Jury in Sam Bankman-Fried trial has reached a verdict, and not the one SBF would hope for. The verdict is that SBF is found guilty of all seven counts of charges. My initial reaction to the verdict is mixed. While everything seemed to suggest SBF wasn't going to get away from his fraudulent actions when running FTX and Alameda Research, I also feel sorry for him. Things could have been a lot different. He could have been a very successful entrepreneur in crypto space or elsewhere. If not a billionaire, he could have still be a millionaire. But the reality is, there was fraud, there was crime, funds were stolen. Justice has been served. Is it complete justice though? To me it seems there are double standards, there are system standards, and lack of them.
SBF is going to prison, while he still has to face other accusations in a separate trial. I have no doubt SBF is guilty on FTX customers losing their funds. The crimes seem to go beyond simple negligence. There are many evidences of obvious scam and fraud. The two main ones are sufficient to say, SBF wasn't playing a fair game. One is that controlling of two companies that had direct conflict of interest, FTX as an exchange and Alameda Research as a trading firm. Separately, the two could have been successful on their own. But the route they chose put customers at disadvantage, and their funds at risk. How was it even possible to run the two. Yes, SBF wasn't officially the CEO of Alameda Research when he was running FTX, but he still had control over it, he still had controlling stakes in the company.
The second obvious terrible move by SBF and associates was hiring an attorney with shady past for legal compliance. The lawyer who was in charge of compliance once worked for a online casino company whose owner cheated users of the platform by activating a "God mode" that gave ability to see the cards of other players. That suggests that SBF didn't care about compliance, but rather was interested in someone who wouldn't hesitate to help hiding illegal activities. In all of this drama, I don't believe SBF is the only guilty person. There were others too, including the same attorney who was in charge of compliance. The attorney and other executives chose to cooperate with the authorities, plead guilty, and entered plea deals in exchange for cooperation, sharing evidence, and testifying against SBF. It is not clear what their penalty will be. I would guess much much less then what SBF will be getting.
This fraud scheme wasn't done by one person. SBF may just be the evil genius. However, this fraud was too complicated for one person to accomplish. It is clear that others were involved as well. In my opinion, all of these executives who were aware of the illegal actions and wrongdoing, participated in them, and/or endorse them are equally guilty. Any one of them could have put a stop to these actions at any point. Nobody did. What were the lawyers or legal department looking at. Where were the accountants? I am just assuming a company operating in billions of dollars would have teams in place for legal matters, finances, accounting, etc. Are any of them responsible for any of the actions done by FTX? I guess it depends if how much they knew what was going on. I am not saying everybody involved in FTX were guilty. Not at all. Only the ones who actively participated in these illegal actions, and benefitted financially. It seems like SBF will end up taking all the blame and face the consequences.
I understand in the legal system turning culprits against each other is one of the common ways to successfully prosecute somebody higher up in the chain. This also lets those who cooperate and testify against others get away for the crimes they have committed. The fraud at the scale of FTX couldn't have been accomplished by one person. Or could it?
Interestingly, SEC has been going after crypto projects, companies, exchanges, and individuals in recent years. That still is the case. Their motto has been - "we want to make sure consumers and investors are protected." But all they have done was sue, sue, and sue. Many of these lawsuits ending up failing, and they find themselves to be in the wrong. But when it comes to actual fraud, actual potential of investors losing their funds, SEC was nowhere to be found. How is it nobody in SEC raised a concern about FTX and Alameda Research being run by the same group of people. Even without the presence of any illegal activities or any signs of, just the fact these two entities were direct conflict should have been of big concern. SEC only stepped in when people lost funds, company declared bankrupt, everything went crazy. Taking legal actions after the fact, once all money is gone, everything is ruined is not proactive measures. This doesn't help SEC's case at all, in my opinion. Or even other authorities as well. What were authorities in Bahamas doing?
There are also double standards. When 2008 financial crisis happened, many banks, insurance companies, hedge funds went bankrupt. That affected many people. People lost their money. Investors lost their money. I am talking about money directly involved with these financial entities. Many more got hurt with the overall global finance and economy collapsing. How many of the CEOs and executives of these banks, insurance companies, and financial services companies were held responsible for their actions? Only one executive from Credit Suisse has received a jail time as a result of the financial crisis of 2007-2008. That conviction was for mismarking bond prices to hide losses, and was sentenced for 30 months in prison. No CEOs or executives were held accountable. Banks were bailed out, and executives received bonuses. How is this different than FTX fiasco. The thing with FTX is probably nothing compared to the scale of fraud done that lead to the global economic collapse.
Holding banks and companies accountable is one side of the story. Doesn't happen in traditional financial world. What happens is banks get bailed out. Just recently when three banks were collapsing, US Treasury and Fed did something they haven't done before, created an unlimited credit line to make sure these bank going down doesn't create a domino affect. They basically guaranteed all depositors their money back beyond FDIC insurance. Nobody lost money. That is nice. Where was this help when FTX or other crypto companies started failing and went on filing bankruptcies. Compared to the amounts of money they are willing to cover in the case of banks, FTX money is not too bad. They could have easily covered those as well. Especially now we know a lot of funds were successfully recovered. They could just fill the gap and let all people who lost money with FTX be compensated fully. I am not saying that what they should do with all situations. I am just pointing out the double standards.
Of course the system will try to protect itself. Nothing wrong with that. The problem is when it doesn't protect who it actually should be protecting, the people. Otherwise it becomes one big collusion and cooperations to enrich themselves among small group of elites. System needs tweaks or should be upgraded so it can meet the contemporary standards and needs. I hope with this verdict we close the chapter of FTX in crypto books, and enter a brighter crypto future, the one where decentralized systems provide actual solutions and benefit people all around the world. Crypto bull run wouldn't hurt in the meantime.
🌄 Good morning (here) @geekgirl!☕ Well written analysis of the final outcome of the latest "crime of the century." Scam Bankrupt Fraud being found guilty on all charges is a welcome result.
Your expressions of some empathy for him are interesting. I have zero empathy. Had he committed all of this as a result of a selfless desire to feed his family, who were starving, etc. well, we might have some empathy for that.
He is the "face" of all that happened. It was not an accident. He benefitted from this, as he intended. To what extent I do not think came out at trial. For one simple example, the family connections between him, his family, Ellison's family, and Gary Gensler.
Gary Gensler? Just the head of the infamous SEC. "Nothing to see here, move along ..."
Other than himself, did he truly care about anything else? The titanic arrogance of these "elitist class" people should be the study of someone who had the means and willingness to not only get "behind the curtain," but then expose all they found back there.
A simple example. SBF was reportedly thinking he should be President of the USA someday. "Effective altruism" and all that garbage somehow, in his convoluted mind, entitled him ... An idea "nurtured" by his mother, for one, from what I read about this man ...
Well, anyway, I could write more, but you get the general idea. As you say, he did not operate all of this alone. And his cohorts were quite uhhh ... "cozy" ... in all of their "collaborative efforts" ... 😏🤷♂️ To ensure this final verdict, they chose to cooperate. I guess we'll find out soon enough what their "payoff" for this will be ...
"Justice served" is never perfect. As people are never perfect. In spite of that, I, for one, was thankful to see this outcome. All that is left is the continued destruction of wealth (how was IT obtained?) which will almost inevitably follow in whatever options for appeal are coming ...
Hi @roleerob!
I agree with your assessment. I am glad it is over now, and rest of crypto can move on more educated, and more mature.
Thank you!
Great read!
It’s such fraud that all the finance campaign fraud violations got dropped! This shouldn’t end with him but it has.
On side note about this ,Everyone’s saying he will get life in media and focusing on the 100 + years max. He won’t do more than 13 years and likely less. Just documenting my prediction. 25 years means has so 13 (half). I would bet he spends 10-13 in prison.
I think campaign finance violations might be in a separate trial.
That is an interesting predictions.
You've provided a thoughtful and comprehensive analysis of the recent events surrounding Sam Bankman-Fried and FTX. It's indeed a complex situation with various aspects to consider. The financial world often faces double standards, and the issue of accountability for large-scale financial crises is a valid point of comparison.
The importance of regulation and oversight, especially in the crypto space, is clear, and authorities should be proactive in ensuring the protection of investors. Your observation about the need for an upgraded system to meet contemporary standards and needs is on point. The crypto space is evolving rapidly, and it's crucial to adapt and establish frameworks that benefit users and investors while maintaining the integrity of the financial ecosystem.
Your hope for a brighter crypto future driven by decentralized systems is shared by many, and the lessons learned from cases like FTX can contribute to the development of a more transparent and accountable crypto industry. Let's indeed hope for a successful crypto future that benefits people globally.
Well said. Thank you!
You're very welcome! Engaging in discussions like this helps shed light on complex issues and paves the way for constructive solutions. Here's to a more transparent and accountable future for the crypto space and financial world! 😊🌟
The situation is ironic. On the other hand, I am glad to see that SBF got what he deserved.
Agreed.
Are you aware that the lawyer for Tether, Stuart Hoegner, was involved in the same? He was director of compliance for the parent company. Just an interesting tidbit of information.
I did not know that. Thank you for the info!
I am not surprised that he is found guilty. There is just so many things that show that SBF was defrauding things but I just don't think the money is going to go back to the users. I heard that the rushed extradition means that they can't investigate a few other things so I guess we will never know the full story.
I am sure there will be more stories to tell, independent investigations and research, and of course movies and documentaries.
Yes. There is still the 2nd court case so we can still expect some more information.
As he should be 😂what a jokester
I guess he got what he deserved. :)
They dropped the main charges of campaign finance violations. So he likely won’t get close to maximum.
I'm glad that they caught him and found him guilty
Fraud should never be tolerated no matter how little it is
I think this could be a lesson for anyone who tries to manipulate users' money
I hope it goes in the right direction
Finally
The criminal is bring to the book
SBF was on of the largest donors to politicians and PACS in the US. It is very easy to understand how FTX was able to get away with certain abuses - for a time.
Makes sense. Once it collapsed, they couldn't keep looking the other way.
I'm going to be more curious now about how long he actully stays there and what gimmick he's going to be able to launch once again.
Do you think he is not done yet? I think it is game over for SBF.
Honestly, if you have that much money and connections I feel it's going to fade over the years and he might only end up doing a few years in prison and fines while investors get screwed over again by the SEC and government that use cases like this to fund themselves.
Welcome to the world of 'No-Fault' Bailouts, and the Tax Payer still foots the bill.
I don't feel sorry for any of them, the higher ups all knew what was going on and they did it as long as they could. I feel bad for those that lost money. The government will bailout only those that make sense to them. Hopefully all those investors get their money back, I heard stories of people losing so much.
To feel bad for SBF and wish he made it big is very much human. However his journey is a lesson to those coming behind to be cautious and watch there ambition. If there dream involves building something that involves other peoples Funds.
Everything else would have been a big surprise, wouldn’t it? 🤷🏼♂️ Fraud is fraud
So true!
Wow, I love how you gave a detailed explanation about the Sam story.
That was justice served, he ruined a lot if things
We should never forget that the money we have at such financial instutions might not be ours one day.
Yup!
In countries where the system actually works, fraudulent people face consequences for their actions. I hope this serves as a lesson to many others who have not been caught yet.
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If he managed to get out scot free there would have been a massive outrage… however all the money their seized might be getting dumped on the market.
Since the other guys ratted on him, why didn't he cooperate with the authorities and rat on them? Seems kind of foolish of him to stick with saying he is inot guilty if he knows he is.
I have been following this FTX debacle and trial for a while, but I love seeing things through anothers eyes. I didn't think of your idea that perhaps everyone who participated as a executive officier shold take an equal fall. Instead everyone got a plea deal to convict one person. Definitely seems unfair, but I guess if witness testimony is the only evidence then bargaining for witnesses to testify becomes the strategy.
Althugh SBFs Tweets seemed self incriminating at times. LOL :)
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