He already lost his whole net worth overnight ($16b) and will live in hiding with serious death threats for the rest of his life. This is no ordinary CEO switcheroo where the he walks away with a slap on the wrist and a golden handshake.

I am still not convinced that he did not steal the missing FTX client funds. So at this point it is not clear to me how much he lost or gained from this. I do hope the DOJ conduct a full investigation and trace where all the money went.

I assume all those political donations bought something :)

Let's hope some congresspeople were stupid enough to put their money into FTX.

If so, then he will be facing jail time. If not, then he is fine.

well, they're not giving the donations back, and it doesn't look like he'll have much to give in the future. Where's their motivation?

Where there is fraud there is embezzlement

Does he still hold on to the billion dollar worth Robinhood shares?

He was running a Ponzi scheme. Don't feel sorry for him.

I'm not. Just saying that he won't get away with it like other CEOs have done in the past while "taking responsibility". His punishment has already begun.

Which is what, exactly? Living in hiding?

Yes, losing his money, reputation and freedom (whether that's in hiding or in jail). He's obviously royally screwed, regardless if he goes to jail or not, and yet people are saying he walks away from this unscathed.

To be fair to the guy, he wasn’t afraid to admit it in some very public interviews. But yeah, don’t feel sorry.

> To be fair to the guy, he wasn’t afraid to admit it in some very public interviews.

I don't think brazen criminals should get a different perspective than sneaky ones; perhaps a worse characterization because they either don't recognize what they're doing is wrong, or they simply hold society in contempt.

It wasn’t a Ponzi scheme, at least based on what’s publicly known.

This is just investing with client funds, which the US learned the hard way must be carefully restricted. The US has the Glass-Steagall Act, and deposit insurance to try to prevent bank runs like this.

The investing with client funds part is probably the easiest charge but his self-description sounds Ponzi-like:

https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...

This sounds like Napoleon Dynamite type of reasoning

Me, as a kid: “the emperor’s new clothes is nonsense, nobody would go along with something that obviously wrong”

Me, after watching people sell no-hope dotcoms, dubious real estate, and cryptocurrency: “… unless they thought they could cash out before the other fools wised up”

They were talking about stuff like Celsius. I don't think FTX was itself offering yield-farming products, just letting people trade those tokens. "Yeah, the stuff people trade on my platform are probably Ponzis" is definitely not great publicity, but it's not obviously admitting to your own crimes.

>It wasn’t a Ponzi scheme, at least based on what’s publicly known.

>This is just investing with client funds...

This is just plain not true.

He had $16b in Magic Dollars(TM) and he can have the same amount in the same token tomorrow if he wants, though.

I am 100% sure he must have siphoned off some sizable part of his net worth in cash or other non-crypto assets.

He will have worked with some accountants and lawyers to move money into untouchable places. There will be someone employed to hold it for him, and dole it out in the future. Sure he will have to keep a low profile, but there will be resources.

He will probably have dispersed quite some sums to friends and family, some of that will come back to him in one way or another.

Finally, he will be able to go on the celebrity speaking circuit for quite a while...

> Finally, he will be able to go on the celebrity speaking circuit for quite a while...

Yeah, talking about the power of failure what he learned from it.

Maybe this is good - maybe it will keep the lesson of crypto alive in the public mind...

Several million dollars is a lot of money - but not sizable compared to $16B.

If he siphoned off 10-20% ($160M+)- you can bet he's going to lose it in bankruptcy proceedings.

10% is $1.6B. Only needs 1% for $160M. .1% for $16M. Which is still generationally rich. Yeah, I think he would have taken that out right?

10-20% is not $160M, it's $1.6B.

SBF personally owns a 7.6% stake in Robinhood worth ~$700m at the current price.

I stand corrected on this point. Bloomberg is reporting that SBF's Robinhood stake was apparently held through Alameda and may have been used as collateral for loans.

Lol give me a break. He will be fine and rich forever, just maybe not a billionaire. There are no real consequences when you are that wealthy.

No death threats because he had money? Have you perhaps seen the extensive list of Russian billionaires who "committed suicide" during like the past five years?

Russia is a terrorist state oligarchy with a murderous dictator. No one is actually going to kill this guy in the US. He will obviously get threats, and then reboot with a new $500mm seed round for some new scam from Marc Andreessen in a few years. Nevermind that's Adam Neumann.

Pretty likely that he has money on the side or some sort of assets that are worth a fair amount. Likely not Billions, but certainly in the Millions.

Hopefully the US Gov goes after him and forces him to pay it back to creditors/customers, similar to Trevor Milton/Nikola

When you have a net worth of 16B it's probably pretty easy to make 10's or 100's of millions disappear.

Other than resigning, what more responsibility can someone take for a professional failure?

In some circles resigning from a failed tech venture is not seen as a failure. WeWork CEO resigned and is now promoting a new fully funded company in the same space.

FTX CEO has been openly lying about the impact for a long time now, and has mismanaged billions of dollars (of other people's money). Resigning doesn't seem like a reasonable punishment.

Not to get too far off-topic, but WeWork was commercial real estate, Flow is residential:

Andreessen [of Andreessen Horowitz, investors of 350M in a company that's single asset is currently a landing page] positioned the new company as a long-awaited solution to the nation’s “housing crisis.” ... “community-driven, experience-centric service” — to explain how the new startup would “create a system where renters receive the benefits of owners.”

This sounds completely different than WeWork, which had the simple goal of changing the world, one beer-Friday at a time.

The sad part is the AZ money isn't the dumb money in this deal; that will flow in latter.

I meant that he is back to working in real estate (both WeWork and Flow are in essence real estate businesses with some tech/VC sprinkles on top).

In this case, jail.

He openly talked about how the whole thing was a Ponzi scheme.

https://youtu.be/KZYqL79GDXU?t=1277

That’s not what he’s saying in that clip.

From Levine’s column yesterday:

> “People on Twitter now are like “he admitted that FTX is a Ponzi!” but of course that’s not true. He conceded a certain validity to my claim that some crypto businesses — not his — are Ponzis. He is just in the business of trading their tokens.

“In fact, I came away from that conversation bullish on FTX and Bankman-Fried. My view was, and is, that if you talk to a crypto exchange operator and he is like “crypto is changing the world, your old-fashioned economics are just FUD, HODL,” then that’s bad. A wild-eyed crypto true believer is not the person to operate an exchange. The person you want operating an exchange is a clear-eyed trader. You want someone whose basic attitude to financial assets is, like, “if someone wants to buy and someone wants to sell, I will put them together and collect a fee.” You want someone whose perspective is driven by markets, not ideology, who cares about risk, not futurism. A certain cynicism about the products he is trading is probably healthy.”

I'm not arguing on the basis of what Levine thought of the conversation.

At the very least, it's apparent that SBF sees crypto as being heavily based on speculation that's disconnected from any actual value proposition, but he's choosing to exploit and profit from those systems. And it's now apparent that he also was engaging in speculation with user funds himself via Alameda.

A wild-eyed crypto believer might lose anywhere from a few thousand to a few million of their own money in poorly placed speculation.

A sophisticated market-maker will facilitate the loss of billions (about $10 billion in this case) from numerous people.

Which is more dangerous? A HODL who loses their savings on some speculative crypto purchase, or the next Bernie Madoff?

I don’t really agree with this.

A wild eyed Luna type can lose a lot of people’s money and is probably more likely to do so than a skeptical trader making deals. The issue with this wasn’t that general heuristic which is still true (imo), it was SBF’s decisions despite that (which were bad and extremely high risk, but different than it being a ponzi).

Pair that with an intelligent enemy looking for ways to destroy you and this is where it ends up.

That is not the comparison at all, and while I have to assume you are commenting in good faith, it is really hard to do so here.

The difference Levine is pointing out is between the type of person operating the exchange. It is not the comparison between janitor and CEO at a fortune 500 company.

A "true believer" will cause just as much (or per Levine's assertion: more) damage as a "sophesticated crypto cynicist", but one will at least understand financial fundamentals while the other brings none of the learnings from running any kind of investment or banking firm.

A "true believer" isn't able to carry out their work without a marketplace. Nobody lost money in crypto on the scale we're seeing 5 years ago.

The largely unregulated, uninsured, and opaque marketplace of crypto, facilitated by people like SBF, has been the conduit for the true believers.

If somebody says "I know you're a sucker and I'm going to take your money", (as SBF did in Levine interview) they just told you everything you need to know. You can rest assured that their other dealings are dirty, as is now coming to light for SBF.

I'm not sure why "good faith" is being brought into question, and I certainly haven't challenged the good faith of those who disagree with me. So I'm not going to address that aspect of the conversation.

>I'm not sure why "good faith" is being brought into question, and I certainly haven't challenged the good faith of those who disagree with me. So I'm not going to address that aspect of the conversation.

Per the commenting guidelines, we are expected to believe people are commenting in good faith even when they say:

>A wild-eyed crypto believer might lose anywhere from a few thousand to a few million of their own money in poorly placed speculation.

>A sophisticated market-maker will facilitate the loss of billions (about $10 billion in this case) from numerous people.

Which is either a deliberately bad comparison (akin to janitor vs CEO), or completely irrelevant in the context of what SBF was saying / what Levine thought.

A wild-eyed crypto believer would make all the same mistakes as the sophisticated trader and run the exchange into the ground while breaking laws. The sophisticated trader will typically run their business within the legal framework, while taking as much profit as possible.

But the exchange it seems was but only one constituent of a wider more complex (necessarily complicated?) web of cross funding that in no way represents the expected business practice of an exchange. Matt it seems failed to account for the bare faced lying of a deluded ideologue. Or at least someone who hid behind an ideology to excuse absurd business practices

> You want someone whose perspective is driven by markets, not ideology

That's a pretty funny statement. Markets are ideology.

Is he supposed to go the nearest federal prison and check himself in?

It's the government's job to prove crimes.

His analogy of a "box" and "cool things" happening to that is almost comical.

I hope you're trolling because this is a very large scale theft. Most of us would agree resignation is not appropriate consequence for such conduct.

I'm not trolling. So far this is just a business failure, not a crime.

I don't know much about this whole thing. It sounds likely there will be investigations, and they may prove "large scale theft" at that time. But right now resigning is the only way for him to "take responsibility".

No way, it is a crime,

When everything was going down he tweeted something on the line that everything was fine, he later deleted that but for sure there's an archive somewhere (and I'm sure Elon would be GLAD to provide that data). That's fraud, and I'm sure there's a lot more like that once the DOJ/SEC start looking around.

I like SBF, honestly, I like his personality, I don't believe he's a bad person, I could even believe (with a truckload of salt) that all of this happened without him being fully aware of what was going on. But, real is real, and I'm quite sure he will do jail time.

> No way, it is a crime

Only a court can decide that.

Stealing billions of dollars while working doesn't make it a professional failure, it's still stealing.

Whether or not he stole is for the legal system to decide, not him. At best he can pledge to cooperate with investigations, if and when they start.

I take full responsibility for stealing $10 billion and am stepping down as CEO, it has been a long journey from me having nothing to this point. I am sorry to those that lost some or all of your money.

I will no longer take part in the company and will quietly fly away on my private jet to my $50 million home where I will contemplate my next venture.

I'm not sure things will be that smooth for him. It sounds as though both DOJ and SEC are looking into this:

https://ustoday.news/both-the-doj-and-sec-are-investigating-...

Look at his connections, nothing of consequence will happen to him.

The context here is other CEOs stepping down after a fiasco, getting a massive severance check, saying they take "full responsibility". Compared to that SBF is massively screwed.

he's bankrupt and deeply in debt. Why would his "connections" stick their necks out for him? I don't know if having a dad teaching at Stanford gives you a free pass everywhere.

> he's bankrupt and deeply in debt.

is he? sounds like his various corporate frauds have destroyed a lot of companies and led to corporate bankruptcies, but what information is there about how much he scooped out before?

Well his hedge fund blew up which took down his exchange. Presumably he was broke a long time ago which is why he dipped into clients funds.

He stood to make a lot more from this working out than what the current situation permits.

?

The allegation is he moved money between companies to support his terrible “hedge” fund. Where have you seen anything at all about him not having a lot of personal money?

Because most of his wealth was in that very hedge fund, and presumably he invested every last personal dollar before declaring bankruptcy.

Or put another way, where have you seen anything at all about him having a lot of assets outside of the Alameda and FTX groups?

$500mil of robinhood stock, $250 mil of real estate in the bahamas etc.

Bloomberg Billionaires Index estimates that SBF has lost 100% of his net worth, all of which was in one way or another tied into Alameda/FTX-related firms (there was some invested in Robinhood, but it was used as collateral for Alameda-related loans.)

https://www.thestreet.com/investing/cryptocurrency/crypto-bi... (this covers the details, but isn’t paywalled.)

I wasn't aware of this before reading your comment. It looks like both of his parents actually teach at Stanford. His mother is Professor of Law:

https://en.wikipedia.org/wiki/Barbara_Fried

I'm not sure how much trouble having parents at stanford gets you out of. Maybe he can get a good lawyer but losing 10B of client funds is going to have a lot of wealthy people quite upset with him. I'd imagine anyway.

Oh I completely agree. I don't think having two parents on the faculty at Stanford helps any more than having one parent on the faculty, which is to say probably not at all here. My comment was really just meant to be parenthetical to the OPs statement.

Depending on how fast the case moves, she may end up getting to teach a course that uses her son as an example of "what not to do".

Do you believe that Bernie Maddoff lacked connections?

I will bet you cash money that this is one CEO you’ll see in prison. This is like 10x as bad as anything Elizabeth Holmes did, and as far as I know, she wasn’t tweeting real time as the walls were closing in on her.

I mean I doubt he's ever stepping foot in the US again. Dudes going into hiding and won't be seen.

Is it as bad as Holmes? Theranos had patients with incorrect medical test results, which seems different in kind that a bunch of crypto investors losing a massive amount of money.