When will the parents face justice? They enriched themselves and the father was even working at the company while the mother was trumpeting her son all around Stanford to anyone who would listen.
Much like the recent convictions of the parents in the recent school shooting, these parents that helped create a family criminal enterprise need to be brought to justice and serve time in prison right along with their son.
Basically anyone who profited off SBF giving them cash or a position in the company is liable. The issue is it’s too easy to take this too far and start suing everyone at the company that profited at all. One could make a case that the parents knew, colluded with, and championed his actions. That would be the only avenue in this case.
Colluded? The parents were instrumental in the scheme. The father was the one to architect the legal structure to avoid regulation and the mothers connections to politicians kept the regulators from looking into FTX. Without them it wouldn't have been possible.
The parents had enough connections to get themselves out of jail by pinning all the blame on their son.
If that’s the case then yes, they should be involved in some sort of criminal investigation. I still like to presume innocence. But if it smells like a dog, barks like a dog, and digs in the backyard like a dog…
There’s probably more grift that went their way, but this one was easy for the government to prove because their names were on the deed as owners, yet they didn’t pay anything.
Getting a house isn’t a crime; what crime did they commit? If not a crime, what civil law did they violate, which indicates that they owe some penalty or compensation?
I’m not sure they’re innocent, but I’m also unsure what you’re accusing them of.
They were FTX insiders. It’s not like they received this massive compensation out of the blue. They should be investigated as co-conspirators in their son’s proven fraud operation.
There's apparently a class action suit that does allege RICO offenses against SBF and co-conspirators (i.e. celebrity endorsements), but believe those are state civil charges?
To me, the RICO charges against the parents would be a pattern of participation-in and driving business-to a criminal enterprise.
They, and the celebrity endorsements, were key enablers in the scheme.
I have no problem with investigating them, I suppose, especially given the father's position at the company. But I think it's a bit unhinged to leap straight to: "these parents that helped create a family criminal enterprise need to be brought to justice and serve time in prison right along with their son."
Did they pay taxes on their gift? If not, they committed a crime IMO. Probably FTX paid the taxes, but maybe no one did, in which case the parents owe it.
SBF's dad "worked" for the company getting paid a million dollars a year, both parents received several gifts of expensive of real estate, and were responsible for directing where political campaign contributions (taken from customer money) were going. They were almost certainly aware and complicit with the crimes he committed, and profited hugely off them.
The father seems to have been engaged in all the irregular business practices and has probably taught classes on what was criminal about their behavior.
I saw a stat that if you look at Forbes' "... Under 30" list, collectively, they have been accused/charged/convicted of stealing/scamming more money than their companies have generated revenue.
And then I saw a tweet a while back, that I admittedly can no longer find, that if you were to filter for "Stanford" in that list, the ratio blows out to nearly 3:1 (ill-gotten gains:revenue).
Obviously it's not as bad in my case, but this entire thing has made me empathize a lot more with the victims of Bernie Madoff.
SBF was happy to cook the books to suit his needs, but now he's upset that there are consequences to committing felonies affecting millions of people? He wanted his sentence commuted to five or six years??
Utterly ridiculous. People have gotten worse sentences for dealing a bit of dope with no real victims. SBF stole about 14 grand from me personally, not to mention all the other victims of Gemini Earn [1] and FTX where he seemed to think that a Ponzi scheme was sustainable.
[1] Yes yes I read the Gemini Earn emails too, I know the Gemini is claiming that they're going to give all our money back. I'll believe it when I see it. Until I get my money back I'm going to continue to say that it was an unregistered security that toppled over because of SBF and Genesis' fraud.
I’m sorry you were affected, I hope it works out as well for you as possible.
The problems for the victims are huge though. What’s often missed, or purposefully overlooked by people, is the appreciation of assets. If you put money in FTX and doubled it, but then lost, getting back what you originally put in is a significant harm. People made financial decisions on the basis they had increased their holdings.
Another issue is how the compensation is recovered. With Madoff it was recovered from victims. That is, if you put your money in, and then over the decades took out more than you originally put in (easy given the apparent rate of return), the administrators sued you for the difference and pulled back in, some cases, millions of dollars, bankrupting people who were otherwise living off their pensions. Whether that was the morally right thing to do or not is a hard call to make, not one I would want to make, but that’s a very significant harm caused by Madoff that is often overlooked.
I don't think they are claiming that it was real money, but most people who weren't named Sam Bankman-Fried didn't know it was a scam.
I put my money into Vanguard ETFs. I think that's generally considered an OK thing to do. I might see my returns go up, and so I decide to remodel my kitchen. If it turned out that Vanguard was actually not doing what they claimed, and someone posts about how "paper wins inside a scam were never real money", well yeah, no shit, but I didn't know it was a scam.
If I had known that Gemini Earn was a scam, I don't think I would have given them my money.
I’m sorry that happened. I didn’t mean for my reply to be so dismissive.
I was trying to make the point that compensating scam victims based on the asset value that was claimed by the scammers (rather than the money put in by the victims) would be very difficult in the general case.
Imagine a pyramid scheme that promises 50% daily returns, and shows you the gains on a website. You can only get some of that money out when you’ve recruited N people as investors. Everyone at the bottom of the pyramid is seeing a massive paper gain when the scheme collapses. There might not be enough money in the world to compensate them for the asset value they imagined.
FTX was a milder version of the same because they showed users asset values but didn’t actually have matching backing assets. (Yes, banks do this too, in the sense that they don’t hold cash to account for the sum of all balances. That’s why they are so heavily regulated.)
I make financial decisions based on the value of my pension, which could theoretically go to zero. Yes there's risk, but to not make a decision based on it is another kind of risk.
This is all to skip over the fact that you may have "cashed out" the risky bit back into dollars and, rightly so, think you were very low risk at that point.
Come on. It's disingenuous to compare an obvious scam like cryptocurrency with a pension. The levels of risk are orders of magnitude different. And in the USA at least, most pensions are insured by the PBGC so they can't literally go to zero even if the sponsoring company fails.
I think it's disingenuous to call all cryptocurrency a "scam". There are a lot of scams, I won't touch the industry for work or investment, but otherwise it is just betting like any other investment, just a highly volatile one.
When I say pensions, I'm thinking specifically about invested pensions (typical for UK private pensions which is what I'm familiar with). Insurance might cover the pension company failing, but I would assume they don't cover the shares your pension is invested in going down in value.
Are the risks an order of magnitude different? Maybe, depends what's being compared. Is there a difference between day trading crypto and day trading stocks? Probably much less of a difference.
The important thing though is that the dimension of risk is in terms of your gains and losses on the assets – that's what people understand, that's what can be modelled etc. Most people are not considering their banking infrastructure to be part of the risk, and most of the time it isn't, because it's illegal to mess with peoples money like FTX did.
(disclaimer: this is coming from a guy who is very embarrassed to have put any money into cryptocurrency and I do think it's stupid now).
I mean, if you were buying crypto shitcoins expecting to make a quick buck, then obviously yeah that's pretty scammy and not comparable to a pension.
However, the way companies like Gemini/Coinbase/FTX/Kraken operate, they treat certain coins like they're a long term investment, like digital gold. I bought into GUSD with Gemini Earn because I believed the bullshit that it was FDIC-insured and was paying ridiculously high interest in the process, and that the funds were backed up one-to-one with regular US dollars.
Was I stupid for believing that? Yeah, sure, I don't dispute that, but I think that's a little different than a claim of "MAKE A MILLION DOLLARS RIGHT AWAY WITH DOGECOIN AND BOREDAPES!!!1!!". The brilliance of the GUSD Gemini Earn scam was that it was good interest, but not necessarily "too good to be true" interest. I think it's a less-obvious scam, at least, and the way it was marketed was acting like it was competing with savings accounts.
I don't have a pension, but there are plenty of investment-retirement things in the US, and it's not like it's impossible to have scams on the regular stock market. Hell, the ETF that I buy most often is VTI, which invests in every publicly traded company, including but not limited scammy penny stocks, or even non-penny-stock scams like Nikola.
Yeah, that's more or less how I was doing things. I believed the idiotic claims of super-high interest for GUSD on Gemini Earn, I planned things around it, then it's locked down and I'm not able to withdraw. I'd be very happy to get my money back for the GUSD. I care less about the other cryptocurrencies because that was always just gambling to me anyway, but I believed the FDIC claims that Gemini had on their website and thought GUSD was safe. In hindsight, it was very stupid, and I really don't need anyone to lecture me about how they would never fall for a scam like that again here, as has happened multiple times already.
I guess I'm not at much risk of being sued to recover assets, since I'm way negative due to Gemini Earn, but it didn't even occur to me that that was a possibility; now I'm kind of glad I didn't withdraw all my funds like a week before.
>According to Ray, "Bankman-Fried continues to live a life of delusion." While Ray's team continues to work to recover funds lost, which has been estimated around $10 billion, the total amount of stakeholder claims filed is $23.6 quintillion dollars.
"One quintillion is one billion billions," Ray told Kaplan. "It is the number 1 followed by 18 zeros. The task of addressing filed claims and reducing them to their proper and 'allowed' amount is monumental. Mr. Bankman-Fried assumes this is a breeze. He is wrong, very wrong."
I did find this in a 11/29/2023 bankruptcy filing:
" As of August 24, 2023, approximately 36,000 customer claims had been filed for a total of over $16 billion ^3 ... Non-customer claims asserted against the Debtors total approximately $40 billion ..."
with this footnote:
3. "Filed customer claim amounts exclude approximately 200 frivolous or errant claims totaling approximately $9.2 quintillion."
Its more likely that one or two wackos claimed losses of 23 quintillion dollars and the claims from all the sane people only add up to a rounding error on that amount
> the total amount of stakeholder claims filed is $23.6 quintillion dollars
What is that, 52,000 times the total wealth in the global economy? How could anyone quote a number like that in any serious context with a straight face? Did Bankman-Fried promise someone that he'd double their money every day, and they are expecting someone to pay out on that insane promise?
I feels like the tech business is become a lot like a dodgy casino with investors that invest the same way an old lady invests in a slot machine. Oh yes sometimes a machine (company) will pay out 10 to 1. Most of the time it pays out nothing before the machine catches fire.
Ray is not arguing here that $23.6 quintillion dollars were lost. The first part of the quote clearly says the lost funds are estimated to be only $10B.
He's saying the claims total $23.6 quintillion, and while it sounds like a non sequitur, from the context it's clear that he's making a point about the effort to work through the claims. The next part of the quote is:
The task of addressing filed claims and
reducing them to their proper and 'allowed'
amount is monumental. Mr. Bankman-Fried
assumes this is a breeze. He is wrong,
very wrong.
I'm not a lawyer, but the effort required to address filed claims doesn't seem relevant to the question of loss, however.
I own some cryptocurrency. Am I able to assert that due to SBF's influence on crypto markets that my stake (which right now is about $1000 in value) would be worth approximately $6.7 sextillion dollars, give or take a few sextillion?
Or, are only customers of FTX able to make completely ludicrous claims?
I'm not a particular fan of SBF but that number seems insane and if that's the metric for his sentencing, then something is amiss. I doubt there is a connection, right? But the fact the new CEO calls it out indicates to me he isn't very qualified other than in gaslighting.
I need to understand where this quintillion thing comes from. This is not just higher than the current world GDP, but higher than the cumulative world GDP since the origin of our species.
Source: Our World In Data has estimates of global GDP since 1 CE. I imported the raw data into a spreadsheet, and did a rough integral. I added the year 300,000 BCE as an origin point with $0. I get 3.4e16 in 2017 dollars, a mere 34 quadrillion. https://ourworldindata.org/grapher/global-gdp-over-the-long-...
I vouched for this comment since the irony of having it on this thread was too great. How can we give recoverydarek@gmail.com a little more legal attention? So long as people feel secure publicly advertising obvious scams like this, it seems certain we're gong to get more of them.
48 comments
[ 3.9 ms ] story [ 90.6 ms ] threadMuch like the recent convictions of the parents in the recent school shooting, these parents that helped create a family criminal enterprise need to be brought to justice and serve time in prison right along with their son.
The parents had enough connections to get themselves out of jail by pinning all the blame on their son.
1) SBF's father worked for the company, and
2) SBF's mom bragged about him around campus.
Therefore...jail? What actual crime did they commit and what's the evidence for it?
https://blockworks.co/news/ftx-customer-funds-bahamas-house
There’s probably more grift that went their way, but this one was easy for the government to prove because their names were on the deed as owners, yet they didn’t pay anything.
I’m not sure they’re innocent, but I’m also unsure what you’re accusing them of.
However, this is exactly what RICO [0] was created to prosecute.
I'd assumed, given the sprawling nature of the case, FTX / SBF was already being charged under RICO. But maybe not?
[0] https://en.m.wikipedia.org/wiki/Racketeer_Influenced_and_Cor...
I am not sure how his parents would have committed a RICO offense, especially because they haven't even been charged with precursor offenses.
https://www.law.cornell.edu/uscode/text/18/part-I
There's apparently a class action suit that does allege RICO offenses against SBF and co-conspirators (i.e. celebrity endorsements), but believe those are state civil charges?
To me, the RICO charges against the parents would be a pattern of participation-in and driving business-to a criminal enterprise.
They, and the celebrity endorsements, were key enablers in the scheme.
Not sure if there are other taxes a US party receiving a gift of real property in the Bahamas would be required to pay related to the transaction.
https://www.coindesk.com/policy/2023/09/19/ftx-bankruptcy-es...
And then I saw a tweet a while back, that I admittedly can no longer find, that if you were to filter for "Stanford" in that list, the ratio blows out to nearly 3:1 (ill-gotten gains:revenue).
SBF was happy to cook the books to suit his needs, but now he's upset that there are consequences to committing felonies affecting millions of people? He wanted his sentence commuted to five or six years??
Utterly ridiculous. People have gotten worse sentences for dealing a bit of dope with no real victims. SBF stole about 14 grand from me personally, not to mention all the other victims of Gemini Earn [1] and FTX where he seemed to think that a Ponzi scheme was sustainable.
[1] Yes yes I read the Gemini Earn emails too, I know the Gemini is claiming that they're going to give all our money back. I'll believe it when I see it. Until I get my money back I'm going to continue to say that it was an unregistered security that toppled over because of SBF and Genesis' fraud.
The problems for the victims are huge though. What’s often missed, or purposefully overlooked by people, is the appreciation of assets. If you put money in FTX and doubled it, but then lost, getting back what you originally put in is a significant harm. People made financial decisions on the basis they had increased their holdings.
Another issue is how the compensation is recovered. With Madoff it was recovered from victims. That is, if you put your money in, and then over the decades took out more than you originally put in (easy given the apparent rate of return), the administrators sued you for the difference and pulled back in, some cases, millions of dollars, bankrupting people who were otherwise living off their pensions. Whether that was the morally right thing to do or not is a hard call to make, not one I would want to make, but that’s a very significant harm caused by Madoff that is often overlooked.
Paper wins inside a scam were never real money.
I put my money into Vanguard ETFs. I think that's generally considered an OK thing to do. I might see my returns go up, and so I decide to remodel my kitchen. If it turned out that Vanguard was actually not doing what they claimed, and someone posts about how "paper wins inside a scam were never real money", well yeah, no shit, but I didn't know it was a scam.
If I had known that Gemini Earn was a scam, I don't think I would have given them my money.
I was trying to make the point that compensating scam victims based on the asset value that was claimed by the scammers (rather than the money put in by the victims) would be very difficult in the general case.
Imagine a pyramid scheme that promises 50% daily returns, and shows you the gains on a website. You can only get some of that money out when you’ve recruited N people as investors. Everyone at the bottom of the pyramid is seeing a massive paper gain when the scheme collapses. There might not be enough money in the world to compensate them for the asset value they imagined.
FTX was a milder version of the same because they showed users asset values but didn’t actually have matching backing assets. (Yes, banks do this too, in the sense that they don’t hold cash to account for the sum of all balances. That’s why they are so heavily regulated.)
This is all to skip over the fact that you may have "cashed out" the risky bit back into dollars and, rightly so, think you were very low risk at that point.
When I say pensions, I'm thinking specifically about invested pensions (typical for UK private pensions which is what I'm familiar with). Insurance might cover the pension company failing, but I would assume they don't cover the shares your pension is invested in going down in value.
Are the risks an order of magnitude different? Maybe, depends what's being compared. Is there a difference between day trading crypto and day trading stocks? Probably much less of a difference.
The important thing though is that the dimension of risk is in terms of your gains and losses on the assets – that's what people understand, that's what can be modelled etc. Most people are not considering their banking infrastructure to be part of the risk, and most of the time it isn't, because it's illegal to mess with peoples money like FTX did.
I mean, if you were buying crypto shitcoins expecting to make a quick buck, then obviously yeah that's pretty scammy and not comparable to a pension.
However, the way companies like Gemini/Coinbase/FTX/Kraken operate, they treat certain coins like they're a long term investment, like digital gold. I bought into GUSD with Gemini Earn because I believed the bullshit that it was FDIC-insured and was paying ridiculously high interest in the process, and that the funds were backed up one-to-one with regular US dollars.
Was I stupid for believing that? Yeah, sure, I don't dispute that, but I think that's a little different than a claim of "MAKE A MILLION DOLLARS RIGHT AWAY WITH DOGECOIN AND BOREDAPES!!!1!!". The brilliance of the GUSD Gemini Earn scam was that it was good interest, but not necessarily "too good to be true" interest. I think it's a less-obvious scam, at least, and the way it was marketed was acting like it was competing with savings accounts.
I don't have a pension, but there are plenty of investment-retirement things in the US, and it's not like it's impossible to have scams on the regular stock market. Hell, the ETF that I buy most often is VTI, which invests in every publicly traded company, including but not limited scammy penny stocks, or even non-penny-stock scams like Nikola.
I guess I'm not at much risk of being sued to recover assets, since I'm way negative due to Gemini Earn, but it didn't even occur to me that that was a possibility; now I'm kind of glad I didn't withdraw all my funds like a week before.
"One quintillion is one billion billions," Ray told Kaplan. "It is the number 1 followed by 18 zeros. The task of addressing filed claims and reducing them to their proper and 'allowed' amount is monumental. Mr. Bankman-Fried assumes this is a breeze. He is wrong, very wrong."
I did find this in a 11/29/2023 bankruptcy filing:
" As of August 24, 2023, approximately 36,000 customer claims had been filed for a total of over $16 billion ^3 ... Non-customer claims asserted against the Debtors total approximately $40 billion ..."
with this footnote:
3. "Filed customer claim amounts exclude approximately 200 frivolous or errant claims totaling approximately $9.2 quintillion."
What is that, 52,000 times the total wealth in the global economy? How could anyone quote a number like that in any serious context with a straight face? Did Bankman-Fried promise someone that he'd double their money every day, and they are expecting someone to pay out on that insane promise?
https://www.credit-suisse.com/about-us/en/reports-research/g...
> 454.4 trillion USD – global wealth at end-2022
https://www.google.com/search?q=23.6+quintillion+%2F+454.4+t...
> 23.6 quintillion / 454.4 trillion = 51936.6197183
He's saying the claims total $23.6 quintillion, and while it sounds like a non sequitur, from the context it's clear that he's making a point about the effort to work through the claims. The next part of the quote is:
I'm not a lawyer, but the effort required to address filed claims doesn't seem relevant to the question of loss, however.Or, are only customers of FTX able to make completely ludicrous claims?
I'm not a particular fan of SBF but that number seems insane and if that's the metric for his sentencing, then something is amiss. I doubt there is a connection, right? But the fact the new CEO calls it out indicates to me he isn't very qualified other than in gaslighting.
Source: Our World In Data has estimates of global GDP since 1 CE. I imported the raw data into a spreadsheet, and did a rough integral. I added the year 300,000 BCE as an origin point with $0. I get 3.4e16 in 2017 dollars, a mere 34 quadrillion. https://ourworldindata.org/grapher/global-gdp-over-the-long-...