see US doing it in Afghanistan or Syria for terrorists but it's hard to imagine it happening for white collar crime in a friendly country with functioning legal system like Bahamas. It will be huge precedent.
A bank which happens to be the centerpiece of the entire iFinex (tether/USDT + Bitfinex) thing (which may or may not be legit).
And SBF is not just a customer from that bank. He also bought another bank, in the US, which previously belonged to the owners of Deltec. And FTX's top lawyer happened to be a colleague of Bitfinex's top lawyer (they both worked for the same company which actively defrauded online poker players).
So there are ties that do go beyond: "customer of a bank".
It looks like it's a little circle of people who know very well each other.
To give an idea of the amounts involved: Tether emitted USDTs worth, so far, four times the entire GDP of the Bahamas.
Bahamas is so small (400 K people) that when the authorities stormed FTX's office and forced SBF to handle them the keys for various shitcoins, they froze an amount representing back then 5% of the Bahamas' GDP (now more like 1.5% because these shitcoins melted, but still).
The amounts in play are tiny and insignificant for a country like the US: QEs are in the trillions, bank bailouts in 2008 were done with $700 billions+, etc.
But for a tiny country like the Bahamas, we're talking about a lot of money.
I'm not saying that he's protected or that the authorities knew about his wrongdoings but you cannot rule that out (at which point many coincidences are not coincidences anymore?).
Can you be more explicit? It sounds like you're being sarcastic.
Are you saying they are friends (in which case, what is the point of pointing to the much weaker relationship)? Or are you saying the weaker relationship is evidence of friendship (presumably combined with the fact that he chose to go to the Bahamas)? Or something else?
Edit: Whoops, I just read more of the comments and am seeing there is a tribalism angle to this. I'm not sure I want to try parsing the answers to my questions :(
Yes, but what is in that treaty, and is there any reason he should be extradited to the USA rather than tried in the Bahamas, or extradited to some other country, for that matter?
It's an honest question: I don't know the details of what he is accused of.
"At the risk of stating the obvious, the reason Madoff was arrested so quickly is because he confessed to every element of criminal fraud — including both the underlying scheme and his criminal intent. This meant that the FBI had both that confession and highly potent, admissible evidence of guilt in the form of testimony from his adult children (who had no apparent axe to grind)."
Right, I mean, I'm not saying he's not guilty, but does anyone at this point really understand it deeply enough to file an arrest warrant? I understand the impatience emotionally, but not logically.
I was jailed for sitting on the sidewalk in front of my old high school when I was 18. The police were called on me by the vice-principal, who could see from his office that I was rolling cigarettes, and thought I was rolling joints. The police showed up, realized that the call was bad because it was obviously loose tobacco, and decided to charge me with "criminal trespassing" because it's a charge that the police can press themselves without a complainant (the vice-principal was informed by others what had happened, would have never pressed charges, and was extremely regretful about it afterwards.) I spent the night in jail, and part of the next day, until my family could raise the money to bond me out (money completely lost; a bond, not a bail.) Luckily my uncle knew a bailbondsman personally, because as a loser black punk rocker teenager no other bailbondsman would take our money. If that hadn't happened, I would have spent a week in jail waiting for my hearing. My entire relationship with my public defender took place walking down a hallway towards the courtroom, where he told me that I could take a plea bargain (i.e. plead guilty) in exchange for no time, no fine, no probation, and a removal from my record if I stayed out of any trouble for six months (and of course the opposite if sitting on the sidewalk went so badly for me again.) I took the plea bargain, which required me to admit to the crime and pay court costs.
The reason SBF isn't arrested is because the people who would have to order him to be arrested relate to him personally, and coddle people like him as they would wish to be coddled themselves.
My Mom was a judge in Oakland. Because I was a little kid, sometimes I would just have to stay in the courtroom or my Mom's chambers. It was shocking to me how different the criminal justice system was than what I saw on TV, in which it was always always roughly fair. My mother above all stressed that it was a deeply unfair system and did what she could. I think a lot of people think the police, courts and lawyers work the way they do on TV.
That’s true but what you’re describing is an example of injustice. It would probably be better if everyone were treated like SBF than if everyone were treated like you were.
Do you believe it's possible that everyone is treated like royalty? And if not, wouldn't it be better if royalty was treated like poor people instead of having a multi-tiered justice system where the fairness of the system depends on your class?
There is also a third option (or forth if you count the status quo). We could treat the rich the way we currently treat the poor and vice versa (an option I like to call eat the rich). IMO this is the only fair option, the rich have it good as is, they have an enormous amount of power that they treat with impunity, never taking the responsibility that comes with it. They have the option of abandoning their wealth (unlike the poor). It is completely fair if the justice system were to be used disproportionately against them.
For some definition of fairness, yes. I don't fully disagree since wealth makes it trivially easy to be lawful, nothing you do is because of needs, it's purely based on wants/desires. It does come with some problems, and I doubt it'll work long-term, but it would be interesting to watch.
I don’t want SBF arrested for criminal trespass, I want him arrested and prosecuted to the fullest extent of the law for the crimes he committed, and I don’t want him getting off because of the need for a speedy trial, before we know what he did.
Law enforcement should not act in bad ways to more people.
That a school vice principal would call the cops on a student boggles the mind (outside of serious crimes or imminent danger). The true educator will patiently observe the ups and downs of a student through the years and will work to teach. Try and engage the student more, talk about drugs and choice in a smart way, recommend some jiu-jitsu classes or, as a last resort, talk to the parents.
A vice principal is an administrator, not an educator. The problem with schools these days (tm) is that power within the system has been given to or taken by these administrators, and there seems to be no way to reverse this.
It is easy to see how that entire chain of events could have really utterly fsckd over your life. I am sorry you had to go through that, but at least it didn't go totally sideways.
It easily could have cost you your job, then your apt, etc.
Thanks for your comment. I think a lot of people are not understanding it.
To a large extent (not completely) law enforcement and the greater justice system exist to mitigate contention in society. If the target of a law enforcement action is rich or famous, and the crime is not active or physically damaging, then it will be contentious to arrest the rich/famous criminal. If the criminal is not rich or famous, or if the crime is physical (murder, assault, etc) then the arrest will be less contentious, and the police will proceed.
Up until now, it has not been at all contentious for the police to arrest/abuse lower status persons.
In the case of a contentious arrest of a high status person, arrest will be delayed until the exact charges are known and believed to be provable.
---
I am describing the system as I see it now, not the system that I think should exist.
The faults described here are not faults of individual members of any justice system, they are faults of society and we ascribe value.
Before replying to this comment, please think about policing in feudal societies and consider the lessons of Foucault in "Discipline and Punish".
You plead guilty precisely because you didn't do anything. The probability distribution for you was: high chance of getting off, low chance of getting a large punishment. The probability distribution for SBF if he pleads not guilty will be inverted: high chance of incarceration, low chance of walking. But the odds will likely be preferable to whatever deal he ends up being offered. Modelling the cops that booked you, their goal is to throw things at the wall and see what sticks. Whichever cops are currently gathering evidence against SBF will be thinking the opposite: they need to be very careful in collecting evidence to minize the risk of SBF getting away.
I should point out that while this is unfortunate, this is all a relatively inevitable consequence of having a justice system. Since humans are deciding cases, there will always be a small chance that they screw it up (in one direction or another). You can't have arbitrary do-overs for people who feel their case was decided poorly, because everyone thinks that (or will say they do).
Argh, that is so far outside of my reality that I have trouble understanding how such evil events happen in the USA — I'm from New Zealand so I just have no frame of reference to understand.
The closest I have experienced second-hand in authoritarian Cuba under Castro while I was visiting there, where I saw some residents arrested for nothing tangible, but they were released within 8 hours and they seemed blasé about it.
I have been arrested, but the police were respectful (it helps that I am a short white guy, and I was wearing a geek identity).
If you ever visit Christchurch, contact me via HN, and I'll feed and put you up for some days, if you're keen.
Don't worry - most people in the USA have trouble understanding that such evil events happen here, too.
You've either been on the pointy end of the "justice" system, or you haven't. Paying "court fees" to directly fund the salaries of the people persecuting you is the icing on the cake.
And like, what happened to OP was pretty tame, all things considered. Nobody died. There wasn't months or years spent in prison. I don't think their life was drastically altered by it (but their personal world view certainly was). Nobody is going to the media with such a story, because it's not glaringly outrageous. Ask an attorney if OP would have a case against the police/state to rectify the injustice, and they'll just laugh. They're part of that system and above you, which is why even if you're paying them, they don't answer the phone after 5.
IMO the first step to reform happening is the system admitting it is fallible. Plea bargains should be drastically reformed - either make the case or STFU. When a victim is found innocent or charges are dropped, they should be mechanically compensated for all of their expenses and damages - legal fees, time lost in jail/court, emotional distress from the kidnapping. That money should come out of the coffers of the city paying the gang of violent thugs that abused OP, and ultimately the taxpayers funding them. If the cost of law enforcement ends up doubling, then the true cost of enforcing the laws was twice what was being paid - right now these damages are funded as a perverse reverse lottery where the unlucky just get stuck with them. This certainly won't fix everything, but correctly defining responsibility is the first step.
Alas, the disempowering mass media narrative we get is that the cops just need "more training" so perhaps they won't commit wanton second degree murder as much. Funny how the average citizen doesn't get a similar allowance.
I think part of it's because when a poor person looks vaguely associated with a crime, it's straight to jail. When it's a rich person it's all "well IDK we just can't be sure, can we?"
ah so that's why my city is so crime free, I and all the women I know are never hypervigilant taking public transport, I'm never afraid for my elderly relatives to be bashed in the head or pushed onto the tracks by 9 time offenders out on bail, and everyone working exhausting retail hours from cvs to applestore doesn't know why all these totally-prejudiced shoplifting deepfakes go viral
I'd be fine with the new surveillance state if it actually delivered some safety-dividends, but i guess lawlessness keeps the working class in line
Also, it's not like he's about to hop in a private jet and evade the jurisdiction. He's constrained in an extradition friendly country. And to the extent it's not extradition friendly (mostly if they want to press charges first), it doesn't help to file an arrest warrant.
Spending your customer deposit that are legally off-limits, and that he said were off-limit, on things like houses, properties, etc for your own self and family is not a straight-up admission of wrong doing?
Since when breaking and entering a looting a house can be defended with "well, I thought all was fine"?
He admitted numerous times doing things that are straight up illegal.
Spending your customer deposit that are legally off-limits, and that he said were off-limit, on things like houses, properties, etc for your own self and family
This isn't proven. He could have bought those houses with VC money not customer deposits.
Where did you get this impression? Even that part is potentially up for debate. FTX isn't a bank or anything like that and they say that FTX USA is actually still solvent and will payout. I have my doubts about the last one but if he actually pays all US customers back he might get away with this.
>but does anyone at this point really understand it deeply enough to file an arrest warrant?
That hasn't stopped prosecutors before. This is happening because there is no appetite to go after him, people can take a look at the public record so far and wonder why this might be the case.
There are high-ranking government officials openly insider trading without any investigations. We have a woman who's been sentenced for sexual trafficking of minors to virtually "nobody in particular". We now have multiple massive crypto scams go completely over everyone's head because it's "internet nerd money".
This complete inaction on behalf of authorities is really starting to feel like any actual wrongdoing assumed by a normal person is just a whacky conspiracy theory that gets swept under the rug because nobody is getting punished for anything when the trail seemingly leads to "the establishment" or whatever you might call it. I mean, I feel a little kooky just typing all of this out.
No, it hasn't always been this way. The "legacy news media" itself hasn't always been this way: 40 years ago, 50 or so companies controlled 90% of American media. Now, 6 companies control 90% of American media. "This is extremely dangerous to our democracy," just like all the newscasters simultaneously say on all the different channels at once. [0]
It's always been the case that Power tends to do whatever it wants, but Power is usually polite to other Powerful entities. When enough of them are at the same table, they tend to keep their elbows tucked in, but when it's too centralized people start talking about lebensraum.
Yes, and if anyone doubts it I'd recommend "Confessions of a Wall Street Analyst". A retired analyst/trader really lays out how much insider trading there was back in the 90s even when things were supposedly regulated.
US prosecutors don't want to get an indictment until they have enough info for a conviction. If they indict prematurely, the perp may get an acquittal. They only get one shot. That's what "double jeopardy" is about.
What ought to be the easy win here for prosecutors is theft, in the form of diversion of client funds. That's most likely to apply to FTX.us. Now, if FTX was registered as a "national securities exchange", or a broker/dealer, under US law, that would definitely apply. Without that, the jurisdiction issues are worse.
A superseding indictment can’t be issued once a trial has started and if it’s issued too close to a trial date it opens up a vindictive prosecution defense.
Grand juries are complicated and can take a long time, if you issue an indictment too soon without having all your ducks in a row the defense can push for a fast trial knowing that the prosecution doesn’t have enough to convict or are at a weak position for a plea deal.
Cases like this are especially complex since whilst it’s easy for anyone to see that something really shady has transpired one would be hard pressed to actually define which laws specifically has he actually broken.
And even more so it would be even harder to gather the evidence required to indict in the first place not to mention get a conviction or a guilty plea.
My reading is this is a very cordial invitation to hang himself under oath. If you think SBF is guilty, than you have to believe he'd be insane to "participate in a hearing." (If you think he's innocent, it's still a crazy thing to do. I'd encourage anyone who hasn't seen Don't Talk to the Police to watch it. https://youtu.be/d-7o9xYp7eE )
Most prosecutions don't involve playing coy with the defendant in hopes they might be forthcoming with evidence before things get all adversarial. There's no reason for kid gloves, especially for this case with its clear cut set up of fraud - the hard evidence is going to consist of transaction logs and other digital files that need to be preserved.
About the most generous interpretation you can give the above tweet is the representative merely trying to get her name in the spotlight on a current hip topic. But that still begs the question of why she would want her name anywhere near stories about a con man - it still seems as if only some types of criminals need to be distanced from.
Waters is not a prosecutor. She's on the financial services committee; there's been a big disruption in the finance world. It's pretty normal for the committee to investigate it.
If you were in her position - wouldn't you reach out to SBF? If you did - wouldn't you do so with honey and not vinegar? What is there about what or how she did this that leads you to believe it's a ploy for attention rather than straightforwardly doing her job?
For me the only unusual thing is that it's over Twitter, but seeing as how he and CZ laid out all their bad blood over Twitter, that seems to be the preferred medium for this community.
Yes, I know that. The "big disruption" is that someone committed basic fraud - SBF seemingly took money while promising to act as its custodian, while actually gambling with it behind the scenes. What's the meta issue to be investigated and pondered here? Fraud is one of the oldest crimes. Arrest the fraudster, put them in jail, perhaps recover some assets for the victims, done.
I'm not saying that's a quick process, nor should it be. But congress treating this as some sort of exceptional meta issue simultaneously deemphasizes that SBF appears to be a run of the mill fraudster ("but on the Internet"), while also emphasizing the narrative that "something must be done" (in other words, never let a good crisis go to waste).
Is it basic fraud, or are there important facts we don't know? Should crypto be regulated and if so how? How can we answer these questions without conducting an investigation?
I agree with you that that is how it currently appears based on media reports, but that doesn't mean that's the whole story. To me it seems pretty obvious that Congress would want to know more.
What we're debating is where that investigation is conducted. Conducting it in congress implies some exceptional thing that needs to be reformed, rather than the brazen simplistic criminality that it seemingly was. This speaks to a two class justice system, with SBF in the same category as other "too big to fail" criminals.
How about starting with a criminal investigation? If that turns up some novel twist exonerating SBF and indicating a meta-issue, like say FTX was actually hacked, then congress can take over. As it stands, all signs point to simple fraud where customer deposits were given to Alameda to gamble with.
As far as regulating cryptocurrency more, that impulse is precisely what I mean by "never let a good crisis go to waste". Fuck, continuing this line of thought I almost have the wonder if SBF is more like an Epstein-club actor here, doing the deliberate job of looting cryptocurrency for the political class, while creating a disaster to usher in more regulation.
I think you misunderstand that investigations often take place in Congress and the DoJ simultaneously, and that Congress conducts quite a few of them, most of which don't result in regulation.
There's almost certainly an investigation in the DoJ. We're not going to hear about it for a long time.
It's a foregone conclusion that crypto will be regulated. Congress has been figuring out how it should be regulated - not if - for a while. One of their key contacts in this industry, who spent a huge amount of time assuring them it wasn't all a scam - was a scammer. That matters to them.
The last part of your comment, where you suggest SBF blew up his own empire so that Congress could maybe pass a law. I don't really know what to say, this is a literal conspiracy theory. I'd encourage you to try and get more perspective.
Sure, there is always some of that dynamic. Police question a suspect without arresting. Police offer food and ask for a statement before your attorney shows up, etc. But not of this magnitude.
Would you bet your liberty on it? For what upside?
Say Waters throws only softballs. Why wouldn't Republicans on the committee seize the opportunity to make her look foolish and compromised by throwing hardballs?
The US is corrupt but not that corrupt. There is separation of powers between congress and the DOJ. And even within the executive there are firewalls between the politicians and the prosecutors.
Which is precisely the point. When you say a nation is "corrupt", you're generally referring to one that is notable for that factor. Because otherwise the term is meaningless (because every nation does have corruption).
As a complementary example, you could argue all legislation is authoritarian; but describing a nation as "authoritarian" in the general (vs specific, as in certain laws/bills) goes above and beyond "normal" legislation.
In what way? They literally write and vote on the (Federal) legislation that puts people in jail via the War on Drugs, the War on Terrorism, various specific crimes, etc.
Or do you mean literally? Because they most definitely have officers in both chambers of Congress and they’re fully empowered LEOs.
He is a an exceedingly large donor to the establishment, especially to the party currently in charge (matters not which one). With his connections, he is in the different tier. No judgement here on whether it’s good or bad.
despite having donated to both parties extensively, i think it's largely a perceptional issue. while the FTX collapse IS mainstream news, the mainstream largely isn't impacted and has already written off crypto as a massive scam. so in some regards, i think joe regular-guy enjoys the spectacle of crypto people losing their money because it validates their skepticism of the entire ecosystem.
for either party to feel really motivated to arrest or prosecute, they'd want joe regular-guy to be clamoring for that action and i don't think that's the case.
He admitted donating to Republican dark money groups. He claims he donated roughly the same amount to conservative causes as he did with Democratic orgs. Plus, another exec in his organization, Ryan Salame, donated $24 million to Republican candidates.
Between Sam's dark money donations and Ryan's $24 million, it's possible Republicans received more FTX money than Democrats. I don't know if that's true, but it's possible.
Sam is a liar, that much is a widely documented fact. That much is known. Your numbers are incomplete and misleading.
We somehow know both SBF and Ryan Salame's personal donations, and he claims dark money went to Republicans but how much dark money went to Democrats? 0? What about the other staffers at FTX? SBF has appeared in public with Maxine Waters and Bill Clinton. His own mother is a major Silicon Valley booster for the Democrats [1]. You telling me no money made it to his own mother's Democrat PAC?
Sam's public claims are not reliable. He is a pathological liar. He manipulated his own accounting books to make his company appear solvent for fundraising purposes. You cannot trust the damage control PR of a pathological liar.
These are the numbers we know. I can't assess the numbers we don't know. That's why I was careful to use the words "possible" and "not sure if this is true". I wasn't trying to be misleading. I fully understood there might be donations we don't know about. But I guess that was for naught since you're calling me a liar anyways.
I would tend to believe him on the Republican dark money. Sam needs all the help he can get right now. It makes sense to make these donations public knowledge. Plus, in the legalized bribery known as campaign donations, it makes sense to donate to both sides. Most companies which do political donations make donations to both. A few very ideological execs will only donate to this side or that, but Sam doesn't strike me as one of those.
Maybe I'm wrong. But I doubt it. The winning move is to donate to both sides. If the Republicans received zero from Sam, they'd have every reason to reveal this to the world. To hurt Democrats and punish the guy who gave them nothing. But the Republicans aren't doing this. Silence to me is evidence that Sam gave at least part of what he claimed.
As for the numbers we don't know, I'm not making any claims. Maybe a billion went to Democratic PACs. Maybe nothing did. Who knows? It's worthless making assessments on this until further evidence comes out.
We're talking about a major political donor who just defrauded people for billions of dollars, whose parents are extremely well connected to the DNC and have actually written a substantial amount of legislation put forward by Democratic lawmakers, and who was sleeping with the niece of the current head of the SEC who was appointed by Biden. He has every single motivation to lie about this.
Oh my god dude, his parents are tax professors, you are being so incredibly disingenuous with your posts and then to hem and haw about conspiracy theories in response.
Now that's a conspiracy theory worthy of a movie with, say, Aaron Taylor Johnson as SBF and Margot Robbie as his gf (I think she should be pretty in the movie!)
His co-president gave over $20M to republicans and some republican congressmen were among his staunchest defenders and were actively trying to prevent the SEC from investigating. It would behoove people to read a little bit about the case before they start pontificating on their pet conspiracy theories.
I saw elsewhere you're now claiming that SBF was sleeping with Gensler's niece which is a straight lie as far as I can tell? I think it's just a mistaken reference to Caroline Ellison's dad working in a different department at MIT when Gensler was there?
> Cynically, this makes sense to me as what he was buying was really lack of government oversight.
Yeah, I think a lot of people forget that for something like this he didn't need to actually get the government to do anything: simply delaying action gave him the chance to do hundreds of millions of dollars in fraud.
It's been coming out that he donated lots to them too so I guess we'll see. My impression overall though is that he will end up in jail, it's just going to take a while for everyone who received his money to come to terms with the scale of his fraud.
It's a dumb conspiracy in the first place -- he was a large donor to some congressional candidates, many of whom lost (over $10M of his 2022 funds went to a losing candidate in an Oregon primary). In any case, it's obvious he has zero money and zero future prospects to be politically useful so there's no reason that anyone in charge would go out of their way to "protect" him (contrary to someone like Corzine, Menendez or Rick Scott).
These theories are just weird HN conspiracies to add mystique to the very normal slow Federal justice process.
If you were a politician interested in getting more of that sweet fraudster money, tell me, what would you do to send a signal that you're open for business to the next batch of fraudsters, hang the guy that paid you, or help him out?
Sure, this may just be bullshit, we dont know, etc etc, but "he has no more money" is not a very good argument
Complexity is an enabling friend for criminals and the incompetent. And lobbyists. The executive branch has got work with the legislative branch to eliminate ways to draw out prosecution to play for time.
Second, consider this comment filed in the original article:
"He hasn't been prosecuted yet because he was a major contributor to the democrat party."
Another comment made reference to his alleged Jewish heritage.
Beyond this unwarranted untrue generalization, there's an interesting underlying emotional component to the hypercritical hyper divide in many big stories like this: self created, self imagined victimization. When we contextualize the world this way we see ourselves as victims from which we manufacture moral outrage, virtue signaling, and even a kind of perverse machismo that one had the courage to call out the truth eg he's a democratic funder and the rules don't apply to him ...but they do to us the hardworking guys trying to do the right thing.
Folks, it's a dead end. The linked article I think is much more helpful and insightful.
The real world doesn’t work like Law and Order. There will be an investigation before a grand jury. Evidence will be collected and a case built. Evidence and witnesses will be subpoenaed.
At the end of that will come a criminal indictment (unless the grand jury declined to issue an indictment, which is rare).
At that point the investigation is over. You don’t indict then build a case. Federal prosecutions don’t work that way.
This is a complicated case because it involves a lot of money, a tenuous paper trail, lots of communications and several jurisdictions. SBF may need to be extradited and whatever court hears that case will need a strong case. A failure to extradite Matt effectively kill the whole case.
This fraud is so egregious that the US government won’t let this stand. Stealing customer assets is as open and shut as a case gets.
Could you ELI5: what US federal crime(s) can one reasonably suspect SBF of having committed?
Also, how likely is it that he will never be convicted of violating US federal laws? (For any of the numerous possible reasons: he never did anything wrong, or it's too hard to prove, or US lacks jurisdiction, or due to political connections, or prosecutors don't prioritize this type of cases, etc.)
Wire fraud requires you to prove that a fraud actually took place which won’t as simple as you might think in this case.
The wire part of wire fraud is easy since it involved the internet and there is plenty of evidence of communications. However the fraud part would be hard enough to present to a Grand Jury for an indictment and probably even harder to convict on especially within the given time frame.
So I'm confused. The front-page article on HN is about why SBF isn't arrested yet. So shouldn't we already have a well-thought out suspicion of what he might be guilty of?
Basically, do we think this is just another financial bet gone sour (not illegal in itself)? Or do we think SBF stole something, lied about something, etc?
Honestly I don’t know, crypto in general is a scam in my book but I’m very well aware that doesn’t makes it illegal.
Now what SBF is actually guilty of I can’t tell you, you’ll might be able to find a large number of various small violations in terms of fiduciary responsibility but I do not have the sufficient legal expertise to start unpacking this.
I definitely haven’t seen anything specifically that amounts of wire fraud the closest public thing might be when they insinuated that FTX deposits are covered by FDIC insurance.
Which kind of brings us to the next problem not with FTX but with crypto exchanges as a whole they don’t seem to act as only as exchanges but also as banks and investment funds. Stock, derivatives and other goods exchanges don’t tend to have customer deposits their roles is to connect between buyers and sellers and provide arbitration services to execute trades.
Every time I look at crypto exchanges my brain starts to hurt and I can only think to myself how is any of this shit is even legal.
Other potential issues would be the relationship between FTX and Alameda normally you will never be able to have that conflict of interests between an exchange and a market maker in any regulated equity market.
I also don’t understand how or why these exchanges can issue their own tokens that would normally be equivalent to a promissory note.
I honestly can’t wait until this entire crypto fab dies over but I also unfortunately don’t see people going to jail over any of this nonsenses.
It seems that the discussions about the prosecution of SBF all assume that the U.S. will take the lead in prosecuting him, but couldn't he also face fraud charges in any of the countries where FTX operated? I hope that prosecutors in all of these countries are investigating this matter.
I hear a lot of people in the crypto sphere talk about regulation being a bad thing. The reality is that most regulation aims at financial institutions such as these while also protecting the consumer.
Will additional regulation have a negative effect on the value of crypto? It's likely. However, the tech itself will continue to provide value to those who use it to circumvent the banking system. For instance, you can still exchange coins and store them in cold, personal wallets.
The fallout of this collapse will be significant and I hope what emerges thereafter will be a more sensible approach to crypto and more stable value.
I think what a lot of crypto people want to avoid is misguided regulation on decentralized protocols. But regulation that makes it less likely that central exchanges will rug you? I don't think many people mind that much.
SBF himself was lobbying for regulations that many people claimed would have outlawed defi in the US, pushing people to use outfits like FTX instead. People certainly do object to that.
Everyone wants to avoid misguided regulation. I don't think that's unique to crypto. What I hear is more of a blanket statement that regulation of any sort is bad, which feels naive and misguided on the part of the consumer.
I’ve always imagined that piss enough people off like SBF did would increase your chances of accidentally falling down the stairs, or for it to happen to those around you (pay us first or we start on your loved ones).
To be clear, I don’t wish death on SBF, but presumably at least some of the people with money are dangerous. The case of Melissa caddick in aus (stole 40m, disappeared, only her foot was found) seems similar, but currently there’s no evidence of foul play.
From having been lawyer-adjacent, I have one thing to contribute:
Lawyers are pathologically risk-adverse
I use that adjective deliberately. Their favorite phrase is "out of an abundance of caution" which means "I can't think of any reason why I must do this, so I won't."
Cynicism. But to go out on a limb and get your ass kicked by his high-priced lawyers could be career-ending for them. Or rather, their career would become "chasing ambulances."
He hasn't been arrested yet because of one of the reasons below.:
- It's easier for the government to hunt down $600+ transactions instead of trying to navigate their own obtuse, complicated tax laws - wonder if that's intentional, but that's a tangent that doesn't need to be explored
- SBF donated millions of dollars to DNC causes and (SBF-admitted, which ANYBODY should take with a grain of salt since the guy's a sneaky little liar) to RNC causes. Why would politicians rush or push to prosecute someone who gave or could give them more money in the future?
- SBF has family that's tied to major political movements (I believe his mom runs/works for/with a larger financing arm of the DNC).
- It simply takes a long time for the evidence to be gathered, put on display, and have him sentenced/found guilty.
It is _VERY_ suspicious that most media outlets are being nice and trying to whitewash this into obscurity. The dude "LOST" 1-2 billion dollars.
SBF should be under witness protection, at the very least - if not jailed until trial.
The facetious, compulsively lying tech bro who only says "I'm sorry" after literally stealing investors' money should quite literally be barred from seeing the light of day ever again.
Not sure if SBF decided to run this racket for a self-corrupted version of "citizen justice" against a broken and unfair economic system, but he sure harmed a lot of innocent people in the crossfire if that was the intent.
I wouldn't be surprised if he's able to disappear from the eyes of the public due to the always-corporately-manipulated media conglomerates.
> At the risk of stating the obvious, the reason Madoff was arrested so quickly is because he confessed to every element of criminal fraud…
From a European perspective, this is strangely backwards: Madoff confessed and was fully cooperative, hence, there was no need to deprive him of freedoms without a process. In the SBF/FTX affair, on the other hand, there are no signs of full cooperation and there's some danger of obstruction of justice and tampering with potential evidence. (Which should be, apart from risk of recurrence and/or acute danger, the only reason for depriving anyone of granted freedoms without a due process.)
Short answer is, like anything in these cases, it has complications and an investigation unit is needed first in order to collect data and evidence, assess which, if any, laws were broken and file an appropriate warrant for arrest. Until that process happens, "innocent until proven guilty" applies here. Emphasis on the "proven" part as that is how our justice system is intended to be. Which also means "not fast"
More questions about him. If he stays free is he likely to destroy some evidence or affect the investigation somehow? And he is in Bahamas, is he likely to run anywhere from there? Does he even have capacity to attempt it?
If he were to try to run he would likely end up locked up. But currently, it is kind of immaterial.
>> We have not seen anything like a real admission of criminal conduct from SBF yet
He seems to have made many admissions, just in an "aw shucks i mixed up the money and now its all disappeared" and this seems to fall under "ignorance of the law isnt a defense of criminal behavior"
Because Madoff's lawyer says he should shut up, and he isn't, so why not play out some line and let the fish set his own hook? Arresting him would just make him clam up.
I strongly suspect it was because he didn't embarrass any really rich people.
Madoff (and Holmes) embarrassed (worse than ripping off) some very influential people. Jeffrey Epstein could have really done it, but he's boating with Charon, right now...
That is the wrong question given the fact that VCs were involved in passing around a business template that told how to issue tokens to get around SEC governance!
It's not just SBF that will be under possible arrest and jail time, expect some VCs to also be prosecuted.
its just a big joke of what how the world works right now;
he scammed worldwide users for 8B+ or more;
> donated hundreds millions to US organizations and politics;
> US citizen with good connections
> highlighted many times that FTX US was solvent and money flowed away from international organizations
> US users will get funds back; US does not press charges and probably even protect him
Scam scheme of 2022: stole money worldwide, be US citizen and share some for US donations, get profit, repeat
I am curious too. Why is SBF not being treated like a Bernie Madoff? Paper trail non existent or too complicated? It's odd how softball the NYT etc are treating him. There's a meme where they count the number of times "crime" "fraud" etc are mentioned in articles about him. Almost nil.
Given the large number of heroes the USG has rapidly targeted internationally for behavior which was not illegal, illegal but morally righteous, or minor infractions, it is impossible to take nymag’s piece as anything except a placement by a USG LEO or an extremely inexperienced reporter.
Isn't he the very visible tip of a very embarrassing series of many recent events for the Bahamas as a business haven? Or is it the opposite - the Bahamas (or its current leaders) is going for it and embracing the Caymans style, wash your money, hide your business here model?
SBF? Trump had boxes full of actual "Top Secret" documents hidden at home. I guarantee that if the FBI found boxes of nuclear secrets at my house that my remaining freedom would be measured in minutes.
Wild how if you’re caught selling weed you’re immediately arrested but if you’re caught stealing billions of dollars you get to give interviews from the beach.
Let me remind about Bernie Madoff, another white male with connections. The article discusses the differences between Madoff and SBF, and why one got arrested immediately and the other has not. It's an interesting article, check it out!
Putting aside the circumstances specific to SBF/FTX (being in the Bahamas, involving crypto, SBF's political connections, etc), there's not much reason to expect that SBF should have been arrested 5-6 weeks after FTX's collapse:
- Enron blew up in Dec. 2001. It wasn't until mid-July 2004 that Jeffrey Skilling and Kenneth Lay were finally arrested.
- The WSJ expose on Theranos was in 2015, Holmes wasn't indicted until 2018.
- Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.
Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.
Whether SBF is getting exceptionally soft treatment will be easier to discern in retrospect, but it might be many months or even years before he's indicted.
Just another data point. Billy McFarland was arrested by FBI agents Monday following the Fyre Festival for defrauding investors. He did not confess prior to his arrest.
Billy raised $20m with fake financials. SBF raised close to a $1B, and I’m sure he didn’t disclose the fact that customer deposits flowed to a hedge fund he controlled exclusively.
Harm caused to consumers and investors is just as obvious, if not more obvious in SBF’s case, when compared to Billy’s festival.
https://youtu.be/pNS1khHWTmI
That's a great data point, especially because it reaffirms (at least for me, personally) how easy it is to lose track of even recent infamous history.
Just skimming the Wikipedia entry, so maybe I'm missing something, but wasn't McFarland arrested 2 months after Fyre? This May 2017 [0] article, about a month after, describes McFarland still running his company as the first civil lawsuits are filed. This June 30 article [1] is about his arrest. It sounded like the civil suits against McFarland helped push along the wire fraud charge; AFAIK, SBF is named in a couple of investor suits so far, so it'll be interesting what things look like next month.
[0] https://www.nytimes.com/2017/05/21/arts/music/fyre-festival-...
[1] https://www.nytimes.com/2017/06/30/arts/music/billy-mcfarlan...
If you read the indictment, they also had McFarland dead-to-rights: two investors and an employee cooperated to demonstrate specific instances where McFarland knowingly misrepresented basic facts, including forged ScottTrade statements, to get investment for the festival.
McFarland had an investor call him and asked for a percentage of his investment back or things would be over of McFarland. It’s believed this investor turned him in.
The harm may be obvious, but that’s not the same thing as proving criminal guilt beyond a reasonable doubt. Not sure why anyone would think FTX/Alameda would be as easy to investigate as the Fyre Festival.
People don’t get arrested when they’ve done something bad. People get arrested (for federal crimes) when a prosecutor gets a grand jury to believe there’s probable cause they’ve committed a crime.
By all accounts, convicting grand jury is super easy. They will stamp whatever prosecution wants. But, getting ready for actual court takes time and early arrest don't always matter
Grand juries don't convict. But yes, there's the old "I can indict a ham sandwich" line. Even so, the process still takes time, and even then, you don't get an indictment unless you think you've got a case you can win. What evidence does DOJ have at the moment?
>What evidence does DOJ have at the moment?
Only the DOJ knows the answer to that.
I find indictments fascinating, in part, because they pull back the curtain on what is frequently an impressive investigation and body of evidence.
I wonder if this collapse didn't happen, which happened exclusively by being found out, that once his books were eventually audited that the criminal handling of deposits would have caughth up to him eventually.
I tell my gambling friends that if they bet the farm and win big, their wives will be horrified at the risk they tool even though it worked out. It's a moral loss regardless of the outcome.
The thing is, if you bet big and win people get over it real f-ing quick.
I used to work in risk management at an investment bank. When things went wrong, and the result was a gain, we incorporated it into our models as if it was a loss of the same magnitude.
Who only gambles once?
If you be once and win you then can roll the money into lower return legitimate enterprises and sail off into the sunset.
I'd wager that most businesses that start as a single person doing something (be it investing money or detailing cars) start as off the books, under the table, zero regard for regulatory compliance type businesses. It's only when they've made enough on that initial investment outside the rules that they turn around and incur the cost of compliance.
> their wives will be horrified at the risk they tool even though it worked out.
Whenever we participated in auctions for housing sites, my wife would stop me at a certain number. The number of times we were the second highest bidder ...
The sellers thank you!
https://en.wikipedia.org/wiki/Winner's_curse
Well, I never bought the sites, but one of the winners did give very dirty looks for jacking up his purchase price.
Didn’t Fyre Festival turn into a very public humanitarian crisis? I don’t know that the two situations are comparable as a result.
> I don’t know that the two situations are comparable as a result.
Why or why not? Should the amount of publicity matter for the justice system? What distinguishes a "humanitarian disaster" from a bunch of rich kids having to sleep rough on a beach near a resort town for a few days?
Hey now. I heard the rich kids also had to eat sandwiches with just bread and cheese. It was a real humanitarian crisis I tell you, right up there with the Ethiopian famine!
https://www.vice.com/en/article/nza8yq/that-photo-of-the-fyr...
my impression of prosecutors is that they are a narcissist bunch who are in that role because tough-on-crime reputation they earn by putting ppl in prison gives them a leg up in future political career. so more publicity a case gets and less resources the defendant has, more attractive the case is to prosecutors i would think.
State attorneys general and district attorney offices are much, much more mired in politics than the comparable Federal offices. The former are more often staging points for moving up the political ladder; whereas the Federal positions are more often filled by career legal lifers, and act as staging points for moving to the private sector, to judicial appointments, or retirement.
That said, the SEC, which AFAIU would normally take the lead, is poorly staffed. The SEC leans heavily on automation, intimidation, and rapid plea deals in order to avoid resource intensive investigations and prosecutions; much more so than run-of-the-mill criminal cases that more immediately can benefit from the huge staffs at the FBI, ATF, DoJ, etc. So when prosecution and a prerequisite comprehensive investigation is clearly warranted and necessary, there seems to be considerable inconsistency in process and outcome. And that's before accounting for the fact that financial crimes can be very difficult to prove at trial, both factually and legally--just ask Donald Trump or the Church of Scientology, white whales renowned for beating countless financial related prosecutions and civil suits.
> That said, the SEC, which AFAIU would normally take the lead
The SEC only has civil enforcement authority, ie lawsuits. Criminal complaints must be referred to DOJ. They also tend to be much less creative than Justice at finding jurisdiction over non-US entities.
The entire reason crypto companies incorporate outside the US is to avoid SEC jurisdiction. But crimes against US persons are crimes wherever the company is located.
But still the SEC is usually in the lead initially, before referral to the DoJ, and thus the SEC would be the gatekeeper and pace setter, especially this early on. They're in the best position to begin gathering and analyzing evidence, afterall, as well as determining impact and priority. (But please correct me if I'm wrong. The closest I've ever been to such types of investigations is hearing war stories from a law professor who had worked either at the IRS, or at the DoJ on some cases referred from the IRS. Other than that, I just follow the news and interesting legal cases.)
Perhaps the DoJ has already starting formally looking at FTX, et al, on their own. OTOH, I actually had never heard of FTX or Bankman-Fried before recently, and honestly still don't get what the hubbub is about. I'm skeptical how impactful the collapse truly is, beyond the rarified world of crypto enthusiasts, wealthy tech investors, etc. And given that its overseas, I really wouldn't expect (either pragmatically or idealistically) the SEC or DoJ to rapidly shift significant resources and attention to FTX; certainly not on the order of days or weeks.
The SEC collects billions of dollars in fines every year, typically with several individual fines of over $100M.
While some actions (like a minor player doing thousands of dollars in insider trading) may be paint-by-numbers, my impression is that substantial resources go into the types of investigations that can lead to massive settlements.
Although, in a case like FTX, it’s hard to get blood from a stone.
They’ll be able to rake back some of the paid-out funds though. Should be able to pay some big fines/penalties.
I suspect something similar is going on with the quadriga bankruptcy in Canada. CRA (Canadian IRS) did an audit and shared its results with the creditors’ lawyers months ago but nobody has heard anything about it yet: they probably didn’t like the penalties they’re being asked to pay.
I’m not sure it’s the publicity that matters so much as the immediate threat to human life & safety. In society that tends to be prioritized over financial misdeeds with more ambiguous long term consequences.
I think pessimizer is implying that spending a night or two on the beach in the tropics within walking distance of a town is perhaps not actually that risky.
There were no threats to human life. Safety? A bit, but nothing major.
I am sure if there was a camp full of SBFs victims sleeping in tents after their crypto losses they would be acting much faster.
We still operate as the primitive creatures we are. People are more terrified if they see some people potentially dying of hunger vs. many people losing digits in some computer. The first one can trigger panic. Prosecution being as primitive as we are will hurry for the first case.
Another point: $10bn+ is a lot of money and probably caused lots of damage (ie: suicide). But if someone pulled a knife in Time Square, the police will be quick to apprehend him and the prosecution very willing to charge him. There was no harm done and yet resources will be deployed. But SBF might be even more dangerous yet no one is panicking yet (except some people here who might appreciate how dangerous he is)
It's just money. Investment income at that.
Putting human beings at actual risk is an order of magnitude worse and I don't know why that's even debatable.
Everything is relative. "just money" is how it is for any one not homeless or below the poverty line.
Who was at actual risk during Fyre Festival? I watched one of the docs. It was an absolute shit show and people were super uncomfortable for a while. Actual risk that's an order of magnitude worse seems like an overreach.
People kill themselves over “just money”. People find their circumstances markedly reduced. Retirements ruined, health suffering due to stress, working longer, being unable to afford good care…
It’s likely this affects tens or hundreds of thousands of people around the world. It’s a different sort of crisis, but it’s still a crisis.
As a professional investor, if you invested money in FTX it is expected that you know the risks.
No one reasonably expected Fyre Festival to turn out the way it did.
That might be a reasonable expectation if FTX only allowed deposits by accredited investors, but I don’t think “professional investors” were the target audience of their Super Bowl ads starring Tom Brady.
https://youtu.be/uymLJoKFlW8
Wow. What does being "in" even mean in this context?
Investing in cryptocurrencies via FTX / participating in the get rich quick scheme
Same can be said of all Ponzi scheme, that doesn’t make the crimes less severe or the harm caused to the innocent any less painful, and it certainly doesn’t mean that the criminals should be able to escape justice.
I never said that criminals should escape justice.
Just saying that if you invest money in a stock you should expect that you may lose that money.
Having to eat Kraft Singles on Wonderbread when you were promised Michelin star catering is not exactly a humanitarian crisis.
Right? I was starting to think I missed a big chunk of that story.
i suspect sarcasm
not at all: swindled people had to rebook flights home, sleep in an airport or maybe on site for maybe a day?
They were not, however, at risk of starvation or diseases commonly seen only in undeveloped parts of the world that lack sanitation infrastructure.
That's not quite true, there's plenty of precedent for fast prosecution. As an unfortunate example, take the Aaron Swartz case:
- September 25, 2010: Swartz begins using MIT network to pull JSTOR articles.
- Throughout September through December, a cat-and-mouse game ensues where JSTOR blocks access to certain MIT IPs, and then downloading starts again from a different range.
- January 5, 2011: MIT locates the laptop in a closet that Swartz had been using.
- January 6, 2011: Aaron Swartz is arrested.
- July 11, 2011: Swartz is indicted by a federal grand jury.
Additional indictments followed in November 2011 and September 2012. In Swartz's case, the judicial apparatus moved swiftly. As far as I understand, law enforcement became involved in late December 2010 or early January 2011. The timeline to arrest and indictment was short.
I would expect to see a reasonably quick (i.e. on the order of months) indictment of SBF. While other posters are correct to point out that there's a huge morass of complexity and murkiness around FTX/Alameda, my view is that this creates not one, but several cases -- some of them very straightforward and where I'd surely expect the DOJ to put a preliminary case together in a few months.
Swartz wasn't arrested in January by the FBI for the downloading - but by MIT police for breaking and entering. He couldn't have been arrested by the Feds before the indictment or criminal complaint was filed, which didn't take place until 6 months later. I suspect you're right on the timing though, especially with all of the whining about how he hasn't been charged yet. It'll be a politically savvy move for the Feds to file something quickly here and then supersede it eventually when the full scope is clear.
That's correct, though federal law enforcement was involved perhaps earlier than that account suggests. Swartz was initially arrested by the MIT Police and a member of the Secret Service. The United States Attorney Office was in touch with JSTOR almost immediately afterwards. (http://docs.jstor.org/summary.html)
I agree with the final comment; I think the DOJ would be well-served by filing something (and that should be pretty tractable, seeing the staggering scope of apparent misdeeds) to extradite SBF as quickly as possible, and then to file amended/superseded charges in the following 12-24 months.
>> It'll be a politically savvy move for the Feds to file something quickly here and then supersede it eventually when the full scope is clear.
That's likely true.
However, it may also be a more savvy move to let SBF and other execs think little is pending in order to gather more information. Other than reputation of the justice system (which already has a justified slow reputation; "The wheels of justice turn slowly, but they grind exceedingly fine."), this might be the greater consideration...
If they don't rapidly indict, it'll be interesting to see if SBF ever voluntarily returns to US territory before an indictment.
To add to what u/mikeyouse comment, I tried to limit comparisons to incidents involving financial/wire fraud, since they often require a longer/wider investigative scope, and, unfortunately, seem to have a much-too high standard when it comes to actual prosecution (e.g. 2008 financial crisis)
Who do you think should have been prosecuted in relation to the 2008 financial crisis, and on what charges?
The major difference being that Swartz wasn't rich.
Having been born into an affluent family, a well-known programmer and entrepreneur who at the time had no job because he was able to live off the sale of his company (Reddit) to Condé Nast "wasn't rich".
too small to too big to immediate fail?
> Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.
Not only did he confess, saying it's "basically a giant Ponzi scheme," he also said that he planned to distribute the remaining $200-$300M in funds to family, friends, and employees in the next week.
And -- as the article points out -- Madoff was in the United States when he confessed. I rather doubt SBF will ever voluntarily set foot on US soil again.
That’s what the US-Bahamas extradition treaty is for.
Edit: The treaty itself: https://www.state.gov/wp-content/uploads/2019/05/94-922-Baha...
> what the US-Bahamas extradition treaty is for
Which may also be why we aren't seeing a warrant. Maybe SBF is playing for sympathy. But maybe he's just delusional. If the latter is the case, there is no need to tip him off with a performative warrant.
Right thing to do would be to start the extradition process ASAP so he can’t jump the island.
Sympathy or presidential pardon. It is astonishing the sort of kid gloves he has been treated with so far in the liberal media. I am no conspiracy theorist but this is suspicious.
> presidential pardon
I’ve seen a lot of stupid conspiracy theories on HN, but the SBF political influence meme has to be one of the funniest.
Wouldn't expect him to stay somewhere with extradition. Wasn't there a rumor that he tried to flee to Dubai?
Morality aside, that's probably his best move, assuming he has enough of that $3B loan left to grease the exit.
Fleeing to Dubai might mess with his "it was just an honest mistake" PR tour.
At least he's not (yet) borrowing Do Kwon's argument about being the victim of an unjustified witch hunt.
> Fleeing to Dubai might mess with his "it was just an honest mistake" PR tour.
Not in any way that would matter. If it was an honest mistake, fleeing to Dubai (or anywhere) is still the right thing to do. Which means doing so doesn't undermine the idea that it was an honest mistake.
Unless the PR tour is some weird plan to buy time while he gets his ducks in a row to arrange his escape and amass his assets. Could also be playing himself off as dumb/broke naive guy until local police get lazy and then trivially board some random yacht.
There are allegations that SBF "ingratiated" himself with the Bahamian government.
Yep. Thus the word "voluntarily."
Isn't there a statute of limitations for these types of crimes? (Not sure for the US here, but...)
If all the data is spread to the winds, if everyone hits ground, can they even file charges? I suppose so, but if there is no evidence pointing to wrongdoing...
To be honest, I'm not even sure what he supposedly did wrong. He took investments, in an unregulated sector, and backed those investments and lost?
If he were a bank, that's 100% legit. No bank I know of, has 100% of investor funds backed by anything. Even in Canada, land of give-a-fuck-sorta, there used to be a requirement for banks to have hard currency (gold, cash) in a vault somewhere, 5% worth of account holder's value, which was inspected annually by the government. Yet the last time I read the bank act, it was removed as a requirement.
If banks don't need any sort of banking for account holders in CAD, why would an unregulated exchange need that?
(Again, I can imagine there are all sorts of things I'm missing... but?!)
He bought a $16m house in his parents’ names with company funds (fraud).
He transferred customer funds to an unrelated hedge fund company (fraud).
He created fake accounting systems to hide the fraud (fraud).
He claimed to be making lots of money just to help others (morally reprehensible and a huge red flag).
That people are still making excuses for him tells you how rotten this entire ecosystem is.
SBF is so so bad. But,
When does it become criminal to skip the step of establishing an accounting system....prior employees say they didn't even know their cash, liability, or trading positions.
FTX customer deposits went into Alameda bank account. Could be that they stayed there and somebody just kept a spreadsheet of deposits?
My point is that the astounding lack of records and systems may make it very difficult to prosecute him. For example, trades and payments were executed just on verbal orders so it will be hard to pin specifics on SBF.
Probably testimony of insiders will be the most compelling evidence against him.
Oh I suspect he had lots of records for himself (just as one example each real estate transaction had records) and the ‘stunning lack of records’ is yet another lie (along with his lies about not understanding anything), in an attempt to cover up fraud with perceived incompetence. Suddenly, it seems nobody knew anything, how convenient!
He stole money and enriched himself and his family at the expense of others. He and everyone else involved including his parents, higher up employees and investors should feel deep shame.
> Isn't there a statute of limitations for these types of crimes?
For non-capital federal crimes, the basic rule is 5 years, but there are exceptions.
The clock stops the minute that you step overseas, so as long as he's in the Bahamas there is no statute of limitations.
This is not true, see my other response.
Also, isn't FTX a Bahamian company? Why wouldn't he be there?
And what US crime did he commit, as all the accounting stuff didn't happen in the US, but the Bahamas?
> Also, isn't FTX a Bahamian company?
The FTX network of companies (see the consolidated bankruptcy filings) includes more than 100 companies, some of which are American, all of which were ultimately controlled by SBF, most of which had what records they had commingled, and most of which seem to have been tools in the same set of international frauds.
100 companies, heh. Well no wonder investigating takes time.
Just tracking down them all, the board of directors, etc...
Such as fleeing prosecution?
Yes: https://www.nolo.com/legal-encyclopedia/question-tolling-sta...
He is only fleeing prosecution, if he is unavailable.
For example, he can easily be contacted for interviews, with an email or phone call, or even by visiting te Bahamas. Thus he is not fleeing, or hiding from contact, and I even presume he has a lawyer, whom the police can contact.
So nothing is suspended here.
This feels like the judicial equivalent of a product manager asking an engineer why hasn't the feature been shipped yet. Everyone's been talking about the PRD for over a week!
To take the analogy further, violent criminals are arrested much more quickly, which is like a product manager asking for the pricing on the pricing page to be changed.
One thing about SBF and the FTX debacle is the record keeping and overall story seems incredibly confused and incomplete.
That a crime occurred seems very certain, but which exact crime is a lot less clear, and until a lot of digging and cross referencing of records happens, that’s likely to continue to be the case. To arrest, they need to be able to identify a specific crime with identified specific elements in a specific jurisdiction.
It seems like they have had an equivalent of a dump truck load of legos dropped in their lap, and it won’t be hard to assemble a Lego airplane out of it (probably), but yikes.
Though this may be sloppiness as a legal defense. If you haven't actually jumped through the hoop of claiming that you won't just take the money and run, you really kind of can just take the money and run.
They specifically said they wouldn’t take the money and run in their TOS, so they’re well and thoroughly screwed on that front.
As I said, dump truck of legos.
Is failing to meet your TOS actually criminal and not just a tort?
This is the whole thing with "what if a bank but without the regulations?"
If you promise one thing, take their money, and then do another thing and it ends up in your pocket somewhere (which seems to have happened), then that’s fraud or embezzlement, depending.
This is basically what the OP is saying: it's not something specific to SBF or related to his political connections, but a more general issue in prosecuting white-collar crimes.
OP is saying it's a natural side effect of this sort of complicated crime, it's not just an issue with how it's prosecuted.
Although rerouting the massive amounts of money + human capital in non-violent crimes (drugs) to white collar would help... and probably pay for itself in recovered money (via tax revenue and reduced government corruption).
That probably still wouldn't result in SBF-type criminals being arrested right away though.
I also think it's a problem of underinvestment. The NYC police department alone has 5 times the budget of the SEC. That seems disproportionate. If we spent more money on enforcement and hired more investigators, I suspect these investigations would be able to proceed much faster.
The SEC isn't tasked with being the nearly sole dispensary of state violence over a slice of territory containing millions of people. NYPD is.
Occupying territory is expensive.
They are both extremely important.
There’s far more waste in other federal agencies if you need to find one, NYPD is probably not a good one to point fingers at.
Worth noting the SEC is a civil regulatory agency, not a criminal one.
The NYC police can't file criminal charges either; they just investigate and then send cases off to the local DA. The SEC does the same thing; the SEC does the investigative work, but they refer criminal cases to the Justice Department for prosecution.
We could send many more Strongly Worded Letters to criminals and they would be on much nicer paper.
The SEC is basically captured at this point. Who is going to vote to give the SEC more funding and power? Our leaders who are insider trading themselves?
Raphael Bostic insider trading as president of the Atlanta Fed was practically a non-story.
Most people just don't care.
it was all intentionally routed away after 9/11 under the guise of improving homeland security.
Reminds me of that old Immortal Technique clip: https://www.youtube.com/watch?v=4gGLI9ifEzw
> Madoff was arrested after he confessed privately to his own family
Including stating his imminent intent to surrender to authorities, he also admitted to massive fraud when interviewed by the FBI immediately after that, and before the arrest.
SBF ain't in the same place as Madoff.
It would be nice if things could go a little faster. 3 years are a significant percentage of the average remaining life of an adult. The onus should be on the legal system to hurry up a little and streamline the process; these 3 years are quite unpleasant if you are accused of a crime, and have to wait and prepare for a trial, no? If you are guilty the time should be counted as served sentence (maybe at 50%), the innocent should be compensated for unreasonable extra waiting time.
It would be great if these things were faster - in fact, we cared so much to make it so that it's included as part of our 6th amendment. In practice, it's almost exclusively not the case, even if higher profile cases. Two bits of personal anecdata, a death of a friend's brother due to fentanyl lead to the arrest of a drug dealer (with priors, and found in possession of illegal weapons). Open and closed case, right? Still took a year. Similarly, the exact same thing happened to my brother's friend - three years on, the trial just concluded. Several bigger cases in my area, the Rittenhouse and more recently Brooks cases also took a year.
I'm not sure what you mean with your second half though, are you suggesting detaining people during this period and pro-rating their sentence and/or paying them? Or are you saying that they should wait outside of jail, but still have it counted towards their sentence? I don't quite follow exactly. Edit: seems the latter. I'm not sure my opinion, having a case looming over you seems potentially difficult, especially if you're later found innocent, but should the government (/citizens) foot the bill for that?
It's mostly a thought experiment but the general idea is to
- consider the actual effects on someone to be involved in a legal process; for lawyers it's just a workday but for people it's heavy to be accused of a crime and to wait for something awful (jail) to happen.
- define some time reasonable time constraints for everything, in order to give some incentives for the process to speed up. Prosecutors could be measured by how efficient cases go, and paying out some money could be an option.
That danger with that is prosecutors rushing cases through, messing something up, and letting the defendant go free on a technicality.
Or steam rolling cases and imprisoning defendants who are innocent.
The latter isn’t rare already, wait until some prosecutor has to get a few fast cases done so their bosses don’t cut their pay check.
I think living wherever you want and spending millions of other people's dollars for three years is not 50% as bad as being in prison. It's better than most innocent people get to do out of prison.
“The wheels of Justice turn slowly… but they turn.”
Except when they don't, which generally is the case for the rich. They just need to arrest some schmuck every now and then to give they illusion that it turns for them too.
They turn slowly for some crimes. If I was to find the prosecutor or judge who would one day be involved in indicting SBF and punch them in the face, I bet the wheels would turn pretty quick for me.
This is almost off-topic. Skip if that bugs you.
It is interesting to think about the effect that coalitions of criminals have had on the criminal justice system.
Impulsive face-punchers don't tend to have sophisticated attorneys, and at least many of them probably agree that face-punching should be illegal in general, even if they had their reasons in this case.
Contrast with finance criminals. Many of them probably convince themselves they're in the right, and they have access to the best justice money can buy. So over time they've managed to raise the costs of prosecution so high that we see this - it takes multiple years to nail down a solid prosecution.
There are other aspects of course - some financial crime really is difficult to prove. But what I mean is that if all the accounting frauds before Ken Lay had depended on overworked public defenders, prosecuting him would have been much simpler.
Well, in fairness, that's a very simple crime to prosecute :)
Exactly. This isn't really that difficult to figure out that untangling a giant ponzi and money laundering scheme is several orders of magnitude more complex than assault.
>This is almost off-topic. Skip if that bugs you
No, you're completely on topic : the phenomenon you describe of privatised systematic perpetrator defensive hurdles is called self regulation, which is precisely what SBF was most avidly lobbying for.
Right, because getting a judge to approve a warrant to arrest someone for assault is trivial if you have a witness, because that's the kind of thing that is clear and obvious.
Even finding a lawyer capable of writing a warrant application for fraud like FTX is difficult, partly because the evidence is hard to find and hard to understand and frankly just because financial criminal law is a mess. Add to that that if you mess that part up you jeopardize the whole case (because any evidence that you collect with a bad warrant becomes subject to being thrown out, obviously).
No one wants to get that wrong just to get a perp walk. Remember that what people are demanding here isn't punishment, it's just "an arrest". People who are arrested spend a few hours (maybe a day or two) being held before arraignment and then walk right back out of the jail.
> Right, because getting a judge to approve a warrant to arrest someone for assault is trivial if you have a witness, because that's the kind of thing that is clear and obvious.
And, more to the point:
(1) its easy to convict on that kind of assault (delays are more often due to prosecutors not starting a case they dob’t feel adequate confidence they can win than prosecutors being unable to meet the much lower bar of probable cause),
(2) prosecuting on such a case early is much less likely to foreclose other charges or obstruct attempts to identify and action on other crimes or recoverable property tied to them.
> (2) prosecuting on such a case early is much less likely to foreclose other charges or obstruct attempts to identify and action on other crimes or recoverable property tied to them.
Please go into this more.
Lets say an omniscient person can come up with 40 charges that could be brought against SBF. You the prosecutor only know of 3 of them right now. Why can't you charge SBF for the 3 you have, convict them, and while SBF is in prison figure out the other 37? While SBFs in prison I bet its 1000% times harder for him to hide stuff from you too.
With programming, it's commit early and commit often. Why is the prosector trying to make a giant pull request over 3 years to shove through in a year? Target the low hanging fruit for a quick commit and get the restitution process going.
> You the prosecutor only know of 3 of them right now. Why can’t you charge SBF for the 3 you have, convict them, and while SBF is in prison figure out the other 37?
If any of the 3 would be lesser included offenses of any of the 37, those of the 37 for which that would be true could not later be charged, because the application of the federal Constitutional prohibition against double jeopardy forecloses this.
For state charges, this is may be even more restrictive, as many states exclude not only conviction in the same or separate prosecutions for “nested” offenses, but also preclude separate prosecutions after a conviction for the same conduct, or in some jurisdictions even for distinct conduct that forms part of the same transaction.
> With programming, it’s commit early and commit often
Criminal justice is very much not programming, and even to the extent they are loosely analogous, initiating a criminal prosecution isn’t analogous to a commit.
EDIT: To make the reasoning more explicit, since even initiating such a prosecution impacts liberty interests, there a very significant reasons for rules against repeated add-on prosecution that states have, and there are even stronger reasons (because criminal penalties for greater offenses necessarily encompass any lesser included offenses) for the federal rule (also applicable to the states) preventing cumulative punishment for both a lesser included offense and an offense within which it is included.
Programming doesn't have a fifth amendment double jeopardy clause. Imagine if your debugger locked you out if you failed to fix the bug on your first try.
Prosecutors are conservative because our justice system is (for very good reasons) tilted strongly against the state, in favor of the accused. We've collectively decided that it's better on the whole to have some criminals go without punishment than to tolerate innocent people in jail. (Pause while everyone points out that innocent people get locked up all the time, which is true, but it's still something the constitution is trying to prevent)
The speed, torque and direction highly depend on which side of the political aisle are the DoJ and the defendant.
> Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.
This doesn't seem like a good example. The way I understood the story, Shkreli ran an effort that collapsed. Then, he ran another effort that was very successful. Then, he took money from the successful effort and used it to pay back everyone who invested in the flop.
By that accounting, it doesn't really matter when the flop collapsed, because at that point he hadn't done anything wrong.
Thats the whole argument of the article, of course, but still I like your comment for adding some additional interesting supporting examples.
So it would seem safe to say that financial crimes can take a very long time to bring charges. Why is the smoking gun so buried?
building a case takes long time, especially if SBF has good lawyers.
And after Lehman brothers collapsed... nobody was arrested.
What specific crime do you think was committed and who specifically do you think commuted said crime in Lehman?
all of the whistleblowers and internal critics that they fired and blackballed, all the times they ignored anyone who pointed out flaws in their models, all the ways they ignored the conflict of interest for ratings agencies being paid to rate garbage securities as AAA, etc etc etc.
> all of the whistleblowers and internal critics that they fired and blackballed
Interesting, I'd never heard of Lehman firing a whistle blower. Can you provide a link?
It seems like it would be tough to fire them given that Lehman went bankrupt. Also not sure how Lehman would blackball someone given that, again, they went bankrupt.
Are you maybe talking bout a different company?
> all the times they ignored anyone who pointed out flaws in their models
This isnt' a crime.
> all the ways they ignored the conflict of interest for ratings agencies being paid to rate garbage securities as AAA, etc etc etc.
Again, not a crime committed by Lehman.
I get that you are angry, but you really don't have any point here by the looks of things.
Lehman wasn't fraud, though.
SBF will NOT go to jail. He is too politically connected and even his on/off gf is very deeply politically connected to MIT and other politicians. At this point its extremely naive to believe that he might get something more than a slap on the wrist, even if that.
He was on the same event with Janet Yellen whose signature will be on all US currencies.
Jeffrey Epstein was also very well connected. Sometimes those connections vanish into thin air to avoid guilt by association.
Martin Shkreli cant be placed with those other people, no one lost any money.
He was convicted on a technically by telling early investors that he already had investors. When at that point his start up had none.
That’s not a technicality, that’s literally fraud.
It doesn’t matter that an endeavor he followed through later paid back his initial investors, the act itself is literally fraud. Period.
All you’re doing is petty-fogging the issue.
Charitably, I think what OP was getting at is that there was no pressure to arrest / prosecute Shkreli quickly because his actions hadn’t in actuality physically or monetarily harmed people, unlike, e.g., Theranos.
Its a technically because that is not what brought him to public attention, he made himself a target so they went looking into his life for something to charge him with.
If you look hard enough through anyone's phone and online history you will find something to put them away for - no exception.
I say he should not belong on the list because his company was not scam company its still alive to this day - the ethics aside of hiking drug prices.
Investors were but complaining, it was the state that was after him. It's obviously different from owing billions of dollars that don't exist anymore like Bankman did.
The biggest answer people miss is that:
1. Sam Bankman Fried is in the Bahamas 2. Sam Bankman Fried was Tether’s biggest customer and banked with Deltec, Tether’s bank 3. The attorney general of the Bahamas, the man with the power to arrest Sam, is Deltec’s former lawyer
The US system is probably content to watch while Sam confesses, but they can’t directly arrest him and Sam appears to have captured the local judicial apparatus.
You forget he was also the 2nd largest donor to the Democratic Party last year, and allegedly gave plenty to Republicans as "dark money" (though he only said that after the Democratic donations came out, so it could be a lie to save face).
If you won your election with SBF funds, it undermines the will to prosecute, or to view him as the conman he is instead of a stupid young guy.
For that reason, don't be surprised when Democratic Party leaders send out apologetic messages like this: https://news.ycombinator.com/item?id=33836009
I keep seeing comments like this on HN and it's disappointing. His co-CEO donated $20 million to Republican causes as well. There is no conspiracy here. It isn't even proper to say that there's the normal favoritism shown to business that donate to both parties. There's no evidence of any favoritism at all yet and comments like these just play into the tribalism that's greatly damaged the US over the last few decades.
I see mostly Dem and Dem-leaning celebrities been talking up crypto, and a conservative side more educated and knowledgeable about dysfunction in the financial sector as a whole. So even without any stats on the donations, it seems fairly logical to suggest party favoritism is at play.
Genuinely ludicrous to say that cryptocurrency has historically been talked up by Democrats; similarly, Republicans have historically been vastly more trusting of the financial industry
I mean ludicrous that since 2009 it's Democratic thinking to bail out the banks, sweep inflation concerns under the rug, spend more money, funding unprofitable tech companies etc. I never said Republicans aren't in on the deal, just that it's obvious one side leading the charge on those things.
Ignoring the factual errors in your post, it's really not addressing the point on cryptocurrencies.
It's an opinion about democratic thinking, and a general assessment in correlating level of education in finance/econ to party bases. I have no idea what "facts" you are referring to. Just wow.
The bank bailout was 2008, proposed and lobbied for by the Bush administration. It passed the House with support from 45% of Republicans and the Senate with support from 69% of Republicans. Generally considered bipartisan, it almost certainly saved the financial industry. It's not clear what you mean by "a general assessment in correlating level of education in finance/econ to party bases".
https://en.wikipedia.org/wiki/Emergency_Economic_Stabilizati...
https://clerk.house.gov/evs/2008/roll681.xml
https://www.govtrack.us/congress/votes/110-2008/s213
Yep, and so began the golden age of fraud we now experience, and the backdrop for this SBF story. 100% agree that the bailout was bi-partisan and necessary though.
> I mean ludicrous that since 2009 it's Democratic thinking to bail out the banks, sweep inflation concerns under the rug,
Again, more ludicrous tribalism. The Great Recession bailout was all orchestrated under Bush. Trump famously was hounding Powell to lower rates before the pandemic, which would have had even more disastrous inflation consequences, just to make the stock market go up.
I think your mistake is to look at bought-and-paid-for politicians, I'm talking about the general public. My guess is you don't know many republican voters and therefore unqualified to to make the comparison. Most democrats I know think the bailout "paid for itself" lol
Conspiracy theorists of any variety argue that their conclusions are fairly logical.
And it's completely illogical to assume no conspiracy in this case?
Logic isn’t the issue here.
You’re trying to apply logic to articles you’ve read on the internet. This isn’t like you read a cake recipe on the internet and then tried it out in your kitchen. Or read an article about some web framework and tried it out by making a blog. Or read about mathematical topology and tried it out on some problem you’ve been working on.
I'm applying logic based on my actual experiences with corruption, you're obviously taking some other approach to come up with an opinion.
Maybe, if only maybe, you should make political donations illegal. That would pretty much solve it for the legal part of business. But money is free speech whatever that may mean (I know what it means legally, you can still ban it).
Don't trust impressions from the news media
He was also the 3rd largest donor to the Republican Party, or so he claims: https://www.businessinsider.com/sam-bankman-fried-says-hes-t...
He claims many things, but as we have learned, it's best not to believe what he claims.
Convenient that there are no records.....
Thanks, Citizens United.
Being a donor doesn't save you from being arrested, see Madoff https://www.opensecrets.org/news/2008/12/madoff-and-company-...
If donations is a factor, it would be more logical for politicians to consider the likelihood of future donations rather than past ones. In fact, if the chance of future donations is close to zero, there is a certain appeal in making an example of SBF to "prove" that donations do not matter in this way.
(I'm still mulling whether they do or not; just commenting on the game theory.)
You forget the example the politicians want to make to other future donors.
If you let him hang because he doesn't have more money to give you, nobody else is going to give you anything.
On the other hand it's not good when they embarrass you, regardless of how much they might have put in. If you make it clear that being hung out to dry will be the punishment for embarrassment, maybe you'll get fewer of those donations.
>there is a certain appeal in making an example
No politician wants to make an example of any white collar crime for they are all criminals themselves and they fear someone making an example of them
I think the argument would be that said second largest donor would have beans to spill if they get arrested.
No, I’m not forgetting that. You’re ignoring my comment.
SBF was a donor to those politicians, but a conspirator with the attorney general. Whole other level of involvement.
The US can put in an extradition request and it will be handled…by the same attorney general who is in on it.
Re: your link, getting SBT to testify would be a win, especially if he was physically travels to the US to do so, where he could be arrested. The general legal strategy when under threat is to say nothing that can be used against you.
This ignores the parent comment. Whether or not members of the democratic party want to throw him in jail is irrelevant since they are not able to so long as he is in a different country. If he can convince the bahamas not to prosecute, nothing else really matters.
The US has an extradition treaty with the Bahamas.
It adds a few more steps.
It's a good rule of thumb that if you are hacking you should target victims in another country other than your own. I think the Netherlands (say) could get you extradited from the US, but it is a lot of work and the whole process of investigation leading up to to that extradition is going to be slowed down since the police won't be able to use the same powers they could do if you were in their jurisdiction. Most likely they'll go prosecute some easier case and only go after you if the results of your hack are particularly larger, visible and embarrassing.
Even better, escape to England, appeal against the conditions of the US prison system:
"In January 2021, a British judge ruled Australian-born Assange should not be extradited, saying his mental health meant he would be at risk of suicide if convicted and held in a maximum security prison.
But that decision was overturned after an appeal by U.S. authorities who gave a package of assurances, including a pledge he could be transferred to Australia to serve any sentence."
https://www.reuters.com/world/julian-assange-appeals-europea...
@LegitShady It delayed his extradition for years while court cases and appeals worked out - and, if it goes through, he'll escape to an Australian prison instead of an American one. Worked as well as it could compared to alternatives.
in other words, it doesn't work
In particular, the US police won't be able to just show up at FTX's headquarters with a search warrant.
Yeah, but they can't just go there and arrest him. Right now, the US and the bahamas seem to be in dispute over where to hold the bankruptcy. So there's some territorial beef. It's entirely in the hands of the Bahamas to arrest him and turn him over, if they decide to turn him over at all. In any case, it's common for extradition to take months or even years.
Congress doesn't control the justice department and cannot bring charges... Maxine really has nothing to do with it.
Being a prospective future donor is what gets you special treatment, not being a past donor. SBF is not going to be making big donations to anyone anytime soon, so all his donations will get him nothing.
He got high on his own supply and put too much into the scheme. He can't exactly threaten to stop donating if he has no money to spare for it. Absent that, the PR value of being able to frame it as fighting corrupt business practices is enormous.
What do you base this on?
Even if we're assuming political corruption is in play, what drives improper political favors is the potential for future money. SBF is broke and will be for many years to come. If anything, politicians will be lining up to throw him under the bus because they've got all they money they're going to get from him and there's political capital to be had from him going to jail.
Which specific prosecutors do you think won election with SBF funds that you think should be already after him?
> If you won your election with SBF funds, it undermines the will to prosecute
This reasoning doesn't make sense to me, they already accepted and spent the money, if anything that's an incentive to prosecute in order to cultivate a perception of distance from his wrongdoing.
Wouldn't those open contributions not encourage any implicated Dems to go hard on him, as a measure of self-preservation to prove to the electorate they weren't being bought (whether or not that was the original intention)?
Depends on the message they want to send to future potential donors.
Yeah good thinking - man figuring out the politician meta is really kinda tough
Why would he donate to both parties?
Many (but not all) corporations and wealthy people donate to both political parties because it gives them access and influence, generally with the idea of furthering their own specific goals as opposed to advancing a broad policy agenda.
ah. thanks. do we know if SBF leaned one way or the other politically?
All we know is he was very into misplacing other people's money.
To get friendly with politicians on both parties?
Is this really a more convincing explanation than, these things take time? FTX filed for bankruptcy less than a month ago. It's a complex white collar case across multiple jurisdictions. Whether or not this Bahamian AG was corrupt - why would we expect an arrest by this point?
If the case doesn't develop over the next, say, 11 months, I'll be as suspicious as anyone else. But at this point it feels like jumping at shadows.
The most boring explanation is the most likely explanation.
The most interesting explanation is the most likely to be heard explanation.
I agree with this explanation too and think it's complementary. The US system is pretty happy to let people blabber on and incriminate themselves. That they can't immediately arrest him isn't a huge hurdle while they build their case and let SBF talk.
> The US system is probably content to watch while Sam confesses, but they can’t directly arrest him
The US has directly apprehended people in foreign countries for criminal prosecution in the US, including countries with whom they have extradition treaties, and the target being corruptly linked to and protected by local law enforcement has been a factor in favor of such action when it has occurred.
Can you provide comparable to SBF example? I can see US doing it in Afghanistan or Syria for terrorists but it's hard to imagine it happening for white collar crime in a friendly country with functioning legal system like Bahamas. It will be huge precedent.
Marc Rich, fugitive financier
He won't make an arrest because the subject is a former customer of a bank for which he is a former lawyer? Am I misunderstanding?
A bank which happens to be the centerpiece of the entire iFinex (tether/USDT + Bitfinex) thing (which may or may not be legit).
And SBF is not just a customer from that bank. He also bought another bank, in the US, which previously belonged to the owners of Deltec. And FTX's top lawyer happened to be a colleague of Bitfinex's top lawyer (they both worked for the same company which actively defrauded online poker players).
So there are ties that do go beyond: "customer of a bank".
It looks like it's a little circle of people who know very well each other.
To give an idea of the amounts involved: Tether emitted USDTs worth, so far, four times the entire GDP of the Bahamas.
Bahamas is so small (400 K people) that when the authorities stormed FTX's office and forced SBF to handle them the keys for various shitcoins, they froze an amount representing back then 5% of the Bahamas' GDP (now more like 1.5% because these shitcoins melted, but still).
The amounts in play are tiny and insignificant for a country like the US: QEs are in the trillions, bank bailouts in 2008 were done with $700 billions+, etc.
But for a tiny country like the Bahamas, we're talking about a lot of money.
I'm not saying that he's protected or that the authorities knew about his wrongdoings but you cannot rule that out (at which point many coincidences are not coincidences anymore?).
Thanks, that sounds like a reasonable thread of thought.
https://knowyourmeme.com/memes/pepe-silvia
Some people have friends
Can you be more explicit? It sounds like you're being sarcastic.
Are you saying they are friends (in which case, what is the point of pointing to the much weaker relationship)? Or are you saying the weaker relationship is evidence of friendship (presumably combined with the fact that he chose to go to the Bahamas)? Or something else?
Edit: Whoops, I just read more of the comments and am seeing there is a tribalism angle to this. I'm not sure I want to try parsing the answers to my questions :(
A criminal bank, yes.
You can still get a US arrest warrant even if you aren't in the US.
Bahamas has an extradition treaty with the US
Yes, but what is in that treaty, and is there any reason he should be extradited to the USA rather than tried in the Bahamas, or extradited to some other country, for that matter?
It's an honest question: I don't know the details of what he is accused of.
> 1. Sam Bankman Fried is in the Bahamas
If he's an American citizen, why isn't he being extradited? Because of his connections?
"At the risk of stating the obvious, the reason Madoff was arrested so quickly is because he confessed to every element of criminal fraud — including both the underlying scheme and his criminal intent. This meant that the FBI had both that confession and highly potent, admissible evidence of guilt in the form of testimony from his adult children (who had no apparent axe to grind)."
Right, I mean, I'm not saying he's not guilty, but does anyone at this point really understand it deeply enough to file an arrest warrant? I understand the impatience emotionally, but not logically.
I was jailed for sitting on the sidewalk in front of my old high school when I was 18. The police were called on me by the vice-principal, who could see from his office that I was rolling cigarettes, and thought I was rolling joints. The police showed up, realized that the call was bad because it was obviously loose tobacco, and decided to charge me with "criminal trespassing" because it's a charge that the police can press themselves without a complainant (the vice-principal was informed by others what had happened, would have never pressed charges, and was extremely regretful about it afterwards.) I spent the night in jail, and part of the next day, until my family could raise the money to bond me out (money completely lost; a bond, not a bail.) Luckily my uncle knew a bailbondsman personally, because as a loser black punk rocker teenager no other bailbondsman would take our money. If that hadn't happened, I would have spent a week in jail waiting for my hearing. My entire relationship with my public defender took place walking down a hallway towards the courtroom, where he told me that I could take a plea bargain (i.e. plead guilty) in exchange for no time, no fine, no probation, and a removal from my record if I stayed out of any trouble for six months (and of course the opposite if sitting on the sidewalk went so badly for me again.) I took the plea bargain, which required me to admit to the crime and pay court costs.
The reason SBF isn't arrested is because the people who would have to order him to be arrested relate to him personally, and coddle people like him as they would wish to be coddled themselves.
My Mom was a judge in Oakland. Because I was a little kid, sometimes I would just have to stay in the courtroom or my Mom's chambers. It was shocking to me how different the criminal justice system was than what I saw on TV, in which it was always always roughly fair. My mother above all stressed that it was a deeply unfair system and did what she could. I think a lot of people think the police, courts and lawyers work the way they do on TV.
That’s true but what you’re describing is an example of injustice. It would probably be better if everyone were treated like SBF than if everyone were treated like you were.
Do you believe it's possible that everyone is treated like royalty? And if not, wouldn't it be better if royalty was treated like poor people instead of having a multi-tiered justice system where the fairness of the system depends on your class?
If by being treated like royalty you mean being treated with empathy, then yes I believe that that is possible.
There is also a third option (or forth if you count the status quo). We could treat the rich the way we currently treat the poor and vice versa (an option I like to call eat the rich). IMO this is the only fair option, the rich have it good as is, they have an enormous amount of power that they treat with impunity, never taking the responsibility that comes with it. They have the option of abandoning their wealth (unlike the poor). It is completely fair if the justice system were to be used disproportionately against them.
For some definition of fairness, yes. I don't fully disagree since wealth makes it trivially easy to be lawful, nothing you do is because of needs, it's purely based on wants/desires. It does come with some problems, and I doubt it'll work long-term, but it would be interesting to watch.
I don’t want SBF arrested for criminal trespass, I want him arrested and prosecuted to the fullest extent of the law for the crimes he committed, and I don’t want him getting off because of the need for a speedy trial, before we know what he did.
Law enforcement should not act in bad ways to more people.
That a school vice principal would call the cops on a student boggles the mind (outside of serious crimes or imminent danger). The true educator will patiently observe the ups and downs of a student through the years and will work to teach. Try and engage the student more, talk about drugs and choice in a smart way, recommend some jiu-jitsu classes or, as a last resort, talk to the parents.
Faith in humanity? Sometimes shaky.
A vice principal is an administrator, not an educator. The problem with schools these days (tm) is that power within the system has been given to or taken by these administrators, and there seems to be no way to reverse this.
It is easy to see how that entire chain of events could have really utterly fsckd over your life. I am sorry you had to go through that, but at least it didn't go totally sideways.
It easily could have cost you your job, then your apt, etc.
Thanks for your comment. I think a lot of people are not understanding it.
To a large extent (not completely) law enforcement and the greater justice system exist to mitigate contention in society. If the target of a law enforcement action is rich or famous, and the crime is not active or physically damaging, then it will be contentious to arrest the rich/famous criminal. If the criminal is not rich or famous, or if the crime is physical (murder, assault, etc) then the arrest will be less contentious, and the police will proceed.
Up until now, it has not been at all contentious for the police to arrest/abuse lower status persons.
In the case of a contentious arrest of a high status person, arrest will be delayed until the exact charges are known and believed to be provable.
---
I am describing the system as I see it now, not the system that I think should exist.
The faults described here are not faults of individual members of any justice system, they are faults of society and we ascribe value.
Before replying to this comment, please think about policing in feudal societies and consider the lessons of Foucault in "Discipline and Punish".
You plead guilty precisely because you didn't do anything. The probability distribution for you was: high chance of getting off, low chance of getting a large punishment. The probability distribution for SBF if he pleads not guilty will be inverted: high chance of incarceration, low chance of walking. But the odds will likely be preferable to whatever deal he ends up being offered. Modelling the cops that booked you, their goal is to throw things at the wall and see what sticks. Whichever cops are currently gathering evidence against SBF will be thinking the opposite: they need to be very careful in collecting evidence to minize the risk of SBF getting away.
I should point out that while this is unfortunate, this is all a relatively inevitable consequence of having a justice system. Since humans are deciding cases, there will always be a small chance that they screw it up (in one direction or another). You can't have arbitrary do-overs for people who feel their case was decided poorly, because everyone thinks that (or will say they do).
Argh, that is so far outside of my reality that I have trouble understanding how such evil events happen in the USA — I'm from New Zealand so I just have no frame of reference to understand.
The closest I have experienced second-hand in authoritarian Cuba under Castro while I was visiting there, where I saw some residents arrested for nothing tangible, but they were released within 8 hours and they seemed blasé about it.
I have been arrested, but the police were respectful (it helps that I am a short white guy, and I was wearing a geek identity).
If you ever visit Christchurch, contact me via HN, and I'll feed and put you up for some days, if you're keen.
Don't worry - most people in the USA have trouble understanding that such evil events happen here, too.
You've either been on the pointy end of the "justice" system, or you haven't. Paying "court fees" to directly fund the salaries of the people persecuting you is the icing on the cake.
And like, what happened to OP was pretty tame, all things considered. Nobody died. There wasn't months or years spent in prison. I don't think their life was drastically altered by it (but their personal world view certainly was). Nobody is going to the media with such a story, because it's not glaringly outrageous. Ask an attorney if OP would have a case against the police/state to rectify the injustice, and they'll just laugh. They're part of that system and above you, which is why even if you're paying them, they don't answer the phone after 5.
IMO the first step to reform happening is the system admitting it is fallible. Plea bargains should be drastically reformed - either make the case or STFU. When a victim is found innocent or charges are dropped, they should be mechanically compensated for all of their expenses and damages - legal fees, time lost in jail/court, emotional distress from the kidnapping. That money should come out of the coffers of the city paying the gang of violent thugs that abused OP, and ultimately the taxpayers funding them. If the cost of law enforcement ends up doubling, then the true cost of enforcing the laws was twice what was being paid - right now these damages are funded as a perverse reverse lottery where the unlucky just get stuck with them. This certainly won't fix everything, but correctly defining responsibility is the first step.
Alas, the disempowering mass media narrative we get is that the cops just need "more training" so perhaps they won't commit wanton second degree murder as much. Funny how the average citizen doesn't get a similar allowance.
I'm sorry this happened to you.
How would sitting on the side walk in front of a school constitute a criminal trespass?
The severity of your experience makes zero sense… until you mention being a punk rocker.
Fact is: non-punk rockers merely get the right to become masters-of-the-universe revoked.
/s
Gah that's horrific.
I think part of it's because when a poor person looks vaguely associated with a crime, it's straight to jail. When it's a rich person it's all "well IDK we just can't be sure, can we?"
ah so that's why my city is so crime free, I and all the women I know are never hypervigilant taking public transport, I'm never afraid for my elderly relatives to be bashed in the head or pushed onto the tracks by 9 time offenders out on bail, and everyone working exhausting retail hours from cvs to applestore doesn't know why all these totally-prejudiced shoplifting deepfakes go viral
I'd be fine with the new surveillance state if it actually delivered some safety-dividends, but i guess lawlessness keeps the working class in line
Also, it's not like he's about to hop in a private jet and evade the jurisdiction. He's constrained in an extradition friendly country. And to the extent it's not extradition friendly (mostly if they want to press charges first), it doesn't help to file an arrest warrant.
Speed isn't required here.
Hasn't SBF given long detailed interviews about the activity of FTX & his roles there?
Yes but it’s fairly complex and he keeps presenting it as a mistake and a lack of controls.
He hasn’t admitted to it as fraud, which is (I’ve heard) hard to prove.
Spending your customer deposit that are legally off-limits, and that he said were off-limit, on things like houses, properties, etc for your own self and family is not a straight-up admission of wrong doing?
Since when breaking and entering a looting a house can be defended with "well, I thought all was fine"?
He admitted numerous times doing things that are straight up illegal.
Spending your customer deposit that are legally off-limits, and that he said were off-limit, on things like houses, properties, etc for your own self and family
This isn't proven. He could have bought those houses with VC money not customer deposits.
> customer deposit that are legally off-limits
Where did you get this impression? Even that part is potentially up for debate. FTX isn't a bank or anything like that and they say that FTX USA is actually still solvent and will payout. I have my doubts about the last one but if he actually pays all US customers back he might get away with this.
>but does anyone at this point really understand it deeply enough to file an arrest warrant?
That hasn't stopped prosecutors before. This is happening because there is no appetite to go after him, people can take a look at the public record so far and wonder why this might be the case.
In principle charges are not to be brought unless the prosecutor believes they have enough evidence to win a conviction in court.
This is a simple explanation: https://twitter.com/compound248/status/1598446656634191872
Everyone says they know all the facts, but I haven't seen anyone post a draft of what they imagine the indictment will look like to gist or pastebin.
There are high-ranking government officials openly insider trading without any investigations. We have a woman who's been sentenced for sexual trafficking of minors to virtually "nobody in particular". We now have multiple massive crypto scams go completely over everyone's head because it's "internet nerd money".
This complete inaction on behalf of authorities is really starting to feel like any actual wrongdoing assumed by a normal person is just a whacky conspiracy theory that gets swept under the rug because nobody is getting punished for anything when the trail seemingly leads to "the establishment" or whatever you might call it. I mean, I feel a little kooky just typing all of this out.
It's always been this way. You just never knew it because it wasn't covered by the very narrow view of the world that the legacy news media presented.
No, it hasn't always been this way. The "legacy news media" itself hasn't always been this way: 40 years ago, 50 or so companies controlled 90% of American media. Now, 6 companies control 90% of American media. "This is extremely dangerous to our democracy," just like all the newscasters simultaneously say on all the different channels at once. [0]
It's always been the case that Power tends to do whatever it wants, but Power is usually polite to other Powerful entities. When enough of them are at the same table, they tend to keep their elbows tucked in, but when it's too centralized people start talking about lebensraum.
[0] https://www.youtube.com/watch?v=ZggCipbiHwE
Yes, and if anyone doubts it I'd recommend "Confessions of a Wall Street Analyst". A retired analyst/trader really lays out how much insider trading there was back in the 90s even when things were supposedly regulated.
US prosecutors don't want to get an indictment until they have enough info for a conviction. If they indict prematurely, the perp may get an acquittal. They only get one shot. That's what "double jeopardy" is about.
What ought to be the easy win here for prosecutors is theft, in the form of diversion of client funds. That's most likely to apply to FTX.us. Now, if FTX was registered as a "national securities exchange", or a broker/dealer, under US law, that would definitely apply. Without that, the jurisdiction issues are worse.
[1] https://www.justice.gov/usao-mdtn/pr/former-mid-state-securi...
They do superseding indictments all the time.
A superseding indictment can’t be issued once a trial has started and if it’s issued too close to a trial date it opens up a vindictive prosecution defense.
Grand juries are complicated and can take a long time, if you issue an indictment too soon without having all your ducks in a row the defense can push for a fast trial knowing that the prosecution doesn’t have enough to convict or are at a weak position for a plea deal.
Cases like this are especially complex since whilst it’s easy for anyone to see that something really shady has transpired one would be hard pressed to actually define which laws specifically has he actually broken.
And even more so it would be even harder to gather the evidence required to indict in the first place not to mention get a conviction or a guilty plea.
This tweet explains it all
https://twitter.com/RepMaxineWaters/status/15986938112528752...
(For folks who don't know, Maxine is a congresswoman sitting on U.S. House Committee on Financial Services)
1 year ago: "We need to put reporting requirements on account flow for all bank accounts worth more than $600 to avoid billionaire corruption."
Now: "SBF, would you join us for tea and coffee at a cordial executive meeting?"
My reading is this is a very cordial invitation to hang himself under oath. If you think SBF is guilty, than you have to believe he'd be insane to "participate in a hearing." (If you think he's innocent, it's still a crazy thing to do. I'd encourage anyone who hasn't seen Don't Talk to the Police to watch it. https://youtu.be/d-7o9xYp7eE )
Most prosecutions don't involve playing coy with the defendant in hopes they might be forthcoming with evidence before things get all adversarial. There's no reason for kid gloves, especially for this case with its clear cut set up of fraud - the hard evidence is going to consist of transaction logs and other digital files that need to be preserved.
About the most generous interpretation you can give the above tweet is the representative merely trying to get her name in the spotlight on a current hip topic. But that still begs the question of why she would want her name anywhere near stories about a con man - it still seems as if only some types of criminals need to be distanced from.
Waters is not a prosecutor. She's on the financial services committee; there's been a big disruption in the finance world. It's pretty normal for the committee to investigate it.
If you were in her position - wouldn't you reach out to SBF? If you did - wouldn't you do so with honey and not vinegar? What is there about what or how she did this that leads you to believe it's a ploy for attention rather than straightforwardly doing her job?
For me the only unusual thing is that it's over Twitter, but seeing as how he and CZ laid out all their bad blood over Twitter, that seems to be the preferred medium for this community.
Yes, I know that. The "big disruption" is that someone committed basic fraud - SBF seemingly took money while promising to act as its custodian, while actually gambling with it behind the scenes. What's the meta issue to be investigated and pondered here? Fraud is one of the oldest crimes. Arrest the fraudster, put them in jail, perhaps recover some assets for the victims, done.
I'm not saying that's a quick process, nor should it be. But congress treating this as some sort of exceptional meta issue simultaneously deemphasizes that SBF appears to be a run of the mill fraudster ("but on the Internet"), while also emphasizing the narrative that "something must be done" (in other words, never let a good crisis go to waste).
Is it basic fraud, or are there important facts we don't know? Should crypto be regulated and if so how? How can we answer these questions without conducting an investigation?
I agree with you that that is how it currently appears based on media reports, but that doesn't mean that's the whole story. To me it seems pretty obvious that Congress would want to know more.
What we're debating is where that investigation is conducted. Conducting it in congress implies some exceptional thing that needs to be reformed, rather than the brazen simplistic criminality that it seemingly was. This speaks to a two class justice system, with SBF in the same category as other "too big to fail" criminals.
How about starting with a criminal investigation? If that turns up some novel twist exonerating SBF and indicating a meta-issue, like say FTX was actually hacked, then congress can take over. As it stands, all signs point to simple fraud where customer deposits were given to Alameda to gamble with.
As far as regulating cryptocurrency more, that impulse is precisely what I mean by "never let a good crisis go to waste". Fuck, continuing this line of thought I almost have the wonder if SBF is more like an Epstein-club actor here, doing the deliberate job of looting cryptocurrency for the political class, while creating a disaster to usher in more regulation.
I think you misunderstand that investigations often take place in Congress and the DoJ simultaneously, and that Congress conducts quite a few of them, most of which don't result in regulation.
There's almost certainly an investigation in the DoJ. We're not going to hear about it for a long time.
It's a foregone conclusion that crypto will be regulated. Congress has been figuring out how it should be regulated - not if - for a while. One of their key contacts in this industry, who spent a huge amount of time assuring them it wasn't all a scam - was a scammer. That matters to them.
The last part of your comment, where you suggest SBF blew up his own empire so that Congress could maybe pass a law. I don't really know what to say, this is a literal conspiracy theory. I'd encourage you to try and get more perspective.
> Most prosecutions don't involve playing coy with the defendant in hopes they might be forthcoming with evidence before things get all adversarial.
What is this assertion based on because that’s exactly how things very often work?
Sure, there is always some of that dynamic. Police question a suspect without arresting. Police offer food and ask for a statement before your attorney shows up, etc. But not of this magnitude.
Not unless you know you will be asked about weather in the Bahamas.
Would you bet your liberty on it? For what upside?
Say Waters throws only softballs. Why wouldn't Republicans on the committee seize the opportunity to make her look foolish and compromised by throwing hardballs?
Crazy that NY mag would write a whole article when they could have just clicked retweet.
The NY Mag article argues against that interpretation.
He agrees. He's implying, reasonably, that the comment above is fatuous.
Ah, sorry, I think I didn't catch the sarcasm.
Yes a congresswoman is going to stand strong with some disgraced, new-money mark who donated to her, out of loyalty. Come on, get a grip
The US is corrupt but not that corrupt. There is separation of powers between congress and the DOJ. And even within the executive there are firewalls between the politicians and the prosecutors.
> The US is corrupt but not that corrupt.
By that metric, every nation is corrupt and the term becomes meaningless.
It would be like hyperbolically calling every person guilty of physically injuring someone else a “murderer”.
Every nation does have corruption. Corruption is not a binary.
Which is precisely the point. When you say a nation is "corrupt", you're generally referring to one that is notable for that factor. Because otherwise the term is meaningless (because every nation does have corruption).
As a complementary example, you could argue all legislation is authoritarian; but describing a nation as "authoritarian" in the general (vs specific, as in certain laws/bills) goes above and beyond "normal" legislation.
If every nation had it, it would not be a binary. It would be a gradient characteristic, like temperature.
And given that nations are made of people and people are corruptible, that actually sounds about right.
You know.... it might be time for a presidential candidate to run on fighting corruption.
well no, actually the linked article we're discussing explains it all.
I mean Congress doesn't arrest people
Technically speaking they can, but haven't since the 1800s.
https://supreme.justia.com/cases/federal/us/19/204/
Not applicable in this case, though.
In what way? They literally write and vote on the (Federal) legislation that puts people in jail via the War on Drugs, the War on Terrorism, various specific crimes, etc.
Or do you mean literally? Because they most definitely have officers in both chambers of Congress and they’re fully empowered LEOs.
He is a an exceedingly large donor to the establishment, especially to the party currently in charge (matters not which one). With his connections, he is in the different tier. No judgement here on whether it’s good or bad.
despite having donated to both parties extensively, i think it's largely a perceptional issue. while the FTX collapse IS mainstream news, the mainstream largely isn't impacted and has already written off crypto as a massive scam. so in some regards, i think joe regular-guy enjoys the spectacle of crypto people losing their money because it validates their skepticism of the entire ecosystem.
for either party to feel really motivated to arrest or prosecute, they'd want joe regular-guy to be clamoring for that action and i don't think that's the case.
> despite having donated to both parties extensively
> both
He was the second biggest donor to the DNC after George Soros. I'm not aware of any RNC contributions.
He admitted donating to Republican dark money groups. He claims he donated roughly the same amount to conservative causes as he did with Democratic orgs. Plus, another exec in his organization, Ryan Salame, donated $24 million to Republican candidates.
Between Sam's dark money donations and Ryan's $24 million, it's possible Republicans received more FTX money than Democrats. I don't know if that's true, but it's possible.
https://fortune.com/crypto/2022/11/29/sam-bankman-fried-poli...
https://www.washingtonpost.com/opinions/2022/12/01/crypto-po...
>claims
>it's possible
>I don't know if that's true, but it's possible.
Sounds an awful lot like a conspiracy theory, my dude.
If you want to call Sam a liar, be my guest. But it's his claim. Plus the $24 million from Ryan is documented.
If Sam isn't lying, then that's 40 million + 24 million = 64 million to Republicans. Which is more than the roughly 40 million to Democrats.
All of this is from public information and Sam's claims. Where's the conspiracy theory, my dude?
Sam is a liar, that much is a widely documented fact. That much is known. Your numbers are incomplete and misleading.
We somehow know both SBF and Ryan Salame's personal donations, and he claims dark money went to Republicans but how much dark money went to Democrats? 0? What about the other staffers at FTX? SBF has appeared in public with Maxine Waters and Bill Clinton. His own mother is a major Silicon Valley booster for the Democrats [1]. You telling me no money made it to his own mother's Democrat PAC?
Sam's public claims are not reliable. He is a pathological liar. He manipulated his own accounting books to make his company appear solvent for fundraising purposes. You cannot trust the damage control PR of a pathological liar.
[1] https://www.influencewatch.org/political-party/mind-the-gap/
These are the numbers we know. I can't assess the numbers we don't know. That's why I was careful to use the words "possible" and "not sure if this is true". I wasn't trying to be misleading. I fully understood there might be donations we don't know about. But I guess that was for naught since you're calling me a liar anyways.
I would tend to believe him on the Republican dark money. Sam needs all the help he can get right now. It makes sense to make these donations public knowledge. Plus, in the legalized bribery known as campaign donations, it makes sense to donate to both sides. Most companies which do political donations make donations to both. A few very ideological execs will only donate to this side or that, but Sam doesn't strike me as one of those.
Maybe I'm wrong. But I doubt it. The winning move is to donate to both sides. If the Republicans received zero from Sam, they'd have every reason to reveal this to the world. To hurt Democrats and punish the guy who gave them nothing. But the Republicans aren't doing this. Silence to me is evidence that Sam gave at least part of what he claimed.
As for the numbers we don't know, I'm not making any claims. Maybe a billion went to Democratic PACs. Maybe nothing did. Who knows? It's worthless making assessments on this until further evidence comes out.
> If you want to call Sam a liar
Yes
We're talking about a major political donor who just defrauded people for billions of dollars, whose parents are extremely well connected to the DNC and have actually written a substantial amount of legislation put forward by Democratic lawmakers, and who was sleeping with the niece of the current head of the SEC who was appointed by Biden. He has every single motivation to lie about this.
Oh my god dude, his parents are tax professors, you are being so incredibly disingenuous with your posts and then to hem and haw about conspiracy theories in response.
His mom literally runs a major fundraising arm of the DNC.
So? You make them sound like they write all legislation proposed by Democrats... but they are just tax professors...
Now that's a conspiracy theory worthy of a movie with, say, Aaron Taylor Johnson as SBF and Margot Robbie as his gf (I think she should be pretty in the movie!)
And your view that his donations are relevant to his prosecution - that's just "facts and logic", I suppose?
Tell me, if he and Democrats hatched a plan to avoid prosecution. What would one call that? What crime would this be?
>I'm not aware of any RNC contributions.
Now you are.
https://www.foxbusiness.com/politics/ftx-founder-sam-bankman...
https://www.coindesk.com/policy/2022/04/11/ftx-co-ceo-donate...
So 0.6% of his overall contributions? Not even a full percent?
His co-president gave over $20M to republicans and some republican congressmen were among his staunchest defenders and were actively trying to prevent the SEC from investigating. It would behoove people to read a little bit about the case before they start pontificating on their pet conspiracy theories.
I saw elsewhere you're now claiming that SBF was sleeping with Gensler's niece which is a straight lie as far as I can tell? I think it's just a mistaken reference to Caroline Ellison's dad working in a different department at MIT when Gensler was there?
https://www.opensecrets.org/outside-spending/donor_detail/20...
https://twitter.com/RepTomEmmer/status/1504117902080942084?
https://apnews.com/article/fact-check-sec-chair-ftx-ceo-daug...
Gave to Republicans that they thought might be friendly to regulation.
You know what this is. Don't pretend otherwise.
Right, and SBX's handlers are pushing the lie that the scam doesn't effect the mainstream citizen / regular joe.
Lmaoooo
What will happen when the party currently in charge change? Will he still be untouchable?
Well, he claims to have given about as much to both parties (just in different ways).
https://fortune.com/crypto/2022/11/29/sam-bankman-fried-poli...
Cynically, this makes sense to me as what he was buying was really lack of government oversight.
> Cynically, this makes sense to me as what he was buying was really lack of government oversight.
Yeah, I think a lot of people forget that for something like this he didn't need to actually get the government to do anything: simply delaying action gave him the chance to do hundreds of millions of dollars in fraud.
It's been coming out that he donated lots to them too so I guess we'll see. My impression overall though is that he will end up in jail, it's just going to take a while for everyone who received his money to come to terms with the scale of his fraud.
It's a dumb conspiracy in the first place -- he was a large donor to some congressional candidates, many of whom lost (over $10M of his 2022 funds went to a losing candidate in an Oregon primary). In any case, it's obvious he has zero money and zero future prospects to be politically useful so there's no reason that anyone in charge would go out of their way to "protect" him (contrary to someone like Corzine, Menendez or Rick Scott).
These theories are just weird HN conspiracies to add mystique to the very normal slow Federal justice process.
If you were a politician interested in getting more of that sweet fraudster money, tell me, what would you do to send a signal that you're open for business to the next batch of fraudsters, hang the guy that paid you, or help him out?
Sure, this may just be bullshit, we dont know, etc etc, but "he has no more money" is not a very good argument
it turns out he was smart enough to give to both parties, knowing how power can change hands (not saying that giving to either party was a good thing)
He also is part of the establishment, as a former Jane Street trader.
Maybe he belongs to a small tight knit group with institutional power?
.
No, he’s in the Bahamas and yes is is a donor to the Bahamian government.
Complexity is an enabling friend for criminals and the incompetent. And lobbyists. The executive branch has got work with the legislative branch to eliminate ways to draw out prosecution to play for time.
Second, consider this comment filed in the original article:
"He hasn't been prosecuted yet because he was a major contributor to the democrat party."
Another comment made reference to his alleged Jewish heritage.
Beyond this unwarranted untrue generalization, there's an interesting underlying emotional component to the hypercritical hyper divide in many big stories like this: self created, self imagined victimization. When we contextualize the world this way we see ourselves as victims from which we manufacture moral outrage, virtue signaling, and even a kind of perverse machismo that one had the courage to call out the truth eg he's a democratic funder and the rules don't apply to him ...but they do to us the hardworking guys trying to do the right thing.
Folks, it's a dead end. The linked article I think is much more helpful and insightful.
The real world doesn’t work like Law and Order. There will be an investigation before a grand jury. Evidence will be collected and a case built. Evidence and witnesses will be subpoenaed.
At the end of that will come a criminal indictment (unless the grand jury declined to issue an indictment, which is rare).
At that point the investigation is over. You don’t indict then build a case. Federal prosecutions don’t work that way.
This is a complicated case because it involves a lot of money, a tenuous paper trail, lots of communications and several jurisdictions. SBF may need to be extradited and whatever court hears that case will need a strong case. A failure to extradite Matt effectively kill the whole case.
This fraud is so egregious that the US government won’t let this stand. Stealing customer assets is as open and shut as a case gets.
Could you ELI5: what US federal crime(s) can one reasonably suspect SBF of having committed?
Also, how likely is it that he will never be convicted of violating US federal laws? (For any of the numerous possible reasons: he never did anything wrong, or it's too hard to prove, or US lacks jurisdiction, or due to political connections, or prosecutors don't prioritize this type of cases, etc.)
Wire fraud, as always.
Wire fraud requires you to prove that a fraud actually took place which won’t as simple as you might think in this case.
The wire part of wire fraud is easy since it involved the internet and there is plenty of evidence of communications. However the fraud part would be hard enough to present to a Grand Jury for an indictment and probably even harder to convict on especially within the given time frame.
So I'm confused. The front-page article on HN is about why SBF isn't arrested yet. So shouldn't we already have a well-thought out suspicion of what he might be guilty of?
Basically, do we think this is just another financial bet gone sour (not illegal in itself)? Or do we think SBF stole something, lied about something, etc?
Honestly I don’t know, crypto in general is a scam in my book but I’m very well aware that doesn’t makes it illegal.
Now what SBF is actually guilty of I can’t tell you, you’ll might be able to find a large number of various small violations in terms of fiduciary responsibility but I do not have the sufficient legal expertise to start unpacking this.
I definitely haven’t seen anything specifically that amounts of wire fraud the closest public thing might be when they insinuated that FTX deposits are covered by FDIC insurance.
Which kind of brings us to the next problem not with FTX but with crypto exchanges as a whole they don’t seem to act as only as exchanges but also as banks and investment funds. Stock, derivatives and other goods exchanges don’t tend to have customer deposits their roles is to connect between buyers and sellers and provide arbitration services to execute trades.
Every time I look at crypto exchanges my brain starts to hurt and I can only think to myself how is any of this shit is even legal.
Other potential issues would be the relationship between FTX and Alameda normally you will never be able to have that conflict of interests between an exchange and a market maker in any regulated equity market.
I also don’t understand how or why these exchanges can issue their own tokens that would normally be equivalent to a promissory note.
I honestly can’t wait until this entire crypto fab dies over but I also unfortunately don’t see people going to jail over any of this nonsenses.
It seems that the discussions about the prosecution of SBF all assume that the U.S. will take the lead in prosecuting him, but couldn't he also face fraud charges in any of the countries where FTX operated? I hope that prosecutors in all of these countries are investigating this matter.
The wheels turn slowly, but grind exceedingly fine. This is a major case and it will take time for various agencies to put all the pieces together.
Yeah our institutions are taking care of everything, just wait for the rest of your life.
I hear a lot of people in the crypto sphere talk about regulation being a bad thing. The reality is that most regulation aims at financial institutions such as these while also protecting the consumer.
Will additional regulation have a negative effect on the value of crypto? It's likely. However, the tech itself will continue to provide value to those who use it to circumvent the banking system. For instance, you can still exchange coins and store them in cold, personal wallets.
The fallout of this collapse will be significant and I hope what emerges thereafter will be a more sensible approach to crypto and more stable value.
I think what a lot of crypto people want to avoid is misguided regulation on decentralized protocols. But regulation that makes it less likely that central exchanges will rug you? I don't think many people mind that much.
SBF himself was lobbying for regulations that many people claimed would have outlawed defi in the US, pushing people to use outfits like FTX instead. People certainly do object to that.
Everyone wants to avoid misguided regulation. I don't think that's unique to crypto. What I hear is more of a blanket statement that regulation of any sort is bad, which feels naive and misguided on the part of the consumer.
Yeah I have seen that sentiment in some of the subreddits, just not in professional circles in the Ethereum community.
I’ve always imagined that piss enough people off like SBF did would increase your chances of accidentally falling down the stairs, or for it to happen to those around you (pay us first or we start on your loved ones).
To be clear, I don’t wish death on SBF, but presumably at least some of the people with money are dangerous. The case of Melissa caddick in aus (stole 40m, disappeared, only her foot was found) seems similar, but currently there’s no evidence of foul play.
From having been lawyer-adjacent, I have one thing to contribute:
Lawyers are pathologically risk-adverse
I use that adjective deliberately. Their favorite phrase is "out of an abundance of caution" which means "I can't think of any reason why I must do this, so I won't."
Cynicism. But to go out on a limb and get your ass kicked by his high-priced lawyers could be career-ending for them. Or rather, their career would become "chasing ambulances."
Folks in US love to spout, "Innocent until proven guilty" until they feel victimized and they start chanting, "lock em up, right now!"
He hasn't been arrested yet because of one of the reasons below.:
- It's easier for the government to hunt down $600+ transactions instead of trying to navigate their own obtuse, complicated tax laws - wonder if that's intentional, but that's a tangent that doesn't need to be explored
- SBF donated millions of dollars to DNC causes and (SBF-admitted, which ANYBODY should take with a grain of salt since the guy's a sneaky little liar) to RNC causes. Why would politicians rush or push to prosecute someone who gave or could give them more money in the future?
- SBF has family that's tied to major political movements (I believe his mom runs/works for/with a larger financing arm of the DNC).
- It simply takes a long time for the evidence to be gathered, put on display, and have him sentenced/found guilty.
It is _VERY_ suspicious that most media outlets are being nice and trying to whitewash this into obscurity. The dude "LOST" 1-2 billion dollars.
SBF should be under witness protection, at the very least - if not jailed until trial.
The facetious, compulsively lying tech bro who only says "I'm sorry" after literally stealing investors' money should quite literally be barred from seeing the light of day ever again.
Not sure if SBF decided to run this racket for a self-corrupted version of "citizen justice" against a broken and unfair economic system, but he sure harmed a lot of innocent people in the crossfire if that was the intent.
I wouldn't be surprised if he's able to disappear from the eyes of the public due to the always-corporately-manipulated media conglomerates.
Are there any long bets sites where I can place a bet on SBF being arrested within two years?
Should be a question for Good Judgement Open, would be interested to see what superforecasters predict.
> At the risk of stating the obvious, the reason Madoff was arrested so quickly is because he confessed to every element of criminal fraud…
From a European perspective, this is strangely backwards: Madoff confessed and was fully cooperative, hence, there was no need to deprive him of freedoms without a process. In the SBF/FTX affair, on the other hand, there are no signs of full cooperation and there's some danger of obstruction of justice and tampering with potential evidence. (Which should be, apart from risk of recurrence and/or acute danger, the only reason for depriving anyone of granted freedoms without a due process.)
Short answer is, like anything in these cases, it has complications and an investigation unit is needed first in order to collect data and evidence, assess which, if any, laws were broken and file an appropriate warrant for arrest. Until that process happens, "innocent until proven guilty" applies here. Emphasis on the "proven" part as that is how our justice system is intended to be. Which also means "not fast"
More questions about him. If he stays free is he likely to destroy some evidence or affect the investigation somehow? And he is in Bahamas, is he likely to run anywhere from there? Does he even have capacity to attempt it?
If he were to try to run he would likely end up locked up. But currently, it is kind of immaterial.
Article provides a pretty comprehensive reply to that question. Can't wait to see SBF in jail, but it will take time.
I read the article and was puzzled by this:
>> We have not seen anything like a real admission of criminal conduct from SBF yet
He seems to have made many admissions, just in an "aw shucks i mixed up the money and now its all disappeared" and this seems to fall under "ignorance of the law isnt a defense of criminal behavior"
https://news.ycombinator.com/item?id=33835220
Because Madoff's lawyer says he should shut up, and he isn't, so why not play out some line and let the fish set his own hook? Arresting him would just make him clam up.
I strongly suspect it was because he didn't embarrass any really rich people.
Madoff (and Holmes) embarrassed (worse than ripping off) some very influential people. Jeffrey Epstein could have really done it, but he's boating with Charon, right now...
Holmes embarrassed the Patron Saint of Chaos. Prison is getting off light.
That is the wrong question given the fact that VCs were involved in passing around a business template that told how to issue tokens to get around SEC governance!
It's not just SBF that will be under possible arrest and jail time, expect some VCs to also be prosecuted.
I thought it wasn't 100% clear that FTX ever actually claimed fiduciary responsibility?
its just a big joke of what how the world works right now;
he scammed worldwide users for 8B+ or more; > donated hundreds millions to US organizations and politics; > US citizen with good connections > highlighted many times that FTX US was solvent and money flowed away from international organizations > US users will get funds back; US does not press charges and probably even protect him
Scam scheme of 2022: stole money worldwide, be US citizen and share some for US donations, get profit, repeat
He stole enough money to be considered respectable.
I am curious too. Why is SBF not being treated like a Bernie Madoff? Paper trail non existent or too complicated? It's odd how softball the NYT etc are treating him. There's a meme where they count the number of times "crime" "fraud" etc are mentioned in articles about him. Almost nil.
Given the large number of heroes the USG has rapidly targeted internationally for behavior which was not illegal, illegal but morally righteous, or minor infractions, it is impossible to take nymag’s piece as anything except a placement by a USG LEO or an extremely inexperienced reporter.
Isn't he the very visible tip of a very embarrassing series of many recent events for the Bahamas as a business haven? Or is it the opposite - the Bahamas (or its current leaders) is going for it and embracing the Caymans style, wash your money, hide your business here model?
Because he donated to the right people.
SBF? Trump had boxes full of actual "Top Secret" documents hidden at home. I guarantee that if the FBI found boxes of nuclear secrets at my house that my remaining freedom would be measured in minutes.
Pointless article. TL;DR: Madoff confessed, SBF didn't. Investigation takes time.
Wild how if you’re caught selling weed you’re immediately arrested but if you’re caught stealing billions of dollars you get to give interviews from the beach.
Too busy speaking with Zelensky, Zuckerberg, Yellen, and friends.
https://www.nytco.com/press/the-new-york-times-to-host-annua...
Obviously corruption.
Money, and privilege.
Reminder to those down voting the above comment - George Floyd was killed over $20
Let me spell it out for you: white male with connections.
Let me remind about Bernie Madoff, another white male with connections. The article discusses the differences between Madoff and SBF, and why one got arrested immediately and the other has not. It's an interesting article, check it out!
If they wanted him, they would have gotten him already. This is regular every-day corruption.
Because we're a nation of laws, not a nation of knee jerk reactions and reactionary justice.
This a dumb question to ask.