SBF has been accused of so many things and there's more information coming to light all the time.[1] I'm interested in what people here think the core concrete (legal/ethical) accusations are. I myself still don't feel like I have enough clarity to know what lessons should be drawn from everything; I welcome other's insights.
My own view at this point of the main thing SBF did wrong is: HE MARKETED FTX AS A RELATIVELY SAFE EXCHANGE WHEN HE KNEW IT WAS CHAOS BEHIND THE SCENES.
All the other accusations appear much less important than this one and/or don't stand up to scrutiny. For instance:
- I don't believe anyone knew about Alameda's additional $8b liability to FTX via the fiat@ account until summer-fall 2022, SBF included.
- This seems to be the story told by Caroline, Gary, Nishad and of course, SBF.
- It seems really bad to run a company in such a way that mistakes of this magnitude can occur. But an honest mistake is different from fraud.
- Running an offshore crypto company this chaotically is not illegal per se.
- I haven't come up with a much better course of action than they took when they discovered this mistake.
- Alameda didn't need to borrow more to repay the recalled loans.[2]
- Alameda's net asset value was still ~$10 billion, although much was tied up in illiquid investments; things didn't feel "bulletproof" now, but still basically fine. (SBF obviously not anticipating CZ's fatal blow in November.)
- Over the next few months, SBF spent time trying to raise liquidity, sorting out their accounting and exploring replacing Alameda with a better managed backstop liquidity provider like Modulo. Alameda also began repaying FTX.[2]
- The funds Alameda otherwise borrowed from FTX came entirely from the margin lending program, which was permissible under the Terms Of Service.
- For efficiency, Alameda didn't post collateral because SBF (unaware of the $8b fiat@ issue) felt confident they had enough and, since he owned 90% of Alameda, felt confident he could take it if needed.[3]
- The code granting special privileges to market makers, Alameda included, was accessible to any senior developer at FTX. Their general policy was to not publicly disclose info about customer accounts and they saw no need to here.
- When SBF talked about Alameda's account being like everyone else's, he was only addressing the concern that Alameda might be front running other customers, which Gary testified was not happening.
Please tell me where you disagree and why!
- ^
Examples from this month: FTX expects to return all customer money; clawbacks may go away; Justice Department Charges Three People in $400 Million FTX Mystery Hack; FTX CEO SBF Ordered to Appear in Court Amidst Celsius Connection Probe; FTX creditors file class action against bankruptcy lawyers over ties to FTX prior to its collapse; Bahamas Bank Deltec Accused of Giving Bankman-Fried ‘Secret’ Credit to Buy Tether; Ex Blood Gang Member Opens Up About SBF’s Life in Prison: “Free Sam Bankman-Fried”
- ^
"Q. What do you see with the in-use line of credit for Alameda happening, according to the graph there? A. Well, it starts close to 3 billion in June [2022], but then it drops very precipitously about mid June."
- ^
Crypto Lotus was not required to post collateral either.
Thank you for replying despite understandably not wanting to get into it all again. I really appreciate it. And I do regret not finding the courage earlier to make myself the only (?) person on here to suggest that perhaps not all of the accusations are obviously true.
Do you think Caroline, Gary and Nishad lied[1] about this in their testimony then, but told the truth about everything they accused SBF of? (It's possible. But it does seem a little cherry-picked.)
On priors, it ... (read more)