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naraburns  nihil supernum  1yr ago (text post)   29318 thread views

Culture War Roundup for the week of December 12, 2022

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Sam Bankman-Fried has been arrested.

FTX founder Sam Bankman-Fried was arrested by Bahamian authorities this evening after the United States Attorney for the Southern District of New York shared a sealed indictment with the Bahamian government, setting the stage for extradition and U.S. trial for the onetime crypto billionaire at the heart of the crypto exchange’s collapse.

Bankman-Fried was expected to testify before the House Financial Services Committee on Tuesday. His arrest is the first concrete move by regulators to hold individuals accountable for the multi-billion dollar implosion of FTX last month.

There had been some speculation on when and even whether he would be arrested. Just yesterday someone told me to expect it to take two years. So, why right before tomorrow's hearing? And why not wait for him to give more interviews and provide more evidence?

So, I read a breakdown of the SEC complaint (Original PDF)

Someone was asking if Wang and Singh should go down too...and based on this claim of SBF spreading the money via loans to all of them...yes

67 The FTX funds transferred to Alameda were used not only for Alameda’s proprietary trading, but also to fund loans to FTX executives, including Bankman-Fried himself, and to fund personal real estate purchases. Between March 2020 and September 2022, Bankman-Fried executed promissory notes for loans from Alameda totaling more than $1.338 billion, including two instances in which Bankman-Fried was both the borrower in his individual capacity and the lender in his capacity as CEO of Alameda.

68 Bankman-Fried also used commingled funds from Alameda to make large political donations and to purchase tens of millions of dollars in Bahamian real estate for himself, his parents, and other FTX executives. Singh and Wang also borrowed $554 million and $224.7 million, respectively, by executing promissory notes with Alameda in 2021 and 2022.

Wang, Singh, hell, his parents (who he put in this position. Can't imagine...)

No wonder SBF said Singh felt "ashamed and guilty" (not content to snitch on himself!) in the Vox interview.

Speaking of snitching: his own comments are cited, as everyone thought:

As Bankman-Fried acknowledged in a network television interview on or about December 1, 2022: “I wasn’t even trying, like, I wasn’t spending any time or effort trying to manage risk on FTX.” Bankman-Fried continued: “What happened, happened—and, if I had been spending an hour a day thinking about risk management on FTX, I don’t think that would have happened.”

I kinda wish that Bankman-Fried had been permitted to testify at the House committee today, because the members are not happy and some at least of them are trying to get John J. Ray to say Bankman-Fried is a deliberate criminal. The information coming out is really bad, the $1 billion 'loan' that Bankman-Fried gave himself, he claims he re-invested it into FTX, but Ray says there is no trace of what it was for or where it went.

This is really making crypto sound like the biggest scam ever created, all crypto. Anyone who believes crypto is the future of finance, this is not alone two black eyes for the cause, it's breaking arms and legs as well. Anybody who has fond dreams of decentralised finance, the sheer lack of accountability or accounting around billions is going to break that back too.

EDIT: They are now discussing the correct pronunciation of "dogecoin" 🤣

EDIT EDIT: >Wang, Singh, hell, his parents (who he put in this position. Can't imagine...)

Oh crap, one of the committee members just asked if there is any evidence his parents were involved in operations. Bankman-Fried is bringing everybody down with him.

Apparently, he was arrested because he wouldn't testify.

But yes, this has the potential to be a gut shot for crypto. Honestly, the low information "Boomer" voter who sees crypto once on C-Span (he is one of the 6) and decides it's a scam isn't the only problem: even people who do some research will think the whole thing is shady. Binance and Tether have similar "just trust us" policies to SBF and refuse to ever provide audits...

Binance is currently facing huge outflows (which tells you something about confidence even with the crypto-familiar audience) while saying ,as SBF did, that all is fine. If Binance goes...

There are two committees; one is the House committee on Finance, where he agreed to testify (maybe in person, maybe remotely) which is the meeting today, and the other is the Senate committee on Banking on Wednesday, where he refused to attend even under subpoena.

I think the latter may be a reason why he was arrested so fast; not accepting the subpoena does sound like "getting ready to run".

Ah, thanks for the clarification.That would explain why he had his remarks for today already made (and now leaked).

The House committee was on Tuesday, livestream of proceedings here. Since Bankman-Fried was not available, the nearly four hours all went with Mr. Ray, and it got very repetitive towards the end. But the first hour or two are worth watching, because clearly if Bankman-Fried had been there, what Ray said would have sunk him.

I'm hoping to be able to catch the Senate committee hearing later (I have an appointment when it's live) because I imagine they are ready to burn him at the stake, given his refusal to appear and subsequent arrest 😁

I actually did listen to some of it while doing some light work. I couldn't see her face, but the tone of voice when one rep asked "Quickbooks?!" came through clear enough. That's gonna be a scene in the inevitable miniseries lol.

Also Ray's understated way of basically calling FTX amateur hour compared to Enron was funny. There's a lot of talk that Ellison might have flipped but, tbh, Ray was damning enough. He came across as not just as a credible expert witness but just...as a fucking adult, in stark contrast to everything he described about FTX. He just seemed taken aback that even basic precautions didn't exist. Really sells the impression that FTX might as well have been a kid's lemonade stand in terms of how much effective oversight there was over SBF as he was handling people's money.

I'd say he's lucky but he's in a Bahamian jail now so...

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