Come for the politics, stay for the snark.

President Biden is doing good where he can, and getting it done.

Red lights blinking on democracy’s dashboard

There is no right way to do the wrong thing.

Republicans don’t lie to be believed, they lie to be repeated.

Sadly, media malpractice has become standard practice.

…and a burning sense of injustice to juice the soul.

“Joe Biden deserved better than he got from some folks in his own party.”

There are some who say that there are too many strawmen arguments on this blog.

Republicans: The threats are dire, but my tickets are non-refundable!

When your entire life is steeped in white supremacy, equality feels like discrimination.

Republicans are the party of chaos and catastrophe.

Conservatism: there are people the law protects but does not bind and others who the law binds but does not protect.

Bogus polls are all they’ve got left. Let’s bury these fuckers at the polls a year from now.

This must be what justice looks like, not vengeful, just peaceful exuberance.

Following reporting rules is only for the little people, apparently.

Michigan is a great lesson for Dems everywhere: when you have power…use it!

Pelosi: “He either is stupid, or he thinks the rest of us are.” Why not both?

We’re not going back!

Every reporter and pundit should have to declare if they ever vacationed with a billionaire.

Today’s gop: why go just far enough when too far is right there?

If marriage is the equivalent of selling yourself into slavery, women with self respect should reject the offer.

Seems like a complicated subject, have you tried yelling at it?

Elections aren’t won by handwringing, cowering, and/or bashing your own candidates.

The line between political reporting and fan fiction continues to blur.

You are here: Home / Economics / C.R.E.A.M. / Cold Grey Dawn Open Thread: SBF Goes On Trial — Officially

Cold Grey Dawn Open Thread: SBF Goes On Trial — Officially

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Ars Technica has the best summary I’ve seen — “SBF trial to begin as judge says he faces “very long sentence” if convicted”:

Sam Bankman-Fried’s criminal trial is beginning this week with jury selection on Tuesday morning. SBF, the 31-year-old man behind bankrupt cryptocurrency exchange FTX, is facing seven criminal charges with maximum sentences adding up to 110 years.

“Your client in the event of conviction could be looking at a very long sentence,” US District Judge Lewis Kaplan told SBF’s lawyers in a hearing on Thursday while rejecting the defense’s request for a temporary release from jail. “If things begin to look bleak… maybe the time would come when he would seek to flee,” Kaplan said, according to a Reuters article.

Bankman-Fried was previously under house arrest but was sent to jail in August after his bail was revoked. In their request for a temporary release, SBF’s lawyers said the “case is highly technical and complex, and we need our client to help us understand the facts and explain many of the issues. He alone knows the facts which are also critical in preparing his defense.”…

7 charges now, 5 more in March 2024 trial

The seven charges in this trial are wire fraud on customers of FTX, conspiracy to commit wire fraud on customers of FTX, wire fraud on lenders to Alameda Research, conspiracy to commit wire fraud on lenders to Alameda Research, conspiracy to commit securities fraud on investors in FTX, conspiracy to commit commodities fraud on customers of FTX in connection with purchases and sales of cryptocurrency and swaps, and conspiracy to commit money laundering.

The five charges related to wire fraud and money laundering carry maximum sentences of 20 years each, while the two securities and commodities fraud charges have maximum sentences of five years each. Kaplan will determine the actual sentence if the jury convicts SBF…

The indictment’s bribery charge said the bribe’s purpose “was to influence and induce one or more Chinese government officials to unfreeze certain Alameda trading accounts containing over $1 billion in cryptocurrency, which had been frozen by Chinese authorities.”

One charge for conspiracy to make unlawful campaign contributions and defraud the US Federal Election Commission was dropped…

Case against SBF “looks extremely strong”

Four former FTX and Alameda executives previously pleaded guilty to criminal charges, and three of them are cooperating with government prosecutors.

“I think the government’s case looks extremely strong,” Sarah Paul, a former assistant US attorney and partner at law firm Evershed Sutherland, was quoted as saying in a Financial Times article. “They have multiple cooperating witnesses who worked very closely with him and are going to say that they committed a crime with him. It’s hard to imagine that doesn’t carry the day here.”…

Judge limits blame-the-lawyers defense

As the FT article said, “Bankman-Fried’s lawyers will probably try to undermine the credibility of the witnesses, pointing to their past relationships and the leniency they hope to receive in exchange for cooperating.” A “spree of interviews and filings by his legal team suggest his defense strategy will involve casting blame on others, including Ellison and FTX’s lawyers. He has said he was unaware of crucial details of the financial engineering behind the scenes of his empire, and that he never intended to defraud anyone.”

Bankman-Fried’s ability to blame FTX lawyers will be limited to some extent. An order by Kaplan yesterday partially granted a government motion related to the “advice-of-counsel defense” in which SBF could argue that he sought advice from company lawyers, received advice that his conduct was legal, and “relied on that advice in good faith.”…

SBF himself may not testify. “It would be foolhardy for Bankman-Fried to testify. He’s shown himself to be very erratic,” Bradley Simon, a former assistant US attorney and a criminal defense lawyer at Schlam Stone & Dolan, told FT. “Presumably his counsel are telling him that’s out of the question. But sometimes clients don’t listen.”

SBF has thirty years’ experience talking his way out of consequences for his behavior; it’ll take some very stern advice indeed to convince a professional grifter with his educational background *not* to try bamboozling a jury of mere non-effectively-altruistic mortals. But then again, Rikers Island has its own severe educational effects!

Inside the Metropolitan Detention Center, the Brooklyn jail where he is being held, Sam Bankman-Fried, once the head of a multibillion-dollar crypto empire, sounds as if he’s being treated like most inmates there—which is to say, shabbily. Arrested on federal fraud charges in December, after the collapse and bankruptcies of his hedge fund Alameda Research, his crypto exchange FTX, and related companies, Bankman-Fried was out on $250 million bond at first. But the judge overseeing his case revoked bail in August after prosecutors complained of Bankman-Fried’s “escalating evasions of his bail conditions,” and the 31-year-old was jailed.

Nowadays his lawyers have said he’s subsisting on peanut butter sandwiches—alas, Bankman-Fried, who is vegan, can’t eat the “flesh diet” served in jail, one lawyer said. His therapist, who’d also been an executive coach at FTX, wrote the court saying Bankman-Fried had only a small amount of his medications on hand when he was jailed, and needed a consistent supply of Adderall, for ADHD, and Emsam, for depression. (On Monday, his lawyers noted in a filing he’s been getting only a half dose of Adderall.)…

Yet at its core the case is not about emerging technology but rather old-fashioned fraud, with the allegations against Bankman-Fried echoing those of so many white-collar criminals past and present: that he used his company to enrich himself illegally…

Underneath the sophisticated, often befuddling overlay of cryptocurrency, and the whiz-kid reputation of Bankman-Fried, the charges against the FTX founder suggest classic fraud rather than anything particularly innovative. John J. Ray III, an executive appointed to sort out FTX’s affairs in bankruptcy, had also overseen the Enron bankruptcy. At Enron, he told Congress in testimony about FTX in December, “the crimes that were committed . . . were highly orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets.” At FTX, though, “this is just taking money from customers and using it for your own purpose. . . . This isn’t sophisticated whatsoever. This is just plain old embezzlement.”…

At FTX there was also a startling amount of money spent on random things: $379,013 on catering in September 2022, right before the implosion; and more than $10 million in the first nine months of 2022 for hotels. There were the expenses the company covered: the $2.5 million for an Alameda executive’s boat, the multimillion-dollar transfers for executives’ Bahamas apartments that were titled in their names, its bankruptcy investigators later wrote in court filings. There were the questionable transfers, like tens of millions sent to Bankman-Fried in 2021 and 2022 that were recorded as “Investments in Subsidiaries: Investments-Cryptocurrency.”…

Maybe SBF didn’t use — or at least try to use — this blizzard of bookkeeping to hide away a few untraceable millions for his eventual escape / exoneration. Although it might be hard to convince jurors who’ve ever watched a mobster movie or read an Elmore Leonard novel it was all just innocent mistakes.

Michael Lewis has to be extremely conflicted right now. On the one hand, you couldn’t buy this amount of publicity about his hot-off-the-presses SBF bio. On the other hand, from all reports, SBF conned Lewis every bit as successfully as he did the anonymous punters throwing their bitcoin at him. Per the NYTimes review:

… Is Bankman-Fried guilty?

Mr. Lewis does not offer a “yes” or “no” answer. He depicts Mr. Bankman-Fried as delusional and often callous in his treatment of co-workers, a young entrepreneur who “thought grown-ups were pointless” and left messes for other people to clean up.

But Mr. Lewis also expresses skepticism about the lawyers and executives who were brought in to manage FTX’s bankruptcy and have become some of Mr. Bankman-Fried’s fiercest public critics. Toward the end of the book, Mr. Lewis writes that Mr. Bankman-Fried’s explanations for the collapse of FTX, as implausible as they sound, have “remained irritatingly difficult to disprove.”…

Hey, he fooled a bunch of very smart lawyers. Who was I to get a clearer picture?

The NYTimes also reports that SBF’s fellow ‘crypto experts’ will be more than happy to see him immolated:

… Some insiders believe that a shakeout was necessary. The market had gotten too overheated in 2021, fueling greed, hype and bad ideas, insiders said. But they rued how Mr. Bankman-Fried’s actions destroyed trust in the entire industry.

Yury Lifshits, the founder of the crypto company Superdao, said the narrative connecting FTX’s fraud to the rest of the industry was deserved on some level, since so many crypto projects were guilty of similar shady behaviors. But plenty of legitimate businesses aren’t connected to the FTX situation at all, he said.

Ultimately, a guilty verdict for Mr. Bankman-Fried would make it easy for crypto companies and executives to move on from the whole ugly spectacle.

“It can’t be over soon enough,” Ms. Breitman said. “The only gift this man has given the industry is that he has self-immolated so aggressively.”…

(I strongly suspect the faculty at Stanford won’t regret seeing SBF sent away, either. But that’s a story for another day.)

Reader Interactions

47Comments

  1. 1.

    Tony Jay

    *** Exclusive – From the Jackal News Breaking News News Desk of Jackal News ***

     

    Glem Greenwald – Guest Contributer

    ‘A Criminal Empire Of Graft, Fraud And Influence Peddling’ – But Whose?

    With the trial of Sam Bankman-Fried beginning this week in the Democratic stronghold of Manhattan, many in the Free Speech community are raising their voices to ask difficult questions about the method and purpose of the Biden Justice Department’s seemingly obsessive vendetta against a pioneer of New Finance. Is it just hostility towards a grass-roots form of currency exchange their Big Money donors can’t control? Or could it be, as the President’s own gun-toting, pill-popping maverick of a son stares down the barrel of his own day in court, more to do with silencing the one man who could, quite plausibly, connect the Biden Family to a network of influence peddling and financial extortion spanning decades?

    *** Jackal News – We Distort, You Deride

  2. 2.

    Adam Lang

    “Your Honor, the reason we need our client released from prison is that, while there are many experts who can fully inform us about What He Did, we believe our client is the only one who can make us understand Why What He Did Was Awesome Actually.”

  4. 4.

    Mel

    @Adam Lang: “Additionally, Your Honor, our client has suffered extreme psychological distress from being forced to wear an orange jumpsuit instead of his cosplay Pirate shirt.”

    (I guess it’s a tad better than his usual sartorial choice of flop-sweat and Cheetos dust encrusted t-shirts, but…)

  5. 5.

    lowtechcyclist

    @Shalimar: ​
     

    I see Michael Lewis continues to burnish his reputation as a fiction writer.

    He just doesn’t want to admit that he exercised way less than the appropriate degree of skepticism, and got suckered just like some ordinary rube.

    Hell, most ordinary rubes could tell that crypto was a flim-flam operation.

  7. 7.

    OzarkHillbilly

    @lowtechcyclist: I know a few otherwise intelligent, somewhat wealthy people who got suckered into believing the crypto scam. Nothing I said could shake their belief.

  8. 8.

    eclare

    @lowtechcyclist:

    Yep, I could.  I still can’t get over some of the things Lewis said about Michael Oher and how he was best friends with Sean Tuohy, which I did not know until recently.  I never read The Blind Side, I wonder if he disclosed that.

    I liked his book The Big Short, I will never read his books again.

  12. 12.

    eversor

    Fuck crypto.

    In other news threw away both alexas and the stupid home pod.  The SO had ordered up all sorts of stupid alerts on them and they won’t turn on off even if you ask them to, repeatedly.  So they would not stop interrupting things and waking me up during a bout of COVID.  I gave her a week to fix it as she said I hadn’t tried (this is false) and they would not stop despite her trying.  So I got Mr.Seldgehammer and fixed it.

    Having to yell at them for an hour straight each morning got tiring.  “alexa stop, alexa stop, alexa stop” fucking evil things.

    For things that run on the same clock they do not.  So we’d have four of the bastards going off and screaming out the weather and trying to cancel it just turned off emergency alerts not the god damn idiotic daily screaching.

    I’m in the dog house for this but I paid for them.  And I’m not buying the “but how will I time the cooking now?” excuse to keep the cursed things.  I dunno!  You have the iPhone I bought you and you have the watch I bought you use those!  People have cooked for thousands of years without a device screaming at them every few hours with nonsense alerts about stuff so I imagine we can as well.

  14. 14.

    Rusty

    Wow, something  created to allow for untraceable criminal activity and tax evasion turns out to be riddled with frauds, cheats and grifters.  Who would have guessed?  I love how the crypto industry thinks that conviction one blatant gifted will fix everything.   The related NFT market has completely collapsed.   Someday crypto will wither away too.  Good riddance to all of it.

  15. 15.

    Marmot

    So what’s with Lewis? BJ commenters are are always like “this fucking guy.”

    Toward the end of the book, Mr. Lewis writes that Mr. Bankman-Fried’s explanations for the collapse of FTX, as implausible as they sound, have “remained irritatingly difficult to disprove.”…

    This just sounds credulous, as if Lewis really doesn’t know how to establish the burden of proof.

  16. 16.

    Tony Jay

    @rikyrah:

    Good morning. What a beautiful day to kick back and watch the MAGAsphere volley-punching itself in everything soft and yielding – again.

  17. 17.

    eclare

    @Tony Jay:

    It should be, but as satby noted, the threat of political violence is real.  It isn’t as easy to enjoy the popcorn with that in the background.

  18. 18.

    Marmot

    Last week I took a photo of a faded, peeling sticker on a lamppost in a grocery store parking lot.

    “Fix the money, fix the world” with a Bitcoin logo.

    Kind of emblematic.

  19. 19.

    Tony Jay

    @eclare:

    You’re right. It’s not easy, and I fully acknowledge that your’s is a valid take, but it is IMHO necessary. Threats of political violence aren’t just about the violence itself, they’re about making people afraid to display pleasure in the self-inflicted misfortunes of the people making them. Even when they’re losing, they want to have that power.

    To which I say, fuck ’em. They’re going to do what they’re going to do, and that’s down to them. In the meantime pointing and mocking at the avalanche of blowback they’re bringing down on themselves is an affirmative act that everyone should indulge in while there’s so much on offer.

  20. 20.

    mrmoshpotato

    SBF is facing up to 115 years in prison.

    A whole lot of thinkin’ time!

    And I see he (and his hair) are dressed somewhat professionally for his trial.

  21. 21.

    OzarkHillbilly

    @Baud: ​ Well, 2 of the folks I am speaking of weren’t born into wealth, they’ve done it on their own. The other 2, they had a leg up on the rest of us for sure, but they’ve done well for themselves*. All of them said some version of “The govt doesn’t control it.” which, to me is indicative of the latent distrust a large percentage of people these days who think to some extent or other, Government=Bad.

    The Reaganite GOP did it’s job well, very well.

    *2 are hard core DEM, another is DEM lite and the 4th is a reformed GOP

  22. 22.

    mrmoshpotato

    @OzarkHillbilly:

    I know a few otherwise intelligent, somewhat wealthy people who got suckered into believing the crypto scam. Nothing I said could shake their belief. 

    Did you keep yourself from calling them dumbasses?

  23. 23.

    Steeplejack

    @eversor:

    😹 Classic self-inflicted user problems and equally classic techbro MotU reaction to tech he can’t master immediately. You guys should do a high-tech remake of I Love Lucy.

    For everyone else, in my role as Alexa influencer (hoping to be promoted to thought leader), I will note that Amazon is running some scorching deals on Echo devices right now: Echo Pop for $18, Echo Dot for $23 and big Echo for $55. “Limited time deals.”

  25. 25.

    mrmoshpotato

    @Rusty:

    Wow, something created to allow for untraceable criminal activity and tax evasion turns out to be riddled with frauds, cheats and grifters. Who would have guessed? I love how the crypto industry thinks that conviction one blatant gifted will fix everything. The related NFT market has completely collapsed. Someday crypto will wither away too. Good riddance to all of it. 

    Surprise!  Also, the Sun rises and sets every day. 🤯

    Do I mention the sarcasm?  Or keep it a secret? 🤫 :)

  29. 29.

    OzarkHillbilly

    @eclare: @Tony Jay:

    I comfort myself with the knowledge that 99.99% are blowhards who would never get out of their LazyBoys to ever do anything more than go to the shooting range and blow thru a thousand $ worth of ammo. “That’ll show them libtards!”
    That still leaves the 1 in 10,000 who might actually do something really stupid but I just ignore that possibility as it is extremely unlikely I will be one of their victims (which is no comfort to those who are).

    I am far more worried about the mansplaying idiots who never go anywhere w/o their penis enhancers. They are far more likely to shoot me by accident while mishandling/showing it off than they are to ever do anything one might call useful.

  31. 31.

    Tony Jay

    @mrmoshpotato:

    And may I just say that I am very much enjoying the ongoing catastropocalypse engulfing the unfit boyzklub known as the Professional Game Match Officials Ltd since they decided it would be a really good idea to ensure that Liverpool FC were prevented from winning last Saturday’s game against Spurs and thus replacing the Gulf State Sportswashing Franchise formerly known as Manchester City at the top of the Premier League.

    They done fucked up bad. This isn’t going to go away. And all of the whining emanating from the savvy boys and girls who are supposed to cover, report on and explain English Football as they see the wrecking ball starting its implacable swing towards the House That Oil Billions Built is just the best soundtrack imaginable.

  33. 33.

    OzarkHillbilly

    @Steeplejack: ​
    Well, I am certainly not a techbro Motu but “self-inflicted user problems” are exactly the result I would expect if I ever purchased one of those damnable things. So I haven’t.

  34. 34.

    Ken

    @lowtechcyclist: Hell, most ordinary rubes could tell that crypto was a flim-flam operation.

    Not all the crypto, just that crypto, over there. The crypto I’m trying to sell you is the good stuff. You can trust me.

    — Yury Lifshits, as not-quite-quoted by the NYT above

  36. 36.

    sab

    @eclare: Read Oher’s own book. He wrote it years ago, before he fell out with them. He just wanted to encourage kids in foster care and also too tell the world he was not actually mentally deficient.

  37. 37.

    Steeplejack

    @OzarkHillbilly:

    I get it and understand. I don’t embrace the whole “automated house/​lifestyle” thing, but I have found that my two little Echo Pops are wonderful if only as clock/​radios on steroids. Occasionally set an alarm, haven’t used the more invasive reminder/​scheduling stuff. Baby steps.

  38. 38.

    Quiltingfool

    @Baud:

    I didn’t know that there were that many Dems in Missouri.

    I’m a Missouri Dem!  OzarkHillbilly and I have never discussed crypto investments, lol!  I think we could discuss caves, or maybe carpentry,  as I have a bit of knowledge about both, but crypto makes no sense to me at all; I like cash…

  39. 39.

    Quiltingfool

    @OzarkHillbilly:

    I comfort myself with the knowledge that 99.99% are blowhards who would never get out of their LazyBoys to ever do anything more than go to the shooting range and blow thru a thousand $ worth of ammo. “That’ll show them libtards!”

    See, this is what I don’t get.  Ammo is NOT CHEAP.  Lord, most of those fools can barely afford the payments on a Ford-250, let alone buying thousands of rounds of ammo.

    Of course, they can buy a 100 rounds to go shoot people at WalMart; chances are they won’t walk away alive.  That is the tragedy.

    I do have a plan for myself if I’m in WalMart and I hear gunfire.  I’m going to fall down and play dead.  No way my fat ass can run fast enough to get away!

  40. 40.

    cmorenc

    @Tony Jay:

    First RC against Liverpool was deserved – when you come in studs-up challenging an opponent for the ball, if you mis-calculate and wind up with studs-first at pace rather than laces-side coming rolling over the ball into the opponent’s ankle, you risk serious potentially bone-breaking injury to the opponent’s ankle.

    The 2nd RC for a 2nd yellow was rather soft – simply a careless miscalculation and not a tactical foul situation since the guilty defender had a covering defender as well nearby.

    The most egregious officiating mistake was the offside called on the 1st Liverpool goal – called by the VAR despite the video replay clearly showing the Liverpool player a step onside.

  41. 41.

    Tony Jay

    @kalakal:

    There could be. There should be.

    “You are incorrect in your assertation and should reconsider the claims you have chosen to make wind your fucking neck in you melt, you’re talking shite.”

    It works!

  42. 42.

    Tony Jay

    @cmorenc:

    We’ll have to agree to disagree on the first red. According to PGMOL’s own rules it wasn’t a red, the VAR shouldn’t have got involved and the way they chose to get involved (by sticking up a still of Jones’ studs in the Spurs player’s ankle) was against their own guidelines and deceptive. The yellow the referee already issued should have stood.

    I’ve no problem with Jota’s 2nd yellow, but the 1st yellow wasn’t even a foul. VAR should have flagged that up and told the referee to look at it again as a clear and obvious error. In addition, the Spurs player who tripped himself up turned to the referee and gestured for a card, which is a straight yellow card offense according to PGMOL’s own rules. He was already on a yellow at the time and should have received a 2nd yellow and a red card. Thus he wouldn’t have been on the pitch to be fouled by Jota a little later.

    The VAR team’s excuses for the Diaz mix-up simply don’t add up. England wasn’t on his own in that booth. At least three other people were there to stop errors like that being made. Asking anyone to believe that every single one of them made a series of identical errors causing them to ignore everything they were seeing in front of them while accidentally signalling ON THE SCREEN that they were ‘reviewing offside’… nah.

    I don’t care how exhausted they were from their highly paid junket the day before to the country that owns Manchester City. They’re full of it.

    I could go on. But nobody wants that. 8-)

  44. 44.

    Shalimar

    @lowtechcyclist: Lewis has also been raked recently for basically inventing part of the story in The Blind Side.  Call it bias in favor of his college buddy if you want, but major parts of the story he wrote weren’t true.

  45. 45.

    artem1s

    @OzarkHillbilly: problem is their financial advisors are the ones giving them the advise they believe. the investment brokers are making money off crypto even when it fails and their clients lose money. and you have the added bullshit advise that there is a place to ‘diversify’ their money that a bank failure won’t touch. it’s a new version of goldbugs and apocalyptic hoarders. they cater to those who think they are going to have a leg up on everyone when social collapse happens. never mind that no one is going to give you food for a mountain of gold when everyone is starving. but more common they are playing those who think that there is some way to protect their investments when the GOP decides to crash the markets again. I know a lot of well educated Dems who thought TFG was just great that first year because their 401’s were doing so well.

  47. 47.

    Ruckus

    @Quiltingfool:

    but crypto makes no sense to me at all; I like cash…

    I believe that is the entire point of crypto. It’s a scam to get people to give them money for nothing, as the song goes. A “currency” backed by nothing is not actually a currency. It’s why countries form their own currency and have exchange rates and stability of value and use. Entire populations can use the same money which gives it stability and an exchange/investment ability. We all know what a dollar or pound or lire, or yen, etc will purchase and the exchange rate. We invest in not only the money but the country we live in. Crypto is investing is a dream of someone hopefully getting rich at your expense, because there is nothing behind it except the idea that it’s worth what the scammer says it is. It’s like 200 yrs ago in this country – the magic elixor that would give you youth and strength and was sold out of the back of a wagon by a guy from out of town, which could kill you or at the very least make the seller money for nothing.

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