As amusing as it may be in a sleazy way, I hate giving Sam Bankman-Fried any more attention than it already gets. Based on the available information, particularly the hour-long SBF interview with The New York Times’ Andrew Ross Sorkin, it appears that the fallen crypto king is trying to outdo the company’s classic “I’m CEO and I don’t know anything” defense by adding a layer of pretense of stupidity, or At best pathologically deceptive.
After reading even small fragments of the SBF record, it is not difficult to conclude that he is a reflective liar, and an especially effective liar given his innocence. However, at this juncture it is strange to see his tricks and serious pretenses at face value. It’s as if people who have respected parents, went to the right schools, and better yet, have baby faces and tech geeks can’t be truly concerned about the impact their actions have on others.
We’ll skip the big claim from the interview, “I’ve never attempted to defraud anyone” and leave that to “Actions speak louder than words.”
Let’s start with one of Sorkin’s SBF claims, that he only has $100,000 in his bank account, implying that everyone should feel sorry for his massive fall from Master of the Universe profit levels. Gee, so what about at least $121 million in Bahamian real estate that SBF’s parents and other FTX executives bought?
It is instructive to see that the SBF tried the same claim of “only $100,000 in the bank” in its now obviously embarrassing lunch interview with the Financial Times earlier this year, to sway monastic indifference to money and suggest that its real interest was charity. But even the captured Rose Leaf effectively summoned him:
Bankman-Fried offers an alternative narrative, focusing on how cryptocurrencies can do good and give ordinary people control over their money. He plans to give away at least 99 percent of what he earns as quickly as possible. “I have about $100,000 in my bank account. I think we’ve made about $100 million so far this year.” (However, on Thursday he revealed that he had found the money in recent months to buy a 7.6 percent stake in online brokerage Robinhood for $648 million.)
So BlockFi is a creditor to FTX that lent Alameda that lent Emergent a shell company owned by SBF that bought Robinhood shares that were pledged as collateral to guarantee a loan to FTX that was used to bail out BlockFi itself.
– ayko2718 (@ ayko2718) November 29, 2022
Even at 50,000 feet, it’s hard to buy SBF’s abrupt claims of extreme ignorance, like not knowing that boatloads of FTX clients’ money was going to the Alamada hedge fund hemorrhaging a loss, plus more than $3 billion in loans to SBF’s person and entity. Mamlouk just missing. FTX was a very restrained conglomerate, with a small executive team where nothing was secret, including the emergence of private parts of the directors. They lived in a six-bedroom apartment, which apparently meant sharing a bed on a regular basis. They’ve ordered massive amounts of vegan food together, and most of them think they’re making use of the doctor’s Rx plate at home:
a) Alarm clocks when you wake up, and sleeping pills if you need them when you go to sleep.
b) Consider your free space: I often doze off in the office so my mind won’t leave my work mode between shifts.
– SBF (SBF_FTX) September 15, 2019
Keep in mind that the SBF’s continuation of speaking to the press is confusing because it is under criminal investigation. As we indicated a few days ago when it seemed clear that he was not rescinding Sorkin’s invitation: “…that either indicates that his judgment is severely impaired and that he is ignoring legal advice or that he has good reason to believe that the risk of him facing prosecution is very low.”
According to Coindesk’s transcript of the letter, the SBF told Sorkin that he was appearing publicly against counsel’s advice.
However, the SBF seemed to think, like the kid who used to talk his way out of trouble in the principal’s office, that if he continued to insist that he didn’t know he was doing anything bad, he couldn’t be found guilty of fraud, since fraud is in most cases Contexts requires intention.
However, intention can also be inferred. Let’s look at this clip from the interview:
I wasn’t mixing up the funds on purpose. And again, one piece of that you have margin trading you know, customers borrow from each other, Alameda is one of those. I was frankly surprised at how large the Alameda site was, which indicates another failure of oversight on my part. and not appointing a person to be primarily responsible for it. But I did not try to mix funds.
huh? First, not all clients sign up with FTX to trade on margin. And even if they had, that would not amount to an authorization to lend or transfer money to an offshore entity.
This “I wasn’t trying to raise money” equivalent:
SBF: “I wasn’t trying to steal money.”
Announcer: “But the money on the table wasn’t your money. However, you picked it up and put it in one of your accounts.”
SBF: “But I didn’t try to steal the money.”
Or perhaps more so from the perspective of FTX clients who lost most or all of their money:
SBF: “I wasn’t trying to kill a rabbit.”
Presenter: But you filled the tub with water, put the rabbit in it until its head was submerged, and held it while it struggled until it stopped moving.
SBF: “But I didn’t try to kill the rabbit.”
Even the very respectful Sorkin, faced with SBF jamming, resorts to talking about stealing:
I guess the question is if you’re supposed to have access to those accounts at the beginning, you know, if you give if I work in a bank and I’m a bank teller and I decide to leave the bank, at the end of attending the money you sent that we had access to her in the evening, even if I intend to return it to the bank later, even with more money to return. I still stole the money.
SBF errs by talking about Alameda, how it wasn’t really under his control, and he didn’t know what was there. huh? The money came from FTX! FTX had to authorize and enable its movement to Alameda! How stupid do people think?
It would be very difficult to pull out of this blind-eyed situation, since his fellow senior SBF officers at FTX have already said they knew what was going on afoot, and were unlikely to stand by him in an effort to scapegoat them, which he said” I had no idea there was gambling in Casablanca. Again from the interview, this bit Sorkin:
Well, let me ask you this: Caroline Ellison told Alameda employees, The Wall Street Journal reported that Alameda used FTX clients’ money to cover loans that were taken down because of the credit crunch triggered by Luna. Caroline says she, Sam and Gary, knew about it. How does that compare to what I originally said on Twitter, that this was an $8 billion accounting error?
If you read SBF’s response, he’s not denying it at the time of his Twitter statement that he knew otherwise. He does a lot of tap dancing which roughly translates as “We were relying on dashboards that did not accurately represent our financial situation and the hole was bigger than we expected.” This completely avoids the main issue, which is Alameda’s use of customer funds that were then recalled. The SBF misleadingly focuses on the size of the number and the accounting issue, not that the hole, no matter how large, was caused by misappropriation of clients’ funds.
I could go on but let’s come up with another stunner from later in the conversation. SBF makes it look as if the tags on FTT and Solana are built based on the metrics in the SBF header:
I don’t think I would have characterized them the way I wish I had in terms of risk.
In Crisis, we called this “a sign that makes us believe.” That ended with a lot of pain.
In other words, if an able Attorney General was serious about bringing down the SBF, I suspect it wouldn’t be so hard to review the SBF’s record and show that he routinely said the wrong things, and that he’s very clever and experienced at pretending I didn’t know it for at least a little bit of the time. Showing that the SBF had a persistent indifference to the truth when it came to furthering its interests would go a long way to puncturing its claims of credulity.
As a validation, take a look at CoinDesk’s rap sheet, FTX’s Collapse Was a Crime, Not an Accident. Well-supported section headers tell the story perfectly:
Alameda Connection [they weren’t remotely “wholly separate” entities as SBF maintained to Sorkin. This is a key plank in SBF’s self-defense.]
FTT print loans and “secured” loans [“This use of an in-house asset as collateral for loans between clandestinely related entities can be best compared to the accounting fraud committed by executives at Enron in the 1990s. Those executives served as much as 12 years in prison for their crimes.’]
Alameda exempted from margin liquidation [“The exemption could be considered criminal from a number of angles. Above all, it means that FTX as a whole was fraudulently marketed.”]
FTX listings from Alameda
Huge personal loans for CEOs
“Bail-outs” for entities holding FTT’s or loans
Secret purchase of an American bank [probable misrepresentations in purchase process]
Author David Z. Morris has produced an accessible piece. And he’s angry because the press keeps buying up SBF’s “aw, shucks” show.
Hopefully, there will be enough connected victims to prevent the SBF from skating. We’ll see in time.