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naraburns  nihil supernum  1yr ago (text post)   31231 thread views

Culture War Roundup for the week of January 9, 2023

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I forgot to share this tidbit from the FTX saga: now Sam Bankman-Fried has his own Substack.

The first (and only so far) article is a pippin, a peach, a doozy. He makes a distinction between FTX US (the arm which permitted Americans to invest and trade) which he claims is solvent (and that seems to be true), and FTX International (the one headquartered in the Bahamas) which.... isn't. So far, this is accurate enough.

But what happened, Sam? we not unreasonably ask. Well, it wasn't his fault, it was all bad luck (global markets crashed at the wrong time) and enemy action (coughBinancecough) and the implication is Alameda went south due to lack of sufficient coverage (your fault, Caroline?) and took FTX down with it.

He includes his example of a balance sheet. I've only very basic accounts knowledge, Sam, but that is not a balance sheet. This is a balance sheet. A list of "we have all this money, trust me", is not a balance sheet.

But never fear! FTX US has assets, and all can be made right very quickly! In fact, he is surprised that hasn't been done yet (implied blame of Mr. Ray and the bankruptcy team?)

I forget which new set of lawyers he is on now - looking it up, it seems to be Mark Cohen, who also represented Ghislaine Maxwell - but surely they must be advising him to shut up, stop giving interviews, and don't publish anything on social media?

He's putting blame on everyone and everything else, and mostly that it was Alameda being exposed to an unprecedented market crash that took it all down, but if he hadn't been strong-armed into Chapter 11, he could have made it all okay.

But some at least of what he is saying is being contradicted by what Caroline Ellison is saying, which is going to make for an interesting day in court when she and Gary Wang testify against Bankman-Fried:

Ellison said she was aware from 2019 through 2022 that Alameda was given access to a borrowing facility at FTX.com that allowed Alameda to maintain negative balances in various currencies.

She said the practical effect of the arrangement was that Alameda had access to an unlimited line of credit without being required to post collateral and without owing interest on negative balances or being subject to margin calls or liquidation protocols.

Ellison said she knew that if Alameda’s FTX accounts had significant negative balances in any currency, it meant that Alameda was borrowing funds that FTX’s customers had deposited into the exchange.

“While I was co-CEO and then CEO, I understood that Alameda had made numerous large illiquid venture investments and had lent money to Mr. Bankman-Fried and other FTX executives,” she said.

Ellison said she understood that Alameda had financed the investments with short-term and open-term loans worth several billion dollars from external lenders in the cryptocurrency industry.

When many of those loans were recalled by lenders in June, she agreed with others to borrow several billion dollars from FTX to repay them.

Wang is also admitting to naughtiness, though he is getting much less coverage than Ellison:

During his plea earlier Monday, Wang said that he made changes to computer code to enable the transactions with Alameda.

“I knew what I was doing was wrong,” he said.

Links to Ellison and Wang's guilty pleas in this article:

Wang pleaded guilty to conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud and conspiracy to commit securities fraud. Ellison pleaded guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.

I'm not surprised they're co-operating as hard as they can, there's several bodies (the SDNY, the SEC, the CFTC and the Bahamian government) all wanting a piece of the action so they're all facing multiple charges on multiple counts, thus Bankman-Fried's denial of fraud won't cut much ice:

Simultaneously, both the Commodity Futures Trading Commission and Securities and Exchange Commission released civil complaints against Wang and Ellison.

The SEC alleged that they were involved “in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform co-founded by Samuel Bankman-Fried and Wang.”

The CFTC’s expanded complaint charges “Ellison with fraud and material misrepresentations in connection with the sale of digital asset commodities in interstate commerce, and charges Wang with fraud in connection with the sale of digital asset commodities in interstate commerce.”

Wang and Ellison accepted the claims made against them, the CFTC statement said. Ellison was singled out in the SEC complaint for engaging in artificial manipulation of FTT, FTX’s self-issued token, as part of a broader effort to boost Alameda Research’s available collateral for lending.

In a statement, the SEC said that Wang and Ellison had also accepted “bifurcated settlements” in connection with the complaints and are cooperating.

...Williams did not offer specific details on charges against Ellison or Wang. The SEC alleges that both Ellison and Wang, in their respective roles at Alameda and FTX, abetted Bankman-Fried in allegedly defrauding FTX customers.

The SEC alleges that Wang created a software backdoor in FTX’s platform which allowed Alameda to divert customer funds for its own trades. Alameda was led by Bankman-Fried until 2021, when Ellison assumed control alongside Sam Trabucco, who departed from Alameda in August 2022.

I'm still blown away by all the very soft media coverage of SBF in the New York Times and elsewhere.

He stole nearly as much money as Bernie Madoff. How is it that Madoff is described in "worse than Hitler" level terms while SBF gets the kid gloves? Is it because Madoff stole from the rich where SBF stole mostly from nobodies? Seriously puzzled.

The cynic in me says the press isn't going too hard on him because he's a democrat donor, maybe not to protect him but who he donated to.

He donated to both parties, and the press is aware, and has an easy narrative. I for one do not concur.

SBF claims to have donated equally to both parties but I'm skeptical. The only evidence offered in the article is SBF's own statements and I think you'd have to be an idiot to take him at his word at this stage.

Which seems more likely? That SBF was funneling something in the realm of 40 million dollars a year through various intermediaries to the GOP and was successfully able to hide this from everyone until now. or a man who has already been exposed as a liar and a fraud is continuing to lie.

He and Singh were major donors to the Democrats (Singh it seems out of conviction and separately), while Salame donated to the Republicans. Much less than to the Dems, but it was the usual "business donates to both sets of politicians so they will have an in with both sides for their own advantage" type of deal.

OpenSecrets has a breakdown of donations here, but the numbers aren't $40 million. On the other hand, his mother is involved with a PAC ("She is a co-founder of the political fundraising organization Mind the Gap, which advocates for Democratic Party candidates and funds get-out-the-vote groups") and he steered contributions towards his brother's group around pandemics, and a lot of that went on buying fancy townhouses to host parties for the lobbyists and members of both parties, so he definitely could have gone up and over $40 million in various spending.

This is another article claiming the donations totalled $71 million or more. Bankman-Fried donated personally mainly to Democrats, but he had his CEO Salame donate to Republicans - I guess Mommy wouldn't have understood why Sammy was giving his own money to the nasty GOP.

I'm not talking bout FTX.us I'm talking about Sam Bankman Fried, which open secrets lists among it's "top donors" as having donated 38.8 million to Democratic causes during the 2022 election cycle.

I agree on that, but he seems to have done his donating through FTX and not merely his own personal fortune (which he now claims he doesn't have, anyway). This is where him giving interviews is shooting himself in the foot, because he later claimed to have personally donated to the Republicans as well, and there's not much sign of it. The "I did it via dark money" can't be proven one way or the other. Openly available figures are that he/associates gave much more to the Democrats than the Republicans. He did donate to Republican candidates but not in the same amounts of money. For 2020 all the donations went to Democrats because he was fully backing the election of Joe Biden.

He did cynically/realistically donate to both parties (your opinion on this will depend on your view of both parties) and he did it to get the kind of legislation around crypto, and favourable regulating, that he wanted pushed. He claims now that he had to hide donating to Republicans because of the circles he moved in, and I don't doubt it - his parents, Stanford, MIT, Bay Area, EA, and the whole circus are signed up to "The Republicans are the Evil Party". So admitting out loud he was giving money to get certain Republican candidates elected/re-elected would have gotten him excommunicated from the circles he wanted to be in.

I don't see this as hypocrisy, because it's standard behaviour for business everywhere: you donate to both big parties because you can't afford to be on bad terms even with the 'enemy' side. People who believe Republicans are all Trump-worshippers and Trump is Literal Anti-Christ will of course see this as treasonous, as giving aid and comfort to the enemy, and all the bad things: helping the party of anti-immigration, of racism, sexism, homophobia and transphobia, of science denial and climate change denial? How could you call yourself an EA after that?

This kind of 'saying the quiet part out loud' is why his lawyers are advising him to keep his yap shut. He might have been depressed or in a bad mood the day he gave that interview, so he took the cynical line on EA etc. and told all. Bad strategy if you're trying to develop a story about how you never did nothing wrong and sticking to that story.

Phone interview where he claims to have donated 'dark' as well as other things; the line is bad so I can't make out all he says:

I donated to both parties. I donated about the same amount to both parties this year. That was not generally known because despite Citizens United being literally the highest profile Supreme Court case of the decade and the thing everyone talks about when they talk about campaign finance, for some reason in practice no-one can possibly fathom the idea that someone in practice actually gave dark. [indistinguishable phrase] So, I don’t know, all my Republican donations were dark. And the reason was not for regulatory reasons, it’s because reporters freak the fuck out if you donate to Republican, they’re all super liberal and I didn’t want to have that fight, so I made all the Republican ones dark.

True? Sorta true? Lying for some reason? Who knows? His rationale seems to be that donating to candidates has maximum effect when you do it for the primaries, because that's where you can influence what candidates get picked. So, presumably, he wanted candidates selected that would be favourable to his interests, which means Republicans interested in crypto and/or seen as moderates. Much the same strategy as that allegedly used by the Democrats in the mid-term elections where they supported extreme Republicans candidates in the primary selections, knowing they would then lose in the election itself.

and was successfully able to hide this from everyone until now.

One of the charges on the indictment was campaign finance law violations

and?

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