Sam Bankman-Fried (SBF) debacle with FTX (1 Viewer)

[jvdesigns2002]

I think that Bitcoin should be viewed differently from the vast majority of the other ”crypto currencies”. I put the words in quotes because the reality is that the vast majority of the other crypto currencies that are out there are sh*t coins. Michael Saylor does a great job explaining why Bitcoin is a commodity and how most of the other coins are unregulated and unregistered securities. I’ll post the link below.

The blockchain can exist and provide value to the world without the existence of these garbage coins and the exchanges that are facades for ponzi schemes. It’s becoming clear that this whole FTX situation is probably going to domino effect and end up exposing a lot of other frauds in the world of crypto/nft’s. Heck, not surprisingly—now Logan Paul is connected to what looks to be a multi-million dollar fraud.


https://www.youtube.com/watch?v=elwtDslrLTI Michael Saylor explaining how the coins outside of bitcoin are virtually impossible to trust.

https://www.youtube.com/watch?v=386p68_lDHA coffeezilla going into a big crypto/nft scam that Logan Paul is tied to

 

[fatness]

Is there some question left about the reporter sharing the DM's in public?

 

[Monty Burns]

on some random talk show heard him referred to as Sam Bankrupt-Fraud

 

[Joe Bryant]

Is there some question left about the reporter sharing the DM's in public?

How do you mean?

The thread started about the debacle at FTX and Bankman-Fried.

After the thread started, I added a separate question with a poll to see how folks felt about the DMs being public. Like most threads, it branched into other areas with good discussion.

The poll was pretty clear with 68% voting for the first option. But also as with most good threads, discussion is allowed to continue and there can definitely be "question left" if people have an opinion. Especially for a minority opinion.

 

[Alex P Keaton]

So I thought this was interesting.
Here's an interview with a guy who is kind of a hobbyist financial forensic auditor.

Block, a vehement crypto skeptic, has spent the past 18 months doing forensic blockchain research. He uses open-source tools to follow flows of money between crypto companies, repeatedly demonstrating how shadow banks and nefarious scammers inflate the value of worthless assets in order to generate enormous wealth that exists only on paper.

The similarities to Harry Markopolous are striking. Markopolous was years ahead of everyone in spotting Bernie Madoff for what he was. Markopolous was a pro, this guy an amateur, but it sure seems like these scammers never get caught by people who are getting paid to catch them, but by people who have a passion and determination about spotting scammers.

This guy is not a believer in crypto (understatement)

Crypto hides behind all this complexity, and people hear words like blockchain and get confused. You hear about decentralized networks and mining, and it sounds complicated. But you get right down to it, and it’s just a ledger. It’s just like somebody writing down numbers in a book, and it’s page after page of numbers. That’s all it is.

This is the money quote:

One thing that is interesting is the psychology of all this. I’ve shared a lot of really damning things over the past year with people online—stuff that, if you were to hear about it, you would think any rational person would think, What am I doing with my money? I need to get it out as quickly as possible. And there were some people who reacted that way. But for every one person who listened, there were at least 10 who didn’t. And it’s just been fascinating to see. But this was almost more fun for me when I was on the losing side—when crypto was booming, and before it was obvious to everybody that this was all a scam. Back then, it was just a minority of us saying, “None of this makes any damn sense, guys.” That was fun. Now it’s kind of sad watching the consequences play out, especially because the people who get hurt the most are the people at the bottom of the food chain.

This is a decent synopsis of the entire FBGs Bitcoin thread.

 

[The Big Donkey]

How Sam Bankman-Fried swindled $8 billion in customer money, according to federal prosecutors

Bankman-Fried's swift fall from hero to villain of the crypto sector exposed a years-long fraud that traced back to FTX's launch in 2019, according to authorities.

www.cnbc.com

Long but good article on this.

 

[fatness]

Is there some question left about the reporter sharing the DM's in public?

How do you mean?

The thread started about the debacle at FTX and Bankman-Fried.

After the thread started, I added a separate question with a poll to see how folks felt about the DMs being public. Like most threads, it branched into other areas with good discussion.

The guy was admitting to crimes in the conversation that was "leaked". I was and am suprised that anyone would think that because he was wealthy he deserved some protection from admitting what he did in that circumstance, as though morality had a sliding scale based on apparent wealth. Now that we know more of what he's done, I don't think there's any question left that the reporter in the initial circumstance did the right thing. Is there some question about that left?

This topic wouldn't exist if a meth addict admitted crimes to a reporter.

 

[FairWarning]

Is there some question left about the reporter sharing the DM's in public?

How do you mean?

The thread started about the debacle at FTX and Bankman-Fried.

After the thread started, I added a separate question with a poll to see how folks felt about the DMs being public. Like most threads, it branched into other areas with good discussion.

The guy was admitting to crimes in the conversation that was "leaked". I was and am suprised that anyone would think that because he was wealthy he deserved some protection from admitting what he did in that circumstance, as though morality had a sliding scale based on apparent wealth. Now that we know more of what he's done, I don't think there's any question left that the reporter in the initial circumstance did the right thing. Is there some question about that left?

This topic wouldn't exist if a meth addict admitted crimes to a reporter.

I’m not surprised because justice can be bought in too many cases. Since his parents are lawyers, he expects the same considerations based on his name:

 

[Joe Bryant]

I was and am suprised that anyone would think that because he was wealthy he deserved some protection from admitting what he did in that circumstance, as though morality had a sliding scale based on apparent wealth.

Who is saying they think he should have protection because he is wealthy?

 

[culdeus]

Is there some question left about the reporter sharing the DM's in public?

How do you mean?

The thread started about the debacle at FTX and Bankman-Fried.

After the thread started, I added a separate question with a poll to see how folks felt about the DMs being public. Like most threads, it branched into other areas with good discussion.

The guy was admitting to crimes in the conversation that was "leaked". I was and am suprised that anyone would think that because he was wealthy he deserved some protection from admitting what he did in that circumstance, as though morality had a sliding scale based on apparent wealth. Now that we know more of what he's done, I don't think there's any question left that the reporter in the initial circumstance did the right thing. Is there some question about that left?

This topic wouldn't exist if a meth addict admitted crimes to a reporter.

I’m not surprised because justice can be bought in too many cases. Since his parents are lawyers, he expects the same considerations based on his name:

I've watched way too many videos on this topic. I'm of the belief he basically thought his Ts&Cs were bulletproof and probably had mommy and daddy sign off on it. Then when those had holes poked in them, he felt that since he wasn't the hole poker (Caroline>Hi) then he'd be ok. Still think he feels like his T/Cs were broad enough to cover his ***, and he won't get hit with major jail time. He's wrong.

 

[The Z Machine]

Is there some question left about the reporter sharing the DM's in public?

How do you mean?

The thread started about the debacle at FTX and Bankman-Fried.

After the thread started, I added a separate question with a poll to see how folks felt about the DMs being public. Like most threads, it branched into other areas with good discussion.

The guy was admitting to crimes in the conversation that was "leaked". I was and am suprised that anyone would think that because he was wealthy he deserved some protection from admitting what he did in that circumstance, as though morality had a sliding scale based on apparent wealth. Now that we know more of what he's done, I don't think there's any question left that the reporter in the initial circumstance did the right thing. Is there some question about that left?

This topic wouldn't exist if a meth addict admitted crimes to a reporter.

I’m not surprised because justice can be bought in too many cases. Since his parents are lawyers, he expects the same considerations based on his name:

I've watched way too many videos on this topic. I'm of the belief he basically thought his Ts&Cs were bulletproof and probably had mommy and daddy sign off on it. Then when those had holes poked in them, he felt that since he wasn't the hole poker (Caroline>Hi) then he'd be ok. Still think he feels like his T/Cs were broad enough to cover his ***, and he won't get hit with major jail time. He's wrong.

I've said it many times before in other threads, but I would love to be on a white collar crime jury, especially where they think that terms and conditions written into some app click thru would protect them from jail time. They better not let me be in charge of sentencing...

 

[massraider]

I've watched way too many videos on this topic. I'm of the belief he basically thought his Ts&Cs were bulletproof and probably had mommy and daddy sign off on it. Then when those had holes poked in them, he felt that since he wasn't the hole poker (Caroline>Hi) then he'd be ok. Still think he feels like his T/Cs were broad enough to cover his ***, and he won't get hit with major jail time. He's wrong

I read a bit recently about how SBF inserted code that allowed Almeda to basically trade with a negative balance, and they did it early. They bragged about their state of the art risk management software, and actually had zero. They didn't have a bank account. Alameda kept the money in their account, and FTX basically held IOUs.

I would not be surprised if SBF had no thoughts at all about whether he was covered legally. He's done so many dumb things, seems out of his character to plan for a rainy day, or try and cover his tracks.

 

[The Z Machine]

I've watched way too many videos on this topic. I'm of the belief he basically thought his Ts&Cs were bulletproof and probably had mommy and daddy sign off on it. Then when those had holes poked in them, he felt that since he wasn't the hole poker (Caroline>Hi) then he'd be ok. Still think he feels like his T/Cs were broad enough to cover his ***, and he won't get hit with major jail time. He's wrong

I read a bit recently about how SBF inserted code that allowed Almeda to basically trade with a negative balance, and they did it early. They bragged about their state of the art risk management software, and actually had zero. They didn't have a bank account. Alameda kept the money in their account, and FTX basically held IOUs.

I would not be surprised if SBF had no thoughts at all about whether he was covered legally. He's done so many dumb things, seems out of his character to plan for a rainy day, or try and cover his tracks.

I read that too. What was the end-game here? Did they think they'd ever cash out of this thing? Or did they just think that all crypto always goes up and they could play with house customer money without repercussions forever?

 

[culdeus]

I've watched way too many videos on this topic. I'm of the belief he basically thought his Ts&Cs were bulletproof and probably had mommy and daddy sign off on it. Then when those had holes poked in them, he felt that since he wasn't the hole poker (Caroline>Hi) then he'd be ok. Still think he feels like his T/Cs were broad enough to cover his ***, and he won't get hit with major jail time. He's wrong

I read a bit recently about how SBF inserted code that allowed Almeda to basically trade with a negative balance, and they did it early. They bragged about their state of the art risk management software, and actually had zero. They didn't have a bank account. Alameda kept the money in their account, and FTX basically held IOUs.

I would not be surprised if SBF had no thoughts at all about whether he was covered legally. He's done so many dumb things, seems out of his character to plan for a rainy day, or try and

I've watched way too many videos on this topic. I'm of the belief he basically thought his Ts&Cs were bulletproof and probably had mommy and daddy sign off on it. Then when those had holes poked in them, he felt that since he wasn't the hole poker (Caroline>Hi) then he'd be ok. Still think he feels like his T/Cs were broad enough to cover his ***, and he won't get hit with major jail time. He's wrong

I read a bit recently about how SBF inserted code that allowed Almeda to basically trade with a negative balance, and they did it early. They bragged about their state of the art risk management software, and actually had zero. They didn't have a bank account. Alameda kept the money in their account, and FTX basically held IOUs.

I would not be surprised if SBF had no thoughts at all about whether he was covered legally. He's done so many dumb things, seems out of his character to plan for a rainy day, or try and cover his tracks.

I read that too. What was the end-game here? Did they think they'd ever cash out of this thing? Or did they just think that all crypto always goes up and they could play with house customer money without repercussions forever?

Basically, yes. Crypto keeps going up and they probably aren't in the news yet. Well, not for this.

 

[massraider]

What was the end-game here?

I don't assume there was one. I think that might be giving them too much credit.

This was SBF's first time operating a billion dollar criminal conspiracy. I'm not super surprised he wasn't good at at.

But to answer the overall question of how they thought they could get away with it, or what the plan was, I think most likely you had a bunch of hopped up on Aderall nerds who chose to ignore the problems, and figured they could get on the right side of trades, or figured when crypto market bounced back they could catch up. That's only IF he/they actually considered an end game, or were looking for a solution. I think it was possibly more fun to ignore the mounting problems, and do another fawning interview.

 

[FairWarning]

I've watched way too many videos on this topic. I'm of the belief he basically thought his Ts&Cs were bulletproof and probably had mommy and daddy sign off on it. Then when those had holes poked in them, he felt that since he wasn't the hole poker (Caroline>Hi) then he'd be ok. Still think he feels like his T/Cs were broad enough to cover his ***, and he won't get hit with major jail time. He's wrong

I read a bit recently about how SBF inserted code that allowed Almeda to basically trade with a negative balance, and they did it early. They bragged about their state of the art risk management software, and actually had zero. They didn't have a bank account. Alameda kept the money in their account, and FTX basically held IOUs.

I would not be surprised if SBF had no thoughts at all about whether he was covered legally. He's done so many dumb things, seems out of his character to plan for a rainy day, or try and cover his tracks.

I read that too. What was the end-game here? Did they think they'd ever cash out of this thing? Or did they just think that all crypto always goes up and they could play with house customer money without repercussions forever?

I’m sure the latter as long as people were investing into crypto as a whole.

 

[Joe Bryant]

I read that too. What was the end-game here? Did they think they'd ever cash out of this thing? Or did they just think that all crypto always goes up and they could play with house customer money without repercussions forever?

Wasn't it more the classic thing where they thought the investments/gambles they were making with customer's real money would win and not lose, right?

At the simplest form, isn't this like taking money from your dad, writing a fake IOU you can't cover, and putting the money down in a big bet on the Rams to win last night. The music keeps going if you'd put the money down on the Packers. The music stops when the money's all gone and all you have is the fake IOU and Dad wants to cash out.

 

[The Z Machine]

figured they could get on the right side of trades, or figured when crypto market bounced back they could catch up.

Always a recipe for a financial distaster.

 

[The Z Machine]

I read that too. What was the end-game here? Did they think they'd ever cash out of this thing? Or did they just think that all crypto always goes up and they could play with house customer money without repercussions forever?

Wasn't it more the classic thing where they thought the investments/gambles they were making with customer's real money would win and not lose, right?

At the simplest form, isn't this like taking money from your dad, writing a fake IOU you can't cover, and putting the money down in a big bet on the Rams to win last night. The music keeps going if you'd put the money down on the Packers. The music stops when the money's all gone and all you have is the fake IOU and Dad wants to cash out.

Maybe, but this wasn't an IOU to Dad. This was a corporation with billions in customers' money on their books.

There's a reason that sportsbooks try to get even money on each side and collect the vig instead of making bets that could bankrupt them.

Oh, and as @Dinsy Ejotuz says, the book doesn't use the customers' bets to buy houses in the Bahamas before collecting the vig.

 

[Dinsy Ejotuz]

Wasn't it more the classic thing where they thought the investments/gambles they were making with customer's real money would win and not lose, right?

Seems like they also used the whole scheme as a personal piggy bank though.

 

[jvdesigns2002]

Really interesting short video on some of the ambiguity of Binance. It’s a short clip from the Breaking Points podcast with Krystal and Saagar.

WATCH: Binance CEO Exposed LIVE on CNBC | Breaking Points with Krystal and Saagar

Krystal breaks down the latest in the crypto world with the potential for yet another massive trading platform Binance to go under after the collapse of FTX....

www.youtube.com

 

[Joe Bryant]

Seems like they also used the whole scheme as a personal piggy bank though.

Yes. Agreed.

I do think though the answer to how they saw it ending was they (obviously wrongly) assumed they would win with the customer's money they were gambling with.

In that case, it's an age-old tale.

 

[John123]

Wow......That happened quick.

Sam Bankman-Fried’s former friends pleaded guilty and are cooperating in the FTX fraud case

And former crypto billionaire SBF is now in FBI custody.

www.theverge.com

 

[Mister CIA]

This was not a debacle.

 

[Encyclopedia Brown]

The US Attorney waited until Bankman was in FBI custody before they leaked the news that Ellison and Wang had cut a plea.

That's good schtick.

 

[Joe Bryant]

This was not a debacle.

I'm sure it's :whoosh: for me but

debacle​

[ dee-bah-kuhl, dey-, duh-, -bak-uhl ]
a general breakup or dispersion; sudden downfall or rout:The revolution ended in a debacle.
a complete collapse or failure.

 

[culdeus]

I read that too. What was the end-game here? Did they think they'd ever cash out of this thing? Or did they just think that all crypto always goes up and they could play with house customer money without repercussions forever?

Wasn't it more the classic thing where they thought the investments/gambles they were making with customer's real money would win and not lose, right?

At the simplest form, isn't this like taking money from your dad, writing a fake IOU you can't cover, and putting the money down in a big bet on the Rams to win last night. The music keeps going if you'd put the money down on the Packers. The music stops when the money's all gone and all you have is the fake IOU and Dad wants to cash out.

Maybe, but this wasn't an IOU to Dad. This was a corporation with billions in customers' money on their books.

There's a reason that sportsbooks try to get even money on each side and collect the vig instead of making bets that could bankrupt them.

Oh, and as @Dinsy Ejotuz says, the book doesn't use the customers' bets to buy houses in the Bahamas before collecting the vig.

They didn't have billions. They had a valuation of billions which is quite something else.

It's entirely possible actual ftx deposits were under 100MM.

 

[IvanKaramazov]

I've said it many times before in other threads, but I would love to be on a white collar crime jury, especially where they think that terms and conditions written into some app click thru would protect them from jail time. They better not let me be in charge of sentencing...

Kind of a tangent, but this is a really good point. I have no idea what the case law is on this sort of thing, but it seems to me that anything unusually adverse to consumers should be unenforceable when it's buried in the standard click-through T&Cs. Nobody actually thinks that anybody reads this stuff, and nobody seriously expects anyone to do so -- it's a legal fiction.

 

[rockaction]

I've said it many times before in other threads, but I would love to be on a white collar crime jury, especially where they think that terms and conditions written into some app click thru would protect them from jail time. They better not let me be in charge of sentencing...

Kind of a tangent, but this is a really good point. I have no idea what the case law is on this sort of thing, but it seems to me that anything unusually adverse to consumers should be unenforceable when it's buried in the standard click-through T&Cs. Nobody actually thinks that anybody reads this stuff, and nobody seriously expects anyone to do so -- it's a legal fiction.

Spent a whole day in Contracts on this very subject. I forget what the end result was. I think they are liable if it's boilerplate, but I don't remember for sure. I was drunk in class, actually. I think I yammered out that boilerplate agreements that circumvent ethics and laws were "garbage" that shouldn't be taken seriously.

I know you can't contract around public policy. This would seem to fall under that rubric.

 

[rockaction]

Wiki on shrinkwrap cases. But these aren't contracting around the law, which is a whole 'nother thing entirely, I think. I know for sure you can't contract around public policy. That comes from agreements between men and women not to hold the man liable for child support in the event of a child. You can't do that, never mind contract around criminal law.

Shrinkwrap (contract law) - Wikipedia

en.wikipedia.org

 

[Sammy3469]

I read that too. What was the end-game here? Did they think they'd ever cash out of this thing? Or did they just think that all crypto always goes up and they could play with house customer money without repercussions forever?

Wasn't it more the classic thing where they thought the investments/gambles they were making with customer's real money would win and not lose, right?

At the simplest form, isn't this like taking money from your dad, writing a fake IOU you can't cover, and putting the money down in a big bet on the Rams to win last night. The music keeps going if you'd put the money down on the Packers. The music stops when the money's all gone and all you have is the fake IOU and Dad wants to cash out.

Maybe, but this wasn't an IOU to Dad. This was a corporation with billions in customers' money on their books.

There's a reason that sportsbooks try to get even money on each side and collect the vig instead of making bets that could bankrupt them.

Oh, and as @Dinsy Ejotuz says, the book doesn't use the customers' bets to buy houses in the Bahamas before collecting the vig.

They didn't have billions. They had a valuation of billions which is quite something else.

It's entirely possible actual ftx deposits were under 100MM.

The SEC complaint says something to the effect customers took out $5 billion of FTX right after the Binance guy said they were selling FTT. Of course that could be funny money tokens.

 

[The Z Machine]

he SEC complaint says something to the effect customers took out $5 billion of FTX right after the Binance guy said they were selling FTT.

Well those guys were hella smart and cashed out before the house of cards fell. They may have put in $100m and got $5b out.

 

[Desert_Power]

Wow......That happened quick.

Sam Bankman-Fried’s former friends pleaded guilty and are cooperating in the FTX fraud case

And former crypto billionaire SBF is now in FBI custody.

www.theverge.com

I've read speculation on this one for a couple weeks now. Still, facing that much time and none of these guys had a plan to disappear?

 

[Rich Conway]

Spent a whole day in Contracts on this very subject. I forget what the end result was. I think they are liable if it's boilerplate, but I don't remember for sure. I was drunk in class, actually. I think I yammered out that boilerplate agreements that circumvent ethics and laws were "garbage" that shouldn't be taken seriously.

I know you can't contract around public policy. This would seem to fall under that rubric.

That was probably against the terms and conditions of the class...

 

[rockaction]

That was probably against the terms and conditions of the class...

I was pretty much against the terms and conditions of pretty much everything back then.

But that comment was...touché. Well done.

 

[East Coast Bias]

Posted $250 million bail using stolen customer money.

 

[Dinsy Ejotuz]

Still, facing that much time and none of these guys had a plan to disappear?

We appear to be living in the Era of 18 Intelligence and 3 Wisdom.

c.f. Tesla stock

 

[John123]

Posted $250 million bail using stolen customer money.

I don't understand how he can make bail. In interviews he said he thought he had like 100k, if that much, in a bank account and that was it. No bail bondsman is backing him for 250 mil. Where is this money coming from?

 

[Dinsy Ejotuz]

In interviews he said he thought he had like 100k

I'm starting to think maybe we can't take his words at face value.

 

[culdeus]

Posted $250 million bail using stolen customer money.

Probably just minted a bunch of ftx tokens

 

[John123]

In interviews he said he thought he had like 100k

I'm starting to think maybe we can't take his words at face value.

All the more reason not to let him out on bail. "No your honor I would never flee."

 

[Dickies]

I was recently “gifted” a free NFT avatar on Reddit, [snip]. I ended up clearing $230.

Are you saying that "blockchain collectible avatar" they just gave me yesterday has some value to it? Sure sounds like a lot of work to get from Step 1 to .... profit, but I may give it a go as a learning experience.

This has got to be worth at least $350 right?

Some are worth something, and some aren't. I'd look into it's potential value before proceeding to sell.

 

[The Big Donkey]

Still, facing that much time and none of these guys had a plan to disappear?

We appear to be living in the Era of 18 Intelligence and 3 Wisdom.

c.f. Tesla stock

this does bring me back, i too once used the 20-sided die.

 

[massraider]

The Gizmodo guys have been good at tracking this mess. Very good read here.

 

[Dinsy Ejotuz]

The Gizmodo guys have been good at tracking this mess.

"[SBF's] explanation was just obviously ********..."

They do seem to have drilled straight in on the crux of the thing.

 

[Sand]

Posted $250 million bail using stolen customer money.

I don't understand how he can make bail. In interviews he said he thought he had like 100k, if that much, in a bank account and that was it. No bail bondsman is backing him for 250 mil. Where is this money coming from?

Wish I was this broke.

This guy is a massive flight risk. Shave the fro and he'll be completely unrecognizable. He can hide out in any game shop in the world.

 

[Pip's Invitation]

Wow......That happened quick.

Sam Bankman-Fried’s former friends pleaded guilty and are cooperating in the FTX fraud case

And former crypto billionaire SBF is now in FBI custody.

www.theverge.com

I've read speculation on this one for a couple weeks now. Still, facing that much time and none of these guys had a plan to disappear?

It doesn’t sound like they had much of a plan for anything.

 

[Sand]

Wow......That happened quick.

Sam Bankman-Fried’s former friends pleaded guilty and are cooperating in the FTX fraud case

And former crypto billionaire SBF is now in FBI custody.

www.theverge.com

I've read speculation on this one for a couple weeks now. Still, facing that much time and none of these guys had a plan to disappear?

It doesn’t sound like they had much of a plan for anything.

No doubt. Sam, at least, is Jewish and he could have probably gone to Israel and been out of reach of US DOJ forever.

 

[Encyclopedia Brown]

And it would do him some good to create a substance abuse problem and have his attorneys ask for a minimum security Fed prison that has a rehab program for addicts. If he completes that program while serving prison time he will shave a lot of time off his sentence

GM with the prescience: https://www.theguardian.com/business/2022/dec/22/sam-bankman-fried-new-york-court-charges-ftx

Under the bail agreement, Bankman-Fried will be monitored via an ankle bracelet. He was required to surrender his passport and to agree to mental health and substance abuse treatment.

 

[John123]

So it looks like SBF didn't even have to post the 250 mil. As I asked yesterday, where was he going to get it? He was saying in interviews that he only has 100k in the bank, if that. So, it turns out his bail is secured by the equity in his parents 4 million dollar house. So, at most he's putting up 4 million but not really. And that is the difference between the haves and the have nots in this country.