Bankman-Fried used $100M in stolen FTX funds for political donations, US says(reuters.com)
reuters.com
Bankman-Fried used $100M in stolen FTX funds for political donations, US says
https://www.reuters.com/legal/bankman-fried-used-customer-funds-100-mln-us-political-donations-prosecutors-say-2023-08-14/
178 comments
[deleted]
guywithahat(6)
Coindesk had a good report on this...
https://www.coindesk.com/policy/2023/01/17/congress-ftx-prob...
>Congress' FTX Problem: 1 in 3 Members Got Cash From Crypto Exchange's Bosses The session began with 196 U.S. lawmakers who took direct contributions from Sam Bankman-Fried and other former FTX executives, and many of them are still trying to get rid of it.
https://www.coindesk.com/policy/2023/01/17/congress-ftx-prob...
>Congress' FTX Problem: 1 in 3 Members Got Cash From Crypto Exchange's Bosses The session began with 196 U.S. lawmakers who took direct contributions from Sam Bankman-Fried and other former FTX executives, and many of them are still trying to get rid of it.
In a just and fair world, the lawmakers elected by corrupt crypto-barons' misappropriation would be chastened. Unfortunately, we don't seem to live in that world.
“Funny, I've always believed that the world is what we make of it”
Another instance, and a nice site:
https://www.reellifewisdom.com/proactive_i_ve_always_believe...
https://www.reellifewisdom.com/proactive_i_ve_always_believe...
I think a particularly interesting part of this filing is that SBF intended to influence both Republicans and Democrats equally - all he cared about was weeding out "anti-crypto" politicians, he just funneled the money to the Dems through himself and Singh, and funneled the money through the Republicans through Salame.
It's kind of cool that even a $100m political bribe doesn't buy you immunity
Well, that $100m didn't go towards obtaining immunity, it was contributed to campaign funds for the purpose of lobbying. He wanted legislation favorable to FTX.
You can bribe a corrupt official or politician for a short period. However, unless you can blackmail or continue supporting them, they won't continue to stay bribed. Once FTX went bankrupt they lost their limited immunity to political consequences. They were too clumsy to engage in the sophisticated schemes used by other lobbyists and PACs to ensure that politicians stay "bribed."
If you want to see how a criminal organization can truly become legitimized through corruption of political structures, Uber is a great example. They managed to create a decentralized illegal Taxi company in the most public manner possible.
https://www.theguardian.com/news/2022/jul/10/uber-files-leak...
If you want to see how a criminal organization can truly become legitimized through corruption of political structures, Uber is a great example. They managed to create a decentralized illegal Taxi company in the most public manner possible.
https://www.theguardian.com/news/2022/jul/10/uber-files-leak...
We shall see where he ends up after the dust settles. Most likely on a yacht somewhere after a few months of house detention.
Seems relevant to much of the discussion here.
https://unusualwhales.com/politics/article/senate_ftx
https://unusualwhales.com/politics/article/senate_ftx
So does only the donator get punished here and not as well the recipient? Isn't it generally the case if you receive stolen goods they can be take away?
I think there should be an exception specificity for political donations where the recipient is just as much in trouble for an illegal donation as the party sending it.
I think there should be an exception specificity for political donations where the recipient is just as much in trouble for an illegal donation as the party sending it.
with regards to the second half of your comment, I suspect this is a belief coloured by your distaste for the political system in general. This is understandable, but not really fair
Yes the political donation system is horrendous, and yes both parties are as a result corrupt capitalist lapdogs to corporations and the super rich, but given that the system exists, it's hard to legally blame a party for taking a donation from what at the time seemed like a legitimate business(man).
I agree that there could and should be some form of financial retribution though. If a charity received illegal donations, surely they would have to forfeit it?
Yes the political donation system is horrendous, and yes both parties are as a result corrupt capitalist lapdogs to corporations and the super rich, but given that the system exists, it's hard to legally blame a party for taking a donation from what at the time seemed like a legitimate business(man).
I agree that there could and should be some form of financial retribution though. If a charity received illegal donations, surely they would have to forfeit it?
I agree that you should not be responsible when the donation is done legally but it appears not only did SBF use stolen funds but also paid illegal donations
Assuming we cannot prove these parties knew the funds were stolen, wouldn’t you be punishing them for something they could not have known was illegal? We may assume that individuals in these parties knew that these donations were not entirely legal (due to the splitting) but can we prove that?
Sure, in the case of parties, they’d be fine, they can pay that kind of money back, but let’s assume you donate to a charity and that charity spends that money on humanitarian aid. Your stolen 100m are now a (pretty nice, big) school in some country far away. Would it be „the right thing“ to make the charity pay that money back? Is that what the law demands? I guess that would make it even harder to run such a thing, since you always have to plan for the case where you might have to pay back donations you received… how long ago?
But then again, political parties and campaigns may need different treatment. And you also somehow want to recover these funds for the people originally owned that money. Rough call to make.
Sure, in the case of parties, they’d be fine, they can pay that kind of money back, but let’s assume you donate to a charity and that charity spends that money on humanitarian aid. Your stolen 100m are now a (pretty nice, big) school in some country far away. Would it be „the right thing“ to make the charity pay that money back? Is that what the law demands? I guess that would make it even harder to run such a thing, since you always have to plan for the case where you might have to pay back donations you received… how long ago?
But then again, political parties and campaigns may need different treatment. And you also somehow want to recover these funds for the people originally owned that money. Rough call to make.
if that's the case, and it's provable in a court of law that they knew, then yeah I agree
The whole scheme strikes me as … unsophisticated, especially for two math geniuses.
in my experience being good at maths doesn't reliably indicate you're good at anything wildly beyond maths. often some related subjects like programming, but not always
This can be said about anything. It also appears that they were good specifically at competitive math problem solving. Which one can say even more narrow area of math. Nevertheless, it does correlate with general intelligence and they were a able sell a snake oil to a bunch of investors, so some level of competence they did poses. However, just taking customers’ moneys directly and wiring it straight to execs’ bank accounts is just… too simplistic. Good old donation to a little soccer league where a politician’s spouse sits on the board has more logistics to it.
is there any evidence they're actually good at math?
> is there any evidence they're actually good at math?
Both went to MIT and Stanford respectively, then went on to be professional traders (Jane Street Capital); now, one wouldn't think that was all because of who their parents were, right? As in this only possible because of their own merit to be sure. That is how this system works, after all!
Honestly, I went to private school, and these idiots reminded me of the children of the affluent who were so irredeemably stupid that their parents will stop at nothing to hide their shame and just pay to have them have some role in a freinds company just to offload them.
There is an interview of her saying on record that she doesn't use or need anything she learned in her math degree to do what she does and man... did that come back to bite her in the ass!
Both went to MIT and Stanford respectively, then went on to be professional traders (Jane Street Capital); now, one wouldn't think that was all because of who their parents were, right? As in this only possible because of their own merit to be sure. That is how this system works, after all!
Honestly, I went to private school, and these idiots reminded me of the children of the affluent who were so irredeemably stupid that their parents will stop at nothing to hide their shame and just pay to have them have some role in a freinds company just to offload them.
There is an interview of her saying on record that she doesn't use or need anything she learned in her math degree to do what she does and man... did that come back to bite her in the ass!
the rest of that fits with entitled brats, but Jane street surprises me, I had the impression they were fairly meritocratic.
She received some honors from math competitions. And he was in math camps and such. Both have degrees either in math or physics. So yeah, they are above average for sure.
I have no idea
And nothing will fundamentally change.
title correction: over $100 million
>"9. As noted above, SAMUEL BANKMAN-FRIED, a/k/a "SBF," the defendant, also used misappropriated customer money to help fund over $100 million in political contributions "
>"9. As noted above, SAMUEL BANKMAN-FRIED, a/k/a "SBF," the defendant, also used misappropriated customer money to help fund over $100 million in political contributions "
[deleted]
and it looks like those donations will get him nowhere.
They got him far. But eventually he flew too close to the sun.
Didn't he already have some very prominent 1st amendment lawyer writing legal briefs about how not letting him intimidate witnesses was a big 1st amendment issue?
Sure, his money spends, maybe the guy would have done it for anyone who paid enough, but I suspect all these prior donations helped grease the wheel for that kind of thing, a lot.
Sure, his money spends, maybe the guy would have done it for anyone who paid enough, but I suspect all these prior donations helped grease the wheel for that kind of thing, a lot.
Yes, that lawyer was Lawrence Tribe.
> and it looks like those donations will get him nowhere.
...because there are not any more coming.
...because there are not any more coming.
We don't know that yet...
[deleted]
vxNsr(2)
koolba(1)
you are an unreasonable optimist.
Funny how because these are "donation" and "lobbying" but not "bribe" there is no consequence for the receiving party and also no recuperation of the money.
It's quite common for politicians to return money that is stolen/foreign/otherwise when they find out.
Sometimes because the law requires it, but also if they don't, the attack ad for their opponent writes itself.
Although obviously it depends on how much time has passed and whether the money should already be considered "spent". Because even if the politician wants to repay it, new donors want their money going to re-election activities, not going to repay FTX. After a period of time, you might as well be asking the television stations to return the money they received for running the campaign ads, which... isn't gonna happen.
Sometimes because the law requires it, but also if they don't, the attack ad for their opponent writes itself.
Although obviously it depends on how much time has passed and whether the money should already be considered "spent". Because even if the politician wants to repay it, new donors want their money going to re-election activities, not going to repay FTX. After a period of time, you might as well be asking the television stations to return the money they received for running the campaign ads, which... isn't gonna happen.
> but also if they don't, the attack ad for their opponent writes itself.
Does this even matter anymore? Seems like people are so tribal that they'll vote for their party no matter what, combined with lots of voter apathy makes it seem like it doesn't matter.
Does this even matter anymore? Seems like people are so tribal that they'll vote for their party no matter what, combined with lots of voter apathy makes it seem like it doesn't matter.
Your political opponent may very well be someone from your own party.
Does this even matter anymore? Seems like people are so tribal that they'll vote for their party no matter what, combined with lots of voter apathy makes it seem like it doesn't matter.
If that was true, there would be no such thing as swing states.
If that was true, there would be no such thing as swing states.
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> Because even if the politician wants to repay it, new donors want their money going to re-election activities, not going to repay FTX. After a period of time, you might as well be asking the television stations to return the money they received for running the campaign ads, which... isn't gonna happen.
Politicians should be made to pay out of their own pockets or have an insurance for this type of situation.
Politicians should be made to pay out of their own pockets or have an insurance for this type of situation.
> Politicians should be made to pay out of their own pockets
We don't want to create a system where only the rich can afford to be politicians ... or at least we don't want to make that any worse than it already is
We don't want to create a system where only the rich can afford to be politicians ... or at least we don't want to make that any worse than it already is
Well, they should know their sources and assume some responsibility, which they mostly lack these days.
Easy to say it now but there was a period there when FTX was a reputable company.
But I would be all for labelling the entire crypto industry as illegal and ensuring any donations are immediately returned. Maybe just to be safe we should add anything AI related to the list as well.
But I would be all for labelling the entire crypto industry as illegal and ensuring any donations are immediately returned. Maybe just to be safe we should add anything AI related to the list as well.
Would that make it worse? The median net worth in the senate is north of 40 million.
> Politicians should be made to pay out of their own pockets or have an insurance for this type of situation.
Why stop at politicians, though? Shouldn't everyone who accepts large sums of money be held accountable if it turns out the money was stolen? At least to some degree?
Why stop at politicians, though? Shouldn't everyone who accepts large sums of money be held accountable if it turns out the money was stolen? At least to some degree?
I think it depends on what we mean by 'held accountable.' If it means, make best effort to return the money sure. If it means more than that, probably not. If someone robbed a bank, evaded the police and donated all that money to the Salvation Army in the next county, the Salvation Army has no way of knowing the money was stolen. So the only fair thing to expect the Salvation Army to do in this situation is, make a best effort to return what they can.
Does this include line employees who worked at Google or Facebook or Microsoft if the company is found liable for doing something sketchy?
The sums sure are substantial. You can argue they know their employer was no angel, too. OK to claw back paychecks, or do we draw the line somewhere closer to actually participating in a criminal act?
The sums sure are substantial. You can argue they know their employer was no angel, too. OK to claw back paychecks, or do we draw the line somewhere closer to actually participating in a criminal act?
Does that not hold true at present?
As a straightforward instance that arises periodically, if a bank were to erroneously deposit funds into your account you’re under obligation to return the funds.
As a straightforward instance that arises periodically, if a bank were to erroneously deposit funds into your account you’re under obligation to return the funds.
I remember someone making out checks to political campaigns from various horrible organizations as a bit of a stunt.
I was surprised how many returned the checks.
I was surprised how many returned the checks.
Even so, the punishment for most crimes is more severe than merely reversing the effects of the crime.
Accepting illegitimate funds without awareness doesn't appear to be a criminal offense, based on my understanding (short of falling afoul of money laundering). The punishment typically just involves returning the funds.
Unless there's compelling evidence to definitively demonstrate their awareness of the funds' misappropriated source, it seems challenging to establish grounds for substantial punitive action in this situation.
Unless there's compelling evidence to definitively demonstrate their awareness of the funds' misappropriated source, it seems challenging to establish grounds for substantial punitive action in this situation.
> you might as well be asking the television stations to return the money they received for running the campaign ads, which... isn't gonna happen.
The PACs should have to return it and if they can't they're declared bankrupt and everyone associated with running them should be barred for 10 years from involvement in political donations in all forms.
Why are PACs lawless relative to the rest of us, do you think?
The PACs should have to return it and if they can't they're declared bankrupt and everyone associated with running them should be barred for 10 years from involvement in political donations in all forms.
Why are PACs lawless relative to the rest of us, do you think?
I suspect there will be pressure to return the money, particularly if it was through straw donors, lest anyone be associated with taking dirty, dirty money from a criminal.
100M isn't that much money for political campaigns in 2023.
100M isn't that much money for political campaigns in 2023.
Stupid question: Doesn't a (social or legal) norm to return money donated by crooks make politicians more willing to sweep their donors' misdeeds under the rug (and push judges to do the same), in order to avoid having to justify themselves?
Possibly, but the risk appears substantial for a relatively modest payoff.
If their guilt is glaringly apparent and your stance is interpreted as supportive, the blowback could be even more detrimental compared to promptly creating distance and professing unawareness of their wrongdoing, genuine or not.
The level of risk seems considerably high for an amount of money that, in the realm of campaign contributions, isn't substantial.
If their guilt is glaringly apparent and your stance is interpreted as supportive, the blowback could be even more detrimental compared to promptly creating distance and professing unawareness of their wrongdoing, genuine or not.
The level of risk seems considerably high for an amount of money that, in the realm of campaign contributions, isn't substantial.
Worse, if the money is dirty, it might give prosecutors a reason to start investigating your campaign. Many federal prosecutors are more than eager to make their name in the Justice Department by taking down a prominent public figure.
Biggest success of the US oligarchy is to convince the general population that lobbying is not bribery.
Considering this is a common belief, it’s hard to agree they’ve convinced anyone.
Have you been to a country that has actual corruption?
[deleted]
> Have you been to a country that has actual corruption?
Absolutely, I lived in E. Europe for a significant amount of time; and I almost respect them more for making it as obvious as they do. At least there isn't an air of goaded legitimacy, and everyone knows that if you just pay the bribe you can just go and live your life on as normal. Whereas in the US you are pressured to pretend it's not all that, and that questioning such a system makes you a heretic of the best system ever devised.
Seriously, it's pathetic and I just don't have the patience anymore; this is exactly what happens when Corps, Banks and Wall Street lobby to create legislation that favors them.
Absolutely, I lived in E. Europe for a significant amount of time; and I almost respect them more for making it as obvious as they do. At least there isn't an air of goaded legitimacy, and everyone knows that if you just pay the bribe you can just go and live your life on as normal. Whereas in the US you are pressured to pretend it's not all that, and that questioning such a system makes you a heretic of the best system ever devised.
Seriously, it's pathetic and I just don't have the patience anymore; this is exactly what happens when Corps, Banks and Wall Street lobby to create legislation that favors them.
You say that as if the US is free of corruption.
I have, I find it just as nuanced as the US system
I was expecting wheelbarrows of cash not having to set up a foundation!
I was expecting wheelbarrows of cash not having to set up a foundation!
The biggest failure of populists is to convince themselves that lobbying is bribery. Lobbying played a significant role in environmental regulation and civil rights. However, now that lobbying has become taboo among grass roots movements, creating a power vacuum that corporate lobbyists are happy to fill.
I don't know how it works, but bankruptcy law seems a little different? Maybe the company's new management (in bankruptcy) will try to get it back? How far back can a bankruptcy court go with clawbacks?
It is not a bribe because it is legal technically.
In Citizens United our wise Supreme Court enshrined bribery as a fundamental right. No law can be passed to stop it.
Called a right in the US, but when it happens somewhere else, particularly in developing nations, it's called bribery and the govt and politicians called corrupt.
No the two are seperate concerns.
Lobbying/donations are a fundamental part of governance in almost all countries.
Bribery is illegal in almost all countries but enforcement is mixed.
Lobbying/donations are a fundamental part of governance in almost all countries.
Bribery is illegal in almost all countries but enforcement is mixed.
That's the illusion you've been sold. Semantics.
You give someone with political power money in order to buy their support and/or influence the way they spend government money/efforts. That's what bribery is. That's what lobbying is.
You give someone with political power money in order to buy their support and/or influence the way they spend government money/efforts. That's what bribery is. That's what lobbying is.
John Stewart advocating for 9/11 first responders or you calling your Senator to tell them to support or oppose a bill would then be called what?
That technically would be lobbying but you define that was also bribery.
That technically would be lobbying but you define that was also bribery.
> John Stewart advocating for 9/11 first responders or you calling your Senator to tell them to support or oppose a bill would then be called what?
That's lobbying.
Jon Stewart supporting politician X with $1M for his re-election campaign in exchange for a 9/11 bill... that would be bribery. But in the US, this bribery is called lobbying.
That's lobbying.
Jon Stewart supporting politician X with $1M for his re-election campaign in exchange for a 9/11 bill... that would be bribery. But in the US, this bribery is called lobbying.
[deleted]
[deleted]
The 'bribe vs donation/lobbying' line in popular culture is the former iron curtain borders.
I love the timing of this: Sam is out on bail for the entire thing, basically living his life with 0 consequence for many many months.
Then one day the bribe money is under scruteny, this hits the news and within less than a day he's in actual jail for the first time.
Then one day the bribe money is under scruteny, this hits the news and within less than a day he's in actual jail for the first time.
The donations have been a central part of the story since day one.
Are you suggesting that They made him leak a witness’s diary so they could arrest him for witness tampering?
Sad to see this conspiracy stuff leaking into HN. Unfortunately I need to make fun of this wildly misinformed cruft to help prevent it taking root here.
Are you suggesting that They made him leak a witness’s diary so they could arrest him for witness tampering?
Sad to see this conspiracy stuff leaking into HN. Unfortunately I need to make fun of this wildly misinformed cruft to help prevent it taking root here.
I'm pretty confident the bribe money was under scrutiny the entire time (see campaign finance charges), and his bail was revoked for unrelated reasons.
The funds should be easy to audit and claw back from the political recipients and distribute back to the victims, right?
...right?
/S
...right?
/S
It’s not uncommon for a bankruptcy court to initiate a clawback of payments like this.
Only possible in America when it afflicts the middle class.
Yes, that is where the bankruptcy proceedings for FTX are taking place.
Bankruptcy law from other countries aside from maybe the Bahamas wouldn’t really be relevant to FTX.
Bankruptcy law from other countries aside from maybe the Bahamas wouldn’t really be relevant to FTX.
Given the political nature of the fraud, I am not confident that will happen, but I am hopeful.
Why would a bankruptcy court judge care about that? They have pretty long terms and they’re not appointed by congress.
Everyone, judges included, have their biases that they usually not aware of.
The implication you're making is that the result is essentially unknowable and also implies your opinion on this is spurious: We might as well equally assume the judge is biased against legislators and is eager to claw back the donations.
The way the judge’s biases lie and how they might affect their decisions is essentially a random unknowable variable, unless you have good information on this particular judge to support your claim.
The way the judge’s biases lie and how they might affect their decisions is essentially a random unknowable variable, unless you have good information on this particular judge to support your claim.
Given the political nature of the fraud, I am MORE confident that will happen.
https://en.wikipedia.org/wiki/Game_theory
https://en.wikipedia.org/wiki/Game_theory
Most of the recipients have already pledged to donate the money. Some have already done so.
...where do I begin.
> Most of the recipients have already pledged
"Most" have "pledged"...that does not give me as much comfort as it gives you.
> Some have already done so.
To who? Do those politicians perhaps have relationships with the orgs they donate to?
I wouldn't trust a politician as far as I can throw one. Especially in this case where they could have easily returned the money to the bankruptcy trustee.
> Most of the recipients have already pledged
"Most" have "pledged"...that does not give me as much comfort as it gives you.
> Some have already done so.
To who? Do those politicians perhaps have relationships with the orgs they donate to?
I wouldn't trust a politician as far as I can throw one. Especially in this case where they could have easily returned the money to the bankruptcy trustee.
It’ll be like Sanders wiring funds to his family’s non-profit. What a thing freedom and democracy is.
All campaign expenditures are public data. Most picked charities from the area they represent.
I'm sure FTX creditors will be happy with these choices.
I don't really understand what you're getting at.
Like if someone defrauded you and gave the money to politicians and the politicians gave the money to charities they were affiliated with instead of returning it to you I'm sure you'd be happy with that.
Put yourself in the shoes of an FTX victim. Would it give you any comfort knowing that your investment was donated to a politician's local charity so they could score political points, instead of going back to you?
Understand yet?
Understand yet?
It's not their money to donate, stolen proceeds belong to the victims. They should've given it back to FTX.
Additionally, money is fungible, so the politicians can't claim the money is "gone" after being donated, since presumably they're not bankrupt and have other money FTX can claw back.
Additionally, money is fungible, so the politicians can't claim the money is "gone" after being donated, since presumably they're not bankrupt and have other money FTX can claw back.
How easy is it to clawback money donated to a politician through a 3rd party? I am not a lawyer and don't live in the US, but I imagine that being super difficult and lengthy as a process.
Yeah, I imagine it would involve a lawsuit, so not trivial if the politician is willing to fight.
Though I'm not sure if most of the straw donors are 3rd parties, since the ones I knew about were officers of the company.
Either way, I feel that the moral action is clear, but some politicians want to still use the ill-gotten gains for their political purposes while claiming to act morally. An act which is unfortunately fooling some people.
Though I'm not sure if most of the straw donors are 3rd parties, since the ones I knew about were officers of the company.
Either way, I feel that the moral action is clear, but some politicians want to still use the ill-gotten gains for their political purposes while claiming to act morally. An act which is unfortunately fooling some people.
[deleted]
efitz(1)
Fixing the title:
US political donations used Bankman-Fried for stolen $100 mln in FTX funds
US political donations used Bankman-Fried for stolen $100 mln in FTX funds
Here is the amended indictment.
https://storage.courtlistener.com/recap/gov.uscourts.nysd.59...
"9. As noted above, SAMUEL BANKMAN-FRIED, a/k/a "SBF," the defendant, also used misappropriated customer money to help fund over $100 million in political contributions in advance of the 2022 election. At BANKMAN-FRIED's direction, and to conceal the source of the funds used for the contributions, some of the political contributions were made in the names of FTX executives, including Nishad Singh. To conceal the fact that the Alameda account containing FTX customer deposits was a source of the donations, BANKMAN-FRIED directed that money from the Alameda account be wired to these executives' personal bank accounts, and that these executives then make donations in their own names. By directing donations through Singh and another FTX executive, BANKMAN-FRIED was able to evade restrictions on certain types of political contributions, and thereby maximize FTX's political influence. He leveraged this influence, in turn, to lobby Congress and regulatory agencies to support legislation and regulation he believed would make it easier for FTX to continue to accept customer deposits and grow, which would, in turn, allow the misappropriation scheme to continue. BANKMAN-FRIED also used these connections with politicians and government officials to falsely burnish the public image of FTX as a legitimate exchange."