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it was the crypto winter!


Sam Bankman-Fried says both FTX and Alameda were raking in billions in profits in 2021 before token values plunged in crypto winter

https://finance.yahoo.com/news/sam-b...142541935.html


Phil Rosen
Thu, January 12, 2023 at 8:25 AM CST·2 min read

In this article:

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+7.96%



Sam Bankman-Fried, founder of FTX and Alameda Research FTX
  • Sam Bankman-Fried published an extensive Substack article Thursday titled, "FTX Pre-Mortem Overview."
  • He said both FTX and Alameda Research were netting billions in profits in 2021, before crypto token valuations crashed in 2022.
  • He noted that "Alameda lost about 80 percent of its assets' value over the course of 2022, due to a series of market crashes."
Sam Bankman-Fried, the disgraced founder of FTX, published a lengthy Substack article Thursday and claimed that his crypto exchange as well as trading firm Alameda Research were highly profitable enterprises in 2021 before the crypto winter began the following year.


"FTX International and Alameda were both legitimately and independently profitable businesses in 2021, each making billions," he wrote in the post titled "FTX Pre-Mortem Overview."


However, the broader crypto environment took a turn when Three Arrows Capital and other firms collapsed in the spring of 2022, he explained. That helped sink the asset values of nearly every major token, including bitcoin, ether, solana, and others.


Alameda lost "about 80 percent" of its assets' value last year, Bankman-Fried said, which subsequently dragged down FTX in the same way that Three Arrows' decline contaminated the likes of Voyager and others.


However, he cautioned that he is estimating some figures due to lack off access to some records.


"Many of my personal passwords are still being held by the Chapter 11 team–to say nothing about data," he wrote. "If the Chapter 11 team wants to add their data to the conversation, I would welcome that."


Bankman-Fried stepped down as the head of his crypto empire in November, and FTX filed for Chapter 11 bankruptcy, which he has since said was a regrettable decision.


New CEO John Ray III has accused Bankman-Fried and his deputies of incompetence, inexperience, and haphazard bookkeeping.


Still, in his Substack note, Bankman-Fried pointed out that there remains a potential for a very substantial recovery for customers, with FTX US still fully solvent.


Meanwhile, FTX International still has "billions of dollars of assets," he explained, and he's also dedicating nearly all of his own personal cash to customers.


In a bankruptcy hearing on Wednesday, FTX said it has located more than $5 billion in assets as part of its work toward repaying creditors.
The ex-FTX chief pleaded not guilty on January 3 in the Justice Department's criminal case. He is due to stand trial in October.


Read the original article on Business Insider
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Sam Bankman-Fried's trading firm borrowed $65 billion from FTX via a 'secret backdoor' to fund donations and a luxury lifestyle, bankruptcy court hears

https://finance.yahoo.com/news/sam-b...131659237.html


Pete Syme
Thu, January 12, 2023 at 7:16 AM CST·2 min read


Sam Bankman-Fried arrives at Manhattan federal court on January 3.Gotham/GC Images
  • Bankruptcy lawyers revealed Sam Bankman-Fried's Alameda had access to $65 billion from FTX.
  • The customer loans were made available via a backdoor created by FTX cofounder Gary Wang, they said.
  • The money was used for luxury purchases like planes, parties, and political donations.
Sam Bankman-Fried instructed his FTX cofounder Gary Wang to create a "secret" backdoor to enable his trading firm Alameda to borrow $65 billion of clients' money from the exchange without their permission, the Delaware bankruptcy court was told Wednesday.


Wang was told to create a "backdoor, a secret way for Alameda to borrow from customers on the exchange without permission," according to FTX's lawyer, Andrew Dietderich.


"Mr Wang created this back door by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, to which customers did not consent," he added. "And we know the size of that line of credit. It was $65 billion."


The CFTC made similar allegations when it brought charges against Wang in December. But the value of that line of credit hasn't been revealed before now. The CFTC then described it as "virtually unlimited."


And in November, Reuters reported that SBF had moved $10 billion between the two companies, with a further $2 billion still unaccounted for.


Dietderich told the court that with the $65 billion back door, Alameda "bought planes, houses, threw parties, made political donations."


Sam Bankman-Fried is the second-highest donor to Democratic causes, but says he donated just as much to Republicans using "dark" money.


$256.3 million of Bahamian real estate was also registered in FTX's name – including 15 condos in the same building. Other court filings say FTX spent $6.9 million on "meals and entertainment" in just nine months.


The rest of the money went towards personal loans, sponsorships, and investments, according to Dietderich.


"We know that all this has left a shortfall, in value to repay customers and creditors," he added. That amount "will depend on the size of the claims pool and our recovery efforts."


The court heard how FTX had so far recovered $5 billion of cash, crypto, and securities, with "plans to monetize over 300 other non-strategic investments" worth $4.6 billion.


Bankman-Fried's attorney did not immediately respond to Insider's request for comment, sent outside normal working hours.


Read the original article on Business Insider
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Failed crypto exchange FTX has recovered over $5 billion, attorney says

https://www.yahoo.com/finance/news/f...112625353.html



FILE PHOTO: Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, arrives on the day of a hearing at Manhattan federal court

Dietrich Knauth and Tom Hals
Wed, January 11, 2023 at 5:26 AM CST

By Dietrich Knauth and Tom Hals


NEW YORK/WILMINGTON, Del. (Reuters) - Crypto exchange FTX has recovered more than $5 billion but the extent of customer losses in its collapse is still unknown, an attorney for the bankrupt company founded by Sam Bankman-Fried said on Wednesday.


The company, which was valued a year ago at $32 billion, filed for bankruptcy in November and U.S. prosecutors accused Bankman-Fried of orchestrating an "epic" fraud that may have cost investors, customers and lenders billions of dollars.


"We have located over $5 billion of cash, liquid cryptocurrency and liquid investment securities," Andy Dietderich, an attorney for FTX, told a U.S. bankruptcy judge in Delaware at the start of Wednesday's hearing.


Dietderich also said that the company plans to sell non-strategic investments that had a book value of $4.6 billion.


However, Dietderich said the legal team is still working to create accurate internal records and the actual customer shortfall remains unknown. The U.S. Commodities Futures Trading Commission has estimated missing customer at more than $8 billion.


Dietderich said the $5 billion recovered does not include assets seized by the Securities Commission of the Bahamas, where Bankman-Fried was located.


FTX's attorney estimated the seized assets were worth as little as $170 million while Bahamian authorities put the figure as high as $3.5 billion. The seized assets are largely composed of FTX's proprietary and illiquid FTT token, which is highly volatile in price, Dietderich said.


SELLING AFFILIATES


FTX's legal team was in court on Wednesday to seek approval for procedures to sell affiliates LedgerX, Embed, FTX Japan and FTX Europe. FTX also wants approval from U.S. Bankruptcy Judge John Dorsey in Delaware to keep customer names secret for at least six months.


FTX's founder, Sam Bankman-Fried, 30, was indicted on two counts of wire fraud and six conspiracy counts last month in Manhattan federal court for allegedly stealing customer deposits to pay debts from his hedge fund, Alameda Research, and lying to equity investors about FTX's financial condition. He has pleaded not guilty.


The four companies FTX intends to sell are relatively independent from the broader FTX group, and each has its own segregated customer accounts and separate management teams, according to FTX court filings.


The crypto exchange has said it is not committed to selling any of the companies, but that it received dozens of unsolicited offers and plans to hold auctions beginning next month.


The U.S. Trustee, a bankruptcy watchdog that is part of the Department of Justice, has opposed selling the affiliates before the extent of the alleged FTX fraud is fully investigated.


In addition to selling affiliates, a company lawyer on Wednesday said FTX will end its seven-year sponsorship deal with the League of Legends video game, which started in 2021.


Bankman-Fried has acknowledged shortcomings in FTX's risk management practices, but the one-time billionaire has said he does not believe he is criminally liable.


In addition to customer funds lost, the collapse of the company has also likely wiped out equity investors.


Some of those investors were disclosed in a Monday court filing, including American football star Tom Brady, Brady's former wife supermodel Gisele Bündchen and New England Patriots owner Robert Kraft.


(Reporting by Dietrich Knauth in New York and Tom Hals in Wilmington, Del.; Editing by Alexia Garamfalvi,l Matthew Lewis and Mark Porter)
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https://www.yahoo.com/finance/news/s...194711253.html



Is Sam Bankman-Fried Losing His Mind?





Artur Debat

David Z. Morris
Fri, January 13, 2023 at 1:47 PM CST

The American Psychiatric Association in 1973 instituted what’s known as “The Goldwater Rule.” This then-novel principle of medical ethics held that psychiatrists should not make diagnoses of public figures at a distance, for instance based on public statements.


Luckily, I’m not a psychiatrist or a medical practitioner of any kind. So I’m free to say that, based on his most recent public statements, Sam Bankman-Fried seems to be losing his mind.


This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.

I make this claim not as a professional psychologist but as a professional reader and writer and financial de-mystifier. Bankman-Fried’s latest effort at public self-exoneration, the first blog post for his newly created Substack, will strike the informed reader as the fizzling, semi-coherent ejection of a mind trapped in a closed and degrading orbit around itself.


Despite what financier Bill Ackman seems to think for some cockeyed reason, Bankman-Fried’s lie-packed and subtly unhinged disquisition is not worth your time to read, except as a set of symptoms manifesting from a psyche teetering along the event horizon of a black hole.


So I read it for you.


Bankman-Fried’s “FTX Pre-Mortem Overview” repeats the same ham-fisted evasions and outright lies that marked his pre-arrest public apology tour. The repetition yet again of these claims and evasions, so manifestly divorced from clear public knowledge, is a strong enough sign of some manic decoupling. But the writing itself, with its wandering need and scattered malapropisms, also hints at something beneath the surface.


See also: Sam Bankman-Fried Blogs Like a Crypto Robin Hood, but inn Court He’s Less Charitable


Above all, Bankman-Fried’s version of events, seemingly unchanged since before his arrest, is premised on one key omission. This glaring blind spot is obvious to those living in reality but seems completely invisible to him: the corrupt nature of the relationship between Alameda Research and FTX.


The new post maintains Bankman-Fried’s unwavering focus on the meltdown of Alameda Research, the supposedly unrelated hedge fund that he founded before FTX, as the determining factor in the entire affair. Bankman-Fried describes in great detail the decline in Alameda’s balance sheet amid the crypto market crash of 2022, and claims that Alameda’s failure “to sufficiently hedge against the risk of an extreme market crash” was fundamental to his downfall.


This leaves out at least three simple and crucial facts that enabled the FTX fraud.


First, Bankman-Fried still acts as if Alameda was an entirely separate operation guided by decisions that remain some sort of vague mystery to him. But the apparent reality, already reported to law enforcement by former Alameda CEO Caroline Ellison, is that Bankman-Fried continued to have direct and overriding control of Alameda’s operations after formally stepping down as CEO in 2019.


Second, Bankman-Fried omits that Alameda had a “secret exemption” from margin collateral and liquidation requirements on FTX. This was a likely criminally fraudulent insider arrangement, and effectively gave Alameda’s operators free rein to dip into FTX spot market user funds – funds that FTX explicitly promised users never to lend out in any form – to continue their losing trades.


Finally, Bankman-Fried omits that FTX never took proper custody of customers’ fiat deposits, instead leaving $8 billion of free, unaccounted money in the infamous “hidden, poorly internally labeled fiat account” controlled by Alameda. Bankman-Fried had previously acknowledged this move, which he characterized as an $8 billion “accident.”


Head like a hole

The same lies of omission have been repeated by Bankman-Fried so often now that they’re almost boring. They certainly shouldn’t be convincing to anyone paying the slightest bit of attention. That’s why Bankman-Fried’s apparent belief that they should be persuasive invites speculation about his state of mind – it’s hard to imagine a fully sane and rational person in Bankman-Fried’s position continuing to insist on this sort of alternative reality.


I’ve written several times before about my diagnosis of the specific variety of Bankman-Fried’s break from reality: elite delusion. Sam Bankman-Fried was born and bred in a cosseted environment that assured him he could do no wrong. (His mother, Barbara Fried, seems to literally doubt that any such thing as “wrong” exists.)


Bankman-Fried likely rationalized his crimes along the way as a mix of improvisational growth-hacking and temporary shortcuts to a long-term good – one of the implicit pillars of the effective altruism he espoused, however cynically. He is now being confronted with the reality of his actions. Instead of acknowledging and processing that reality, he is escaping into a fantasy world in which all the nice things his mommy and daddy and professors and investors told him about himself are still true.


The latest post also hints, though, that not even the few people still close to him remain committed to Bankman-Fried’s counterfactual belief in his own faultless goodness. The post is so poorly organized, argued and written that it doesn’t even seem to have been proofread. Certainly not by his lawyers – like his frenzied media tour ahead of his arrest, the blog post was almost certainly published without or against the advice of whoever is still willing to represent him.

See also: Who Are Sam Bankman-Fried's Politically Connected 'Wealthy Co-Conspirators

It doesn’t seem likely it was reviewed by Bankman-Fried’s law-scholar parents, either – at one point the post misspells the name of Sullivan & Cromwell, a well-known law firm Bankman-Fried worked with for years (“Sullivan & Crowell”). This isn’t a direct index of Bankman-Fried’s mental state – we all make mistakes. But that a man who faces spending literally the rest of his life in prison would dribble out such a half-baked attempt at self-exoneration, without anyone close to him being willing or able to mitigate its rangy sloppiness, implies an extreme isolation that can only divorce him further from reality.


Lie-ghtning round

Finally, here are a few highlights of other bits of the post that are simply false, or otherwise hint at an extreme break with reality.
  • Bankman-Fried claims that he didn’t steal any money and that “nearly all of my assets were and still are utilizable to backstop FTX customers.” Meanwhile, in reality, he has argued that he should be able to retain his personal $450 million stake in Robinhood Markets to pay for his legal expenses. That’s despite the fact that the stake was acquired through a seemingly fraudulent conveyance: a personal loan from FTX to a Bankman-Fried-co-owned holding company.
  • Bankman-Fried claims that “FTX International and Alameda were both legitimately and independently profitable businesses in 2021, each making billions.” Here again we seem to be in Sam’s personal mind-palace for special accounting. In the real world, we know that Alameda and FTX claimed losses of $3.7 billion over the course of the pre-2022 bull market, the rare case of an under-performance so bad it smacks of fraud.
  • Bankman-Fried cites “billions of dollars in funding offers” from interested FTX buyers that “could have made all customers whole” if only his pesky lawyers hadn’t forced him to declare bankruptcy for FTX. This is simply laughable: Bankman-Fried seems to genuinely believe that he could have enticed someone to spend $10 billion paying back the money he stole. Meanwhile, the only publicly acknowledged buyout offer, from Binance, was withdrawn as quickly as a hand burned by a hot stove as soon as the buyer got a look at the books (which were probably more like a wad of napkins).
  • Bankman-Fried repeatedly refers to “illiquid assets” on the FTX balance sheet. Given what we know about how Bankman-Fried thinks about finance, this likely includes fraudulently marketed “assets” such as FTX’s own FTT token and Serum’s SRM token. These are not “illiquid” – they’re worthless.
  • Bankman-Fried cites Alameda’s declining share of FTX’s pre-collapse trading volume and liquidity as evidence of a potential FTX comeback. This is pure howling madness, like saying you can rebuild your car company because only 5% of the cars you made exploded on ignition and killed everyone inside.
  • Bankman-Fried descends even further into conspiracy theories about other people’s responsibility for his own actions. Again he targets his bankruptcy counsel, hinting that Sullivan & Cromwell pressured him into the bankruptcy filing for their own (unclear) benefit. This again directs attention away from the simple fact that he stole billions of dollars.
See also: FTX Founder Sam Bankman-Fried Pleads 'Not Guilty' to Fraud


There’s plenty more where that came from – the entire thing is a tangled mess of self-deception, underwritten by the even deeper self-deception that anyone will take it seriously.


The only truths it conveys were already obvious: That Sam Bankman-Fried is an inveterate liar, and that he is his own most gullible mark.
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https://slate.com/technology/2023/01...fense-ftx.html

Sam Bankman-Fried Is Still Filibustering

The disgraced crypto mogul has now launched a newsletter to tell his story. It’s a huge dodge.

By Timothy B. Lee
Jan 13, 20239:30 AM


Sam Bankman-Fried leaves Manhattan federal court on Jan. 3. TIMOTHY A. CLARY/Getty Images



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This article is from Full Stack Economics, a newsletter about the economy, technology, and public policy.

Sam Bankman-Fried is still desperate to convince the world that he didn’t defraud customers of his bankrupt cryptocurrency exchange, FTX. The disgraced mogul, out on bail as he awaits a federal trial later this year, launched a new Substack on Thursday to make his case.
“I didn’t steal funds, and I certainly didn’t stash billions away,” Bankman-Fried wrote in the newsletter’s first post.


Following from there is a long, rambling explanation of how Alameda Research, SBF’s crypto-trading firm, went bust in the fall of 2022. FTX failed because it had loaned billions of dollars to Alameda, which Alameda proceeded to lose through risky trading.


SBF claims that the value of Alameda’s cryptocurrency holdings fell from more than $100 billion in late 2021 to around $11 billion just before it went bankrupt. And he says that by the end, most of the money was tied up in illiquid or “less liquid” assets that couldn’t easily be converted to cash.


Over the same period, FTX’s loans to Alameda increased from roughly $3 billion to $10 billion. So when panicked customers started trying to pull their money out of FTX in early November, FTX couldn’t get customer funds back from Alameda.


I have no idea if the figures in SBF’s Substack post are accurate; SBF himself labels them as “JUST AN ESTIMATE.” But even assuming everything in the post is true, it isn’t much of a defense.


SBF stands accused of taking money from FTX customers, giving it to Alameda, and letting Alameda lose it. Going into excruciating detail about exactly when and how Alameda lost the money doesn’t really refute claims that Alameda shouldn’t have had the money in the first place.


The former CEO has been offering unconvincing defenses of his actions ever since FTX declared bankruptcy two months ago. Late last year, SBF did a series of high-profile media interviews, including with the New York Times and ABC’s Good Morning America, trying to explain what happened. When I first saw these interviews, I wondered if there might be something to his story, because he really did seem to be trying to answer the reporters’ questions honestly.



But the more I’ve seen SBF try to make his case, the less sympathetic I’ve gotten. Because the fundamental question is pretty simple: Did he allow Alameda to borrow billions of dollars from FTX without customer consent? At this point, almost everyone thinks the answer is “yes.” And while he’s been far more talkative than most criminal defendants, he hasn’t offered anyone a good reason to change their minds.

How FTX Went Bankrupt


Understanding exactly what happened to FTX customers’ money is a bit complicated because FTX didn’t just help customers buy and sell cryptocurrencies—it enabled them to make leveraged trades, a business that inherently involves extending credit to customers.


For example, FTX offered margin trading. This is a service in which customers might deposit $1,000, borrow another $1,000, and use the cash to buy $2,000 worth of Bitcoin. In this scenario, a customer’s $1,000 deposit served as collateral for the loan—much as a home serves as collateral for a mortgage. If the value of Bitcoin dropped, FTX would ask the customer to deposit additional collateral. If they failed to do so, FTX would sell the customer’s Bitcoins and use the proceeds to pay off the loan.


This worked as long as the value of the customer’s Bitcoins didn’t fall too quickly. In my example, if Bitcoin’s value fell by 50 percent before FTX had a chance to sell them, then the customer would have been wiped out. If they fell by more than 50 percent, the customer would have been wiped out and FTX would have taken losses.


Another FTX offering allowed customers to bet on the future price of cryptocurrencies (FTX is short for “futures exchange”). If Bitcoin’s value rose, then “shorts” would lose money and “longs” would gain. If Bitcoin’s value fell, the opposite would occur.


Once again, customers were required to post a certain amount of collateral to cover losses their positions might incur in the future. But in cases of extreme volatility, it might not be possible to close a position quickly enough to avoid big losses. If a customer’s losses exceeded their collateral, FTX itself would be on the hook for subsequent losses.


This kind of failure is a theoretical possibility on any exchange that allows leveraged trading. For example, Bloomberg’s Matt Levine has written about how the London Metal Exchange almost blew up after a nickel trader couldn’t make good on a massive short position.


This is basically what SBF says happened to FTX: FTX allowed Alameda to make huge, leveraged bets on the value of volatile cryptocurrencies. Then the value of those cryptocurrencies crashed. Not only did Alameda get wiped out, but FTX—and by extension, FTX’s customers—lost money as well.


While this story might be basically accurate, I don’t think it exonerates SBF the way he seems to think it does.

Special Rules for Alameda


One of FTX’s biggest selling points has always been that it has a sophisticated “liquidation engine” that was supposed to avoid these kinds of blowups by automatically closing a customer’s position before it got underwater. In a 2019 post, FTX touted its liquidation engine as more sophisticated and conservative than those on rival cryptocurrency exchanges.


“We designed a system that we think will withstand huge market moves and huge volume,” FTX wrote in 2019.


But according to the Securities and Exchange Commission, FTX exempted Alameda from this liquidation process. The SEC says that in May 2020, “Bankman-Fried directed that Alameda be exempted from the ‘auto-liquidation’ feature of FTX’s spot margin trading services.”


This meant that if Alameda’s investments performed poorly, then FTX—and ultimately FTX’s other customers—would wind up paying the cost. It turned FTX into a giant game of “heads Alameda wins, tails other customers lose.”
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The SEC also accuses SBF of telling FTX investors “that Alameda was just another platform customer with no special privileges.” If the government’s allegations are true, then this was a lie and potentially securities fraud too.


So this is the key question SBF needs to answer: Did he in fact direct FTX employees to exempt Alameda from the auto-liquidation process? And did he know that Alameda was getting special treatment when he told investors it was treated like any other customer?


SBF doesn’t even try to tackle these questions in his introductory newsletter post. Instead of addressing them head-on, he wrote more than 2,000 words on issues nobody really asked about. The fact that he has nothing to say about the main accusations against him makes me think whatever answers he might have won’t actually do him any good.
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daddy lawyers up ..

Sam Bankman-Fried’s father, Joseph Bankman, lawyers up as FTX probe progresses

https://nypost.com/2023/01/13/sam-ba...be-progresses/


By Thomas Barrabi

January 13, 2023 1:14pm Updated
More On: sam bankman-fried


Stanford law professor Joseph Bankman has reportedly lawyered up as the feds move forward with their probe into his disgraced son Sam Bankman-Fried’s doomed cryptocurrency empire.


Bankman, who purportedly leveraged his connections and legal expertise to advise his son on running FTX, has hired Sean Hecker of Kaplan Hecker and Fink LLP to represent him, according to Reuters.


Hecker’s bio on the firm’s website describes him as “an experienced trial lawyer whose practice focuses on white-collar criminal defense, government and internal investigations, complex civil litigation, and regulatory compliance.”


Bankman has not been charged with a crime or informed he’s under federal investigation, a source familiar with the situation told The Post.


However, his work at FTX has come under intense scrutiny since the platform declared bankruptcy.


While testifying on Capitol Hill last month, current FTX CEO John Ray confirmed that his team was “investigating” the role that Bankman and his wife, fellow Stanford law professor and Democratic operative Barbara Fried, played in the platform’s collapse.


Ray told lawmakers Bankman had given “legal advice” to his son at FTX and received cash payments from the company.





Joseph Bankman was a key adviser at FTX.Stanford University “I don’t know if he actually had ‘employee’ status, but he certainly received payments, the family did receive payments,” Ray said.


Bankman was known to regularly accompany his son to meetings on Capitol Hill as the FTX founder sought to curry favor with lawmakers.


Here’s the latest coverage on the collapse of crypto giant FTX

The law professor also helped to guide the company’s philanthropic efforts and introduced his son to at least one influential investor, Orlando Bravo of the investment giant Thoma Bravo.





Barbara Fried is a well-known Democratic fundraiser.Stanford University A source told Reuters that Bankman had “personally recruited” Daniel Friedberg, who served as FTX’s chief regulatory officer. Friedberg has drawn intense scrutiny since The Post and other outlets reported on his ties to the infamous UltimateBet online poker cheating scandal.


After FTX’s bankruptcy, Friedberg reportedly began cooperating with the feds on their investigation into Bankman-Fried.




SBF has been under house arrest at his parents’ home. The Post has reached out to Hecker and a representative of Bankman-Fried’s parents for comment.


Fried was not on FTX’s payroll. However, Bankman-Fried made political contributions to the Democratic advocacy network that Fried oversaw.





Barbara Fried is also a law professor.Getty Images Bankman-Fried’s parents also acquired a $16.4 million beachfront “vacation home” in the Bahamas that was purchased using FTX funds, according to records obtained by Reuters. The parents say they plan to return the property.


The feds have accused Bankman-Fried of perpetrating one of the biggest frauds in US history by bilking FTX customers out of billions of dollars.


SBF faces 115 years in prison.AFP via Getty Images


What do you think? Post a comment.


Prosecutors say Bankman-Fried used the funds to fund a lavish lifestyle that included real estate and venture capital investments as well as tens of millions of dollars in political donations. He is also accused of funneling FTX customer funds to prop up risky bets at his cryptocurrency hedge fund, Alameda Research.


Bankman-Fried is under house arrest at his parents’ $4 million home in Palo Alto, Calif. Bankman and Fried secured his release on $250 million bond by putting up their house as collateral.
WTF's Avatar
  • WTF
  • 01-14-2023, 03:16 AM
So the idiots who invested in this bullshit blame Sam and they have no responsibility?
  • Tiny
  • 01-14-2023, 08:52 AM
https://www.yahoo.com/finance/news/s...194711253.html



Is Sam Bankman-Fried Losing His Mind?





Artur Debat

David Z. Morris
Fri, January 13, 2023 at 1:47 PM CST

The American Psychiatric Association in 1973 instituted what’s known as “The Goldwater Rule.” This then-novel principle of medical ethics held that psychiatrists should not make diagnoses of public figures at a distance, for instance based on public statements.


Luckily, I’m not a psychiatrist or a medical practitioner of any kind. So I’m free to say that, based on his most recent public statements, Sam Bankman-Fried seems to be losing his mind.


This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.

I make this claim not as a professional psychologist but as a professional reader and writer and financial de-mystifier. Bankman-Fried’s latest effort at public self-exoneration, the first blog post for his newly created Substack, will strike the informed reader as the fizzling, semi-coherent ejection of a mind trapped in a closed and degrading orbit around itself.


Despite what financier Bill Ackman seems to think for some cockeyed reason, Bankman-Fried’s lie-packed and subtly unhinged disquisition is not worth your time to read, except as a set of symptoms manifesting from a psyche teetering along the event horizon of a black hole.


So I read it for you.


Bankman-Fried’s “FTX Pre-Mortem Overview” repeats the same ham-fisted evasions and outright lies that marked his pre-arrest public apology tour. The repetition yet again of these claims and evasions, so manifestly divorced from clear public knowledge, is a strong enough sign of some manic decoupling. But the writing itself, with its wandering need and scattered malapropisms, also hints at something beneath the surface.


See also: Sam Bankman-Fried Blogs Like a Crypto Robin Hood, but inn Court He’s Less Charitable


Above all, Bankman-Fried’s version of events, seemingly unchanged since before his arrest, is premised on one key omission. This glaring blind spot is obvious to those living in reality but seems completely invisible to him: the corrupt nature of the relationship between Alameda Research and FTX.


The new post maintains Bankman-Fried’s unwavering focus on the meltdown of Alameda Research, the supposedly unrelated hedge fund that he founded before FTX, as the determining factor in the entire affair. Bankman-Fried describes in great detail the decline in Alameda’s balance sheet amid the crypto market crash of 2022, and claims that Alameda’s failure “to sufficiently hedge against the risk of an extreme market crash” was fundamental to his downfall.


This leaves out at least three simple and crucial facts that enabled the FTX fraud.


First, Bankman-Fried still acts as if Alameda was an entirely separate operation guided by decisions that remain some sort of vague mystery to him. But the apparent reality, already reported to law enforcement by former Alameda CEO Caroline Ellison, is that Bankman-Fried continued to have direct and overriding control of Alameda’s operations after formally stepping down as CEO in 2019.


Second, Bankman-Fried omits that Alameda had a “secret exemption” from margin collateral and liquidation requirements on FTX. This was a likely criminally fraudulent insider arrangement, and effectively gave Alameda’s operators free rein to dip into FTX spot market user funds – funds that FTX explicitly promised users never to lend out in any form – to continue their losing trades.


Finally, Bankman-Fried omits that FTX never took proper custody of customers’ fiat deposits, instead leaving $8 billion of free, unaccounted money in the infamous “hidden, poorly internally labeled fiat account” controlled by Alameda. Bankman-Fried had previously acknowledged this move, which he characterized as an $8 billion “accident.”


Head like a hole

The same lies of omission have been repeated by Bankman-Fried so often now that they’re almost boring. They certainly shouldn’t be convincing to anyone paying the slightest bit of attention. That’s why Bankman-Fried’s apparent belief that they should be persuasive invites speculation about his state of mind – it’s hard to imagine a fully sane and rational person in Bankman-Fried’s position continuing to insist on this sort of alternative reality.


I’ve written several times before about my diagnosis of the specific variety of Bankman-Fried’s break from reality: elite delusion. Sam Bankman-Fried was born and bred in a cosseted environment that assured him he could do no wrong. (His mother, Barbara Fried, seems to literally doubt that any such thing as “wrong” exists.)


Bankman-Fried likely rationalized his crimes along the way as a mix of improvisational growth-hacking and temporary shortcuts to a long-term good – one of the implicit pillars of the effective altruism he espoused, however cynically. He is now being confronted with the reality of his actions. Instead of acknowledging and processing that reality, he is escaping into a fantasy world in which all the nice things his mommy and daddy and professors and investors told him about himself are still true.


The latest post also hints, though, that not even the few people still close to him remain committed to Bankman-Fried’s counterfactual belief in his own faultless goodness. The post is so poorly organized, argued and written that it doesn’t even seem to have been proofread. Certainly not by his lawyers – like his frenzied media tour ahead of his arrest, the blog post was almost certainly published without or against the advice of whoever is still willing to represent him.

See also: Who Are Sam Bankman-Fried's Politically Connected 'Wealthy Co-Conspirators

It doesn’t seem likely it was reviewed by Bankman-Fried’s law-scholar parents, either – at one point the post misspells the name of Sullivan & Cromwell, a well-known law firm Bankman-Fried worked with for years (“Sullivan & Crowell”). This isn’t a direct index of Bankman-Fried’s mental state – we all make mistakes. But that a man who faces spending literally the rest of his life in prison would dribble out such a half-baked attempt at self-exoneration, without anyone close to him being willing or able to mitigate its rangy sloppiness, implies an extreme isolation that can only divorce him further from reality.


Lie-ghtning round

Finally, here are a few highlights of other bits of the post that are simply false, or otherwise hint at an extreme break with reality.
  • Bankman-Fried claims that he didn’t steal any money and that “nearly all of my assets were and still are utilizable to backstop FTX customers.” Meanwhile, in reality, he has argued that he should be able to retain his personal $450 million stake in Robinhood Markets to pay for his legal expenses. That’s despite the fact that the stake was acquired through a seemingly fraudulent conveyance: a personal loan from FTX to a Bankman-Fried-co-owned holding company.
  • Bankman-Fried claims that “FTX International and Alameda were both legitimately and independently profitable businesses in 2021, each making billions.” Here again we seem to be in Sam’s personal mind-palace for special accounting. In the real world, we know that Alameda and FTX claimed losses of $3.7 billion over the course of the pre-2022 bull market, the rare case of an under-performance so bad it smacks of fraud.
  • Bankman-Fried cites “billions of dollars in funding offers” from interested FTX buyers that “could have made all customers whole” if only his pesky lawyers hadn’t forced him to declare bankruptcy for FTX. This is simply laughable: Bankman-Fried seems to genuinely believe that he could have enticed someone to spend $10 billion paying back the money he stole. Meanwhile, the only publicly acknowledged buyout offer, from Binance, was withdrawn as quickly as a hand burned by a hot stove as soon as the buyer got a look at the books (which were probably more like a wad of napkins).
  • Bankman-Fried repeatedly refers to “illiquid assets” on the FTX balance sheet. Given what we know about how Bankman-Fried thinks about finance, this likely includes fraudulently marketed “assets” such as FTX’s own FTT token and Serum’s SRM token. These are not “illiquid” – they’re worthless.
  • Bankman-Fried cites Alameda’s declining share of FTX’s pre-collapse trading volume and liquidity as evidence of a potential FTX comeback. This is pure howling madness, like saying you can rebuild your car company because only 5% of the cars you made exploded on ignition and killed everyone inside.
  • Bankman-Fried descends even further into conspiracy theories about other people’s responsibility for his own actions. Again he targets his bankruptcy counsel, hinting that Sullivan & Cromwell pressured him into the bankruptcy filing for their own (unclear) benefit. This again directs attention away from the simple fact that he stole billions of dollars.
See also: FTX Founder Sam Bankman-Fried Pleads 'Not Guilty' to Fraud


There’s plenty more where that came from – the entire thing is a tangled mess of self-deception, underwritten by the even deeper self-deception that anyone will take it seriously.


The only truths it conveys were already obvious: That Sam Bankman-Fried is an inveterate liar, and that he is his own most gullible mark. Originally Posted by The_Waco_Kid
So he’s not only a crook. He’s also nuts and a pathological liar who believes his own lies. I wonder why our Democrat friends reflexively believe he donated massive amounts of dark money to Republicans. Maybe they’re a wee bit biased?
WTF's Avatar
  • WTF
  • 01-14-2023, 09:55 AM
So he’s not only a crook. He’s also nuts and a pathological liar who believes his own lies. I wonder why our Democrat friends reflexively believe he donated massive amounts of dark money to Republicans. Maybe they’re a wee bit biased? Originally Posted by Tiny
If you say so

I never knew crypto was a left wing cause....
  • Tiny
  • 01-14-2023, 10:08 AM
If you say so

I never knew crypto was a left wing cause.... Originally Posted by WTF
It’s more Libertarian WTF. You and I should be big believers based on our biases, instead of recognizing it’s a big Ponzi scheme.
WTF's Avatar
  • WTF
  • 01-14-2023, 12:27 PM
It’s more Libertarian WTF. You and I should be big believers based on our biases, instead of recognizing it’s a big Ponzi scheme. Originally Posted by Tiny
It is more Charlton than anything.

I believe that anyone stupid enough to send money to the Bahamas, should stfu with all this crying about Sam.

Waco should start up a Go Fund me for those idiots, he has been crying about their losses for months. If I didn't know better, I'd bet he he got conned out of a crypto or three!
The_Waco_Kid's Avatar
So the idiots who invested in this bullshit blame Sam and they have no responsibility? Originally Posted by WTF

None whatsoever.


did you say the same thing about Madoff's investors? that since they "should have known" his returns were impossibly high given the market that they weren't victims?


you also continue to not understand. the exchange wasn't an investment account, it was a trading account to buy/sell various crypto currencies similar to forex trading. Alameda Research was a hedge fund/trading firm and private equity firm with large players like Sequoia Capitol investing money. the average joe wasn't involved in Alameda Research. i don't feel sorry one fucking bit for any big players like Sequoia for losing money and neither should you but you are conflating the FTX exchange with Alameda Research and the fact that it was illegal for Sammy to take FTX customer holdings to prop up Alameda's failed investments.
WTF's Avatar
  • WTF
  • 01-14-2023, 01:22 PM
None whatsoever.


did you say the same thing about Madoff's investors? that since they "should have known" his returns were impossibly high given the market that they weren't victims?

Originally Posted by The_Waco_Kid
They were greedy fucks who were getting unreal returns. Evidently nobody pays attention to " If it's to good to be true, it probably is."

I was flying to Acapulco during that time and an old couple was crying about their losses...they thought I was mean for asking how they thought Bernie could guarantee those type returns.
WTF's Avatar
  • WTF
  • 01-14-2023, 01:27 PM


you also continue to not understand. the exchange wasn't an investment account, it was a trading account to buy/sell various crypto currencies similar to forex trading. Alameda Research was a hedge fund/trading firm and private equity firm with large players like Sequoia Capitol investing money. the average joe wasn't involved in Alameda Research. i don't feel sorry one fucking bit for any big players like Sequoia for losing money and neither should you but you are conflating the FTX exchange with Alameda Research and the fact that it was illegal for Sammy to take FTX customer holdings to prop up Alameda's failed investments. Originally Posted by The_Waco_Kid
The whole fucking industry should be illegal imho but it is not....so once again if investors are stupid enough to send money to the Bahamas...then let them be burdened with the risk.
The_Waco_Kid's Avatar
The whole fucking industry should be illegal imho but it is not....so once again if investors are stupid enough to send money to the Bahamas...then let them be burdened with the risk. Originally Posted by WTF

once again you prove you know nothing about the issue. the flow of money to the Bahamas was between Alameda Research and Sammy who was in the Bahamas to avoid US security regulations.



https://www.bloomberg.com/news/artic...uverify%20wall


US Probes FTX Founder for Fraud, Examines Cash Flows to Bahamas

  • Scope of inquiry includes transfers around time of bankruptcy
  • It’s part of broad effort by prosecutors to track client funds

US prosecutors, laying the groundwork for a potential fraud case against Sam Bankman-Fried and others involved in the collapse of cryptocurrency giant FTX, are scrutinizing how funds held by the exchange operator moved outside the US as it was hurtling toward bankruptcy, according to a person familiar with the matter.


Prosecutors are closely examining whether hundreds of millions of dollars were improperly transferred to the Bahamas around the time of FTX’s Nov. 11 bankruptcy filing in Delaware, the person said, asking not to be named without authorization to discuss the case publicly.

Bahamas-based FTX and more than 100 related entities, including the company’s US arm, sent shock waves across the crypto ecosystem with their bankruptcy filing last month. The group and its founder now face scrutiny from regulators and prosecutors in the US and overseas.

no FTX customers directly sent money to the Bahamas. they put it in the US Based exchange. it was Sammy who transferred it to the Bahamas.