There seems to be a sweet spot for fraud: small enough to not be worth chasing down
Given the high cost of investigation and the limited potential return,
it would not be accretive to the estates for the Debtors’ counsel or the Examiner
to investigate the circumstances surrounding each of the hundreds
of small and medium-sized Venture Book investments
I wonder, though, if having hundreds of investments that are lacking in due diligence is itself evidence of fraud that could justify some recapture.
> I wonder, though, if having hundreds of investments that are lacking in due diligence is itself evidence of fraud that could justify some recapture.
I just think the Quinn Emanuel law firm just charge a too high hourly rate to justify investigating each investment that was less than $5M. I wonder if they open sourced the data (with a bounty) someone would find some returns.
"Finally, Quinn Emanuel worked with Alvarez & Marsal to summarize basic information
regarding the remaining, smaller Venture Book investments, i.e., those under $5 million. Quinn Emanuel did not investigate each of these investments, reasoning that the cost of such investigations relative to their limited value would not be accretive to the bankruptcy estates.
These investments totaled approximately $286 million, making up approximately 4.8% of the Venture Book’s total value."
Nobody needs any more evidence of fraud at the large scale: SBF is already in prison.
To claw back individual investments (some as low as $1,000, which can't justify much DD) you'll need more evidence than "this was made without sufficient diligence".
I think there is a very interesting untold story in how the U.S. proactively and aggressively pursued this case.
If I recall Michael Lewis' book right:
- FTX (international) was a somewhat separate company from FTX US; SBF was convinced to fold them both into the bankruptcy proceedings.
- It was never clear that this would be under US jurisdiction at all; SBF was convinced to come to the US from the Bahamas.
- (my favorite part) After the Bahamas seized the passports of FTX employees, US officials smuggled in a new passport for at least one FTX employee in order to get them back to the US, presumably to give evidence against SBF. Who can pull those kinds of strings?
> SBF was convinced to come to the US from the Bahamas
Because he thought he could stay out of jail there.
> US officials smuggled in a new passport for at least one FTX employee in order to get them back to the US, presumably to give evidence against SBF. Who can pull those kinds of strings?
Source?
"Smuggled" implies it was done without the consent or knowledge of the Bahamas government. Otherwise, it's standard U.S. Marshals stuff.
Source: "Going Infinite" by Michael Lewis. Chapter 9.
> Gary never said when he would leave, or how he would leave—which was an
issue, as the Bahamas had taken his passport. On Sunday night, without a further word to
anyone, he just slipped, unnoticed, out of the Orchid penthouse. The lawyer who spirited
him off arranged with US authorities to supply him with a second passport, so that they
might smuggle him back to the United States before the government of the Bahamas
knew what had happened.
Lewis was where? With the Bahamas authorities and the lawyer who got the passport and the U.S. authorities who provided it to them? And the supposed fugitive while he left?
He makes a complex allegation that seems to have been strung together from observations, which I trust him to be relaying honestly, and suppositions given things he didn't see, e.g. that this wasn't coordinated with Nassau, which I'm sceptical of.
Who can pull those kinds of strings? Dog, the CIA is tremendously powerful, and the bahamas are as powerful as a mid-sized town in iowa. whatever america wants, it gets from countries subject to the monroe doctrine.
> whatever america wants, it gets from countries subject to the monroe doctrine
The Monroe Doctrine has to do with preventing powers outside the western hemisphere interfering in Latin America, not the US imposing legal jurisdiction over the region which it obviously doesn’t especially given that Ecuador, Cuba, Bolivia, Nicaragua, and Venezuela refuse to extradite despite having extradition treaties with the US. If you mean the US has outright hegemony in Latin America then that is easily falsified simply by pointing to the recent history of Cuba and Venezuela. Certainly the CIA has enormous reach and may have been involved but not necessarily, getting around passport confiscation could probably be handled by the State Department without too much hassle.
Sure, "the CIA" can do it, but my point is that some particular person actually had to coordinate a bunch of people and actions to make this happen, quite quickly after the collapse and before it was even clear whether SBF would be prosecuted at all, let alone in what jurisdiction or on what charges.
What's more wild is that $20k price was what it was in part because FTX intentionally attempted to crash the Bitcoin price to get out from bitcoin denominated obligations, and because the bankruptcy fixed prices at a time before they had fully recovered from FTX's actions their manipulation was successful.
You’re getting the dollar value of your investment when the bankruptcy happened, which is the only legal currency of the country where it was headquartered, so you are getting 100% in that sense. Maybe in Ecuador where Bitcoin is legal tender it would be different.
This has nothing to do with legal tender and everything to do with the bankruptcy code. Part of the point of bankruptcy is avoiding a race to submit claims. If you use market value, then someone who was paid out earlier or later could feel aggrieved. When FTX went bankrupt, the clock was stopped and the value of every asset frozen. We ringfence some things, and there is a decent argument for ringfencing crypto held in custody, but FTX wasn't doing that, it held some crypto, a bunch of crap and a spreadsheet promising Bitcoins to randos.
Sort of, everything is based on the dollar value of what they had at the time of bankruptcy. Anyone who had assests that have increased in value since then, like bitcoin, are getting back quite a bit less than they otherwise would have had.
The irony of his mom being on the Board of Advisors of Stanford University’s Ethics is astounding.
Page 177:
Joseph Bankman, Bankman-Fried’s father, is a tenured Stanford Law School professor who served as an officer, director, manager and/or pro bono counsel to a number of FTX Group entities. Barbara Fried, Bankman-Fried’s mother, is a Professor Emerita of Stanford Law School. She served as a member of the Board of Advisors of Stanford University’s Ethics.
Or this part about this dad on page 183:
And the Debtors allege that Joseph Bankman directed “donations of more than $5.5 million” to Stanford University in an attempt to “curry favor with and enrich his employer at the FTX Group’s expense.”
FWIW, the least ethical person I've ever known is a girl who's been making her career as an ethicist; philosophy degree, master in ethics and all that.
I was briefly involved with her in a nascent startup (I was leading the engineering side) until she just openly suggested to screw a business partner up, taking up its money and committing fraud, all that without the slightest hint of remorse in her body language. As if I just told you, "oh, it's sunny outside". gg and left that "project" immediately.
Later heard she had to move to Montreal because she had screwed so much people in our hometown that she couldn't find anyone even willing to sit down with her; she was stealing money from everyone she could, pretty much. I wonder what's the endgame for these people or if it's some sort of compulsive disorder, like people who literally can't resist to steal small things from stores.
I wonder if the people drawn to some positions are not for what it entails.
For example, I know several people who work for the government, not so much because they want to help the people, but because it is a stable steady job.
Most positions of power should be assigned to people who do not want the job (yet are competent), rather than to people who want the job and will do anything to get it.
> The irony of his mom being on the Board of Advisors of Stanford University’s Ethics is astounding.
Oh it's worse than that. She wrote people should learn to go "beyond blame".
They enriched themselves (the parents), buying properties worth $15m in the Bahamas.
Same as for the "effective altruist" guru of SBF: he got a $15m donation and bought a mansion in the UK for the "effective thieves" movement. Last I checked that guru tweeted that he needed some time to reflect on what happened and, last I checked, he didn't offer to give back the property acquired with stolen money. Thankfully that property may be clawed back at some point: decades (already) after the Enron scam, ill-acquired money is still being clawed back. So there's hope.
To me these people are despicable worms. That's why I cannot get along with people who want to pardon everyone... I'm loyal. I respect the law. But I've got zero compassion for the complete, total and utter scum of this earth.
It's not that ironic. Ethicists are notorious for their horrible behavior.
In practice, ethics usually means "how an organization justifies its monstrous behavior, especially to outsiders." Ethicists are the people who do said justification.
Yeah, I mean, you wouldn't need an ethicist to justify moral behavior or even just to tell you what is moral. If you're high up in a company you should have the life experience to know already.
Often people choose to study what they do not grasp well. Thus, it may sound ironic for somebody studying ethics to be a sociopath, but it makes sense.
Really? Sam Bankman-Fried is a crook. None of the other family members have been convicted and I have seen no evidence that they knew SBF was a crook or any evidence they knew of FTX’s fraud. I have seen people who have lobbed baseless accusations again SBF’s parents. Lots of them. None can ever justify their demands for punishment. My own guess is his parents did not know he was committing fraud, and they have suffered because of his crimes. I do not see any reason to punish two people who were misled and lied to.
>the Debtors allege that Joseph Bankman directed “donations of more than $5.5 million” to Stanford University in an attempt to “curry favor with and enrich his employer at the FTX Group’s expense.”
What? They were heavily involved in the whole thing, including helping themselves to FTX funds. It's almost impossible that they were unaware of the shady behaviour of SBF, even if they may not have been aware of the full extent to which he was screwing up.
It's actually NOT ironic. You just don't happen to share the ethical framework that SBF and his parents were operating under. It's a framework under which the ends justify the means. If you want to learn more, you can look up "effective altruism."
It's funny that I got downvoted for this comment. Did you think I was supporting EA or something? I'm not. I just wanted to point out what they believe.
> The irony of his mom being on the Board of Advisors of Stanford University’s Ethics is astounding.
Your sentence was cut off? She is a member of the Board of Advisors to the Stanford Ethics in Society Program. That means she helps direct an academic program researching ethics, not that she enforces ethical rules within Stanford.
Professional ethicists and moral philosophers do not, and generally do not claim to, act morally better than others. Their profession is about researching the consistency and implications of moral rules.
Judges are generally held to a higher standard than the general public, so I guess there is irony/hypocrisy when they commit a crime they have convicted others of. But that’s not what Fried was doing.
They do however claim a better understanding of ethics. So unless she's been saying, "Gosh, I knew it was wrong but did it anyway," then it looks like the contrast between her professional expertise and her behavior would still qualify as ironic. As would her role teaching law and ethics when contrasted with both SBF's behavior and his many, many shady statements.
You could easily make the other argument: As a professor of ethics she studies many different ethical systems, including ones that are not mainstream. This means that she can more easily find some ethical system under which a given action is considered ethical.
The "ethics expert = more ethical" connection has never held up and mainly serves as a gotcha.
It's a good thing I never claimed "ethics expert = more ethical", then. What I'm saying is that I agree there's an irony here.
It's true that, as you say, she could use her knowledge of ethics to be less ethical. But that would just be a different kind of irony for somebody who teaches on law and ethics.
>> Professional ethicists and moral philosophers do not, and generally do not claim to, act morally better than others.
That is a little like saying people who teach music don't claim to play an instrument very well. Universities are full of professors who can't do the thing they teach about very well. But I think we should be skeptical of people who study a thing they can't practice.
It’s like saying people who study music theory don’t have to be skilled players of musical instruments. And they don’t.
You can be skeptical all you want of ethics/morality as a field of academic research! I think there are some good reasons to be. That doesn’t mean the researchers are hypocritical when they sometimes act immorally (as all inevitably will on account of being humans), or that it’s ironic or whatever.
I'm not particularly skeptical of "ethics/morality as a field of academic research". I am skeptical of people who teach in a field without being particularly skilled in it. I mean a person who teaches communication without being an above average writer or speaker. A person who teaches business without experience in commerce. A person who teaches film making or video game making without a professional career. They could be good theorists, I just have had too many personal experiences with professors without much real world experience teaching me things that didn't stand up after I had professional experience.
People who study ethics are more capable of rationalizing unethical conduct as a product of their study:
If you showed the same obviously unethical act to both a layperson and an ethicist and asked them, purely as a thought exercise, to present a collection of ethical justifications for what they saw the ethicist would almost certainly have an easier time doing so and would produce arguments which were more convincing (at least to ethicists) due to their familiarity with accepted frameworks.
It might be reasonable to guess that as a consequence ethicists overall may have a greater capacity for unethical conduct than arbitrarily selected members of the public (controlling for other factors).
You didn't understand what he said at all and you are wrong. I ask you this... there are very different ethics and morals around the world, even many differences in ethics and morals between your home and your neighbors, so which ethics or morals should you have to be able to teach ethics and morals? The ones you have? lol
If you know a great deal about what is right and wrong, and you choose to do something bad, that feels worse than being bad and not knowing any better.
>If you know a great deal about what is right and wrong, and you choose to do something bad,
The issue is that when you start studying ethics you'll learn pretty quickly that what's right or wrong isn't exactly that obvious. You don't go to a philosophical ethics class and get taught what's good and bad like in church, you get taught how to think about the many ethical systems that exist.
That means you're going to enounter the ethics of Max Stirner, who was so radically Egoist he makes Ayn Rand look like a puppy loving communitarian, and you're going to encounter Jesus Christ. That people who study ethics for a living often have views that seem so unethical to most people isn't really surprising simply because they're exposed to such a broad range of views.
People who have are perceived as ethical are usually the people least exposed to ethics as a field of study, because they're exactly the people most likely to adopt the beliefs of people around them.
Exactly. A professional ethicist giving a complicated justification for why what they did was OK even though everyone else thinks it was wrong isn’t ironic, it’s apt.
If I assume that she authored the piece sincerely rather than as some navel gazing intellectual and virtue signaling exercise, then it isn't a shock that her child has a defective comprehension of right and wrong (or at least was atypically vulnerable to having one installed by others-- e.g. utilitarian consequentialism and 'effective altruism').
It's also not surprising that such a person would strive to get themselves placed in a position of authority on the subject-- not in spite of a psychopathic, ethically defective, or just overly rationalized worldview but specifically because of it.
I can't believe this kind of take is still bouncing around given the sentence SBF got. After FTX collapsed there were a lot of people claiming that he wouldn't do any time at all, based on nothing more than a cartoonish understanding of how political donations and influence work. SBF got a totally reasonable punishment for a first time offender who stole a massive amount of money, and he will spend many years in prison.
> Had it not been for SBF's political contributions/connections, he would most certainly be locked away for life.
Well gosh, if you're that certain, you must have a fair bit of evidence here, right? If so, let's see it.
And I'd say you're entirely wrong about "undemocratic countries". The state may be supreme, but the law generally isn't. That applies from banana republics to oligarchies like Russia to the Chinese state, where connections make a huge difference. E.g.: https://en.wikipedia.org/wiki/Princelings
I just love the sound of goalposts moving in the morning! First it was "Sam will never be charged with it because of his donations!" then it was "Sam will never be convicted because of his donations!" now its "A conviction of 25 years (where the average convict serves 85% of their sentence) is a sign of the power of his donations!"
Please provide evidence from your detailed understanding of Chapter 5 for why a life sentence was so certain?
In undemocratic countries the leaders' decisions (or whims) are supreme, and that situation is far more exposed to corruption, indeed it's often the modus operandi, and how they maintain power.
It has nothing to do with the state or the law, which are often just used to window-dress the leaders' schemes.
If you generated this with an LLM, you might consider labeling it more clearly. Wrote copy-and-pasting of llm outputs seems contrary to the ‘thoughtful and substantive’ north star of hacker news comments. And just in case I’m wrong, apologies - it would be a good bit of irony if I turned out to be the one hallucinating.
> Venture Investments and Related Parties: The FTX Group’s venture investments were marked by a lack of due diligence, rapid decision-making, and unsupported valuations. Many investments involved entities tied to senior FTX executives, further complicating the financial landscape and recovery efforts .
Seriously asking- how does this differ from any other VC fund?
A VC fund is set up explicitly to operate this way. Investors know what they’re getting into; investors are the customer and are aware of the risks. They know they’re gambling.
FTX was supposedly a safe place to exchange funds, the customers were uninformed as to the risks they were taking. In fact they were encouraged to believe the risks were low. They did not know they were gambling.
