I think it’s a grass is always greener situation. I’d absolutely love a DB pension that is on a similar percentage of income of what teachers and cops get.
Anyone who takes stock comp without understanding the risks is an idiot though. Literally anything can happen.
For example, I know someone who got into a self-defense legal situation and ended up with a felony. He spent <12 months in prison, but lost his job and almost $500k in unvested stock comp.
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thatsashame.gif
This is all just whetting my appetite for SBF’s trial. Need that Michael Lewis book immediately.
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Liz and Balwani tricked a bunch of powerful people, made them look like fools, and lost them a bunch of money. That’s not what Sam did, and he gave hundreds of millions of dollars as bribes to powerful people and institutions. Might be a big difference but I hope I’m wrong.
I am not as cynical as you are (or, I guess, not as cynical as what you posted here). I think the most likely avenue to SBF getting a lighter sentence is that he seems like a complete doofus who would be perceived as incapable of actually planning and executing a multi-billion scam.
Reading the Bad Blood book about Theranos, it seemed like there were mountains of evidence pointing to Holmes/Balwani having the requisite intent/knowledge of their scam for them to get got. It’s still early with FTX, but so far the “holy shit they were stupid and utterly incapable of managing any kind of business larger than a lemonade stand” story seems to be holding up. If there’s no evidence of any intent to defraud, that could make it challenging to prosecute him.
Maybe this is all part of SBF’s grand scheme.
Well, except that’s not really how wire fraud works I don’t think. You’re either guilty of it or not, and then once the sentencing phase comes in it’s pretty much dominated by the magnitude of the financial damages. Here’s what I think is the relevant guidelines manual instructions:
So what you’re talking about, the incompetent businessman defense, is certainly a defense to wire fraud, but having been convicted there’s no mechanism for a more lenient sentence based on the fact that yeah dude is probably massively incompetent. So the only way he’d get a lighter sentence is if they let him plead to something that isn’t the big gun of wire fraud. Which is bullshit because I really think the feds would have an excellent chance of convicting this pos on wire fraud if they really go hard here. But I think some kind of cupcake deal where Sam goes off to a country club prison for six months at worst is likely because of the hundreds of millions of dollars of bribes he paid powerful people with money he stole for average crypto bros. Some would say a victimless crime, but not me.
I guess we’re talking about slightly different things:
- I’m saying that the lack of intent will make prosecution difficult.
- I think you’re saying that intent doesn’t impact sentencing, conditional on him being found guilty.
You could be right, but the document you linked does suggest in one of the bullets (10), that intent can bump up the sentencing guideline. (It also suggests that false claims of acting on behalf of a charitable organization bumps up the sentencing guideline, which could come in to play with SBF.)
I also think our perspectives converge in a plea scenario - a prosecutor faced with a tough case (due to lack of scienter) might be willing to offer a more lenient sentence because it’s a lower likelihood of conviction, even if the sentencing-given-conviction isn’t affected by the lack of intent.
Also, small question:
I think you mean “from”, but it could actually go either way, and I’m curious which direction you think this went.
Will SBF do more than a year of prison time?
- Yes
- No
0 voters
hahaha yeah that’s a typo, and now that I think about it, I should have written “from and for”.
Intent isn’t required, negligent recklessness can also get you there. Like say someone running a hedge fund thinks his leverage is five billion but oopsie, turns out it’s 13 billion. Could happen to anyone, right? This is an argument in court that the jury might reject but the government could give it a go. But they probably won’t because they like winning easy cases and the whole hundreds of millions of dollars worth of bribes.
Setting aside the fact that on November 7 he tweeted that customer assets were fine because they didn’t invest deposits. If he knew that to be false then that’s fraud. If he didn’t know that to be false then that’s maybe a little trickier but go after him for negligent recklessness.
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Should I be annoyed that Balwani got a longer sentence than Holmes (who was his boss)? It feels not right to me
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I think we agree that:
- SBF deserves a harsh sentence
- He may not get one as harsh as he deserves
But we disagree on why:
- You think it’s because he bribed people.
- I think it’s because the lack of demonstrable intent makes this a much more difficult case, and that difficulty will [waves hands instead of offering good logic] result in a lower sentence.
So even if he does get a light sentence, we won’t know who’s right. In cases like that, I just assume I am.
I also think that Theranos was infinitely worse, because they not only defrauded a bunch of investors, they actively misled people about their health conditions. That’s horrible, and they weren’t even prosecuted for it!
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This is great.
When O’Leary first began to promote FTX, he said it was FTX’s compliance systems that drew him to invest in the crypto exchange.
“Finally solved my compliance problems with #cryptocurrencies,” O’Leary wrote on LinkedIn and in a since-deleted August 2021 tweet.
WTF is paying Kevin O’Leary $15 million to endorse something?
Reading about this whole FTX thing, my feeling is the US regulators and prosecutors should only focus on criminal activity related to the FTX US subsidiary.
Seems like a lot of business media are wringing hands about the fraud and how US regulators should be aggressive because Bahamas are ill equipped to prosecute it. But to me, if customers are wiring money to a different company in the Bahamas in order to get around whatever regulations were on the US subsidiary, why should my tax dollars pay for the prosecution?
US Regulators and Bankruptcy courts should try to make people who had money on the US site whole before anyone on the other site gets anything. Let the other people learn their lesson that circumventing US government regulation also circumvents US government protection
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Well they’re related. If he didn’t bribe the right people, or even worse, humiliated the wrong people like Liz did, then the Feds might be more willing to roll the dice on a trickier wire fraud case. But bribing the right people combined with his current oopsie I’m incompetent PR campaign, which will give the Feds cover to say well this is a difficult case, will make a cupcake deal possible.
I’ll be very happy to be proven wrong and see Sam get charged with wire fraud.
Was it 15 million in FTX coins?
Because if a Crypto business in 2021 and 2022 was about creating market value out of nothing based on investor sentiment and confidence then it seems like an effective business strategy to mint a coin and have celebrities (like Tom and Gisele) and celebrity billionaires (like the Shark Tank guys) endorse the coin and the ecosystem and then pay those endorsers millions of dollars but only in the coin they are endorsing.
Suppose there are two entities: FTX US and FTX International, each with billions in liabilities (customer deposits). If there are no actual controls that segregate assets between those two entities (this seems to be the case), how would you propose to identify the assets that should be paid to one entity versus the other? Saying, “I’m just going to take all of the funds from the commingled entities and use those funds to make the FTX US customers whole” would be terrible!
As a crazy analog, imagine Portugal or whoever saying that Bank of America defrauded its Portuguese customers, and it was going to attempt to seize all of BoA’s assets worldwide in order to make the Portuguese customers whole.
Also the Bahamas might actually do something because Sam ruined their scheme to become a crypto regulatory destination.
My framework for financial crime prosecution is basically “did this guy take money out of the pocket of powerful people, or even worse, make them look like fools? If yes hold on to your butt.”
But this isn’t a seizure of assets. My understand is that they filed for bankruptcy proceedings in US courts. I don’t see why it is terrible for US courts to prioritize the US entity’s assets over the others especially if the loss of those assets was due to violations of US laws and regulations that didn’t apply to the other assets.