To be fair to the Guardian, the article is citing those allegations to the complaint filed against Lightcone and related entities in bankruptcy court.
Here are relevant quotes from the complaint (click here and search for 24-50066)
[para 43] … This address is the location of the Rose Garden Inn, a hotel purchased by Lightcone RG in the fall of 2022, in part using funds received from FTX Foundation.
[para 47] On July 13, 2022, and August 18, 2022, FTX Foundation caused payments of $500,000 each to be wired from an account held by North Dimension to a title company as an initial deposit for Lightcone RG’s acquisition of the Rose Garden Inn. Lightcone RG closed on the purchase of the hotel on or about November 4, 2022. Although these transfers were intended as a loan to be re-paid once the financing for the Rose Garden Inn closed, the Debtors records do not indicate that CFAR or Lightcone ever repaid this $1 million “loan.”
[para 49] On October 3, 2022, FTX Foundation approved a grant of $1,500,000 to Lightcone, stipulating that the funds “must be spent for charitable purposes to support the project ‘General Support for Lightcone.’” The grant was paid in a series of 10 transfers made on October 3, 2022 from an account held by FTX Foundation. Upon information and belief, a material portion of the transfers was used by CFAR to fund Lightcone and the acquisition and renovation of the Rose Garden Inn.
[Note: Upon information and belief is lawyer-speak for we are guessing that . . . . But that’s usually considered OK in the context of a complaint, because the plaintiff hasn’t had a chance to dig through the defendant’s records, depose their officers, and otherwise prove up their case.]
Turning to the article:
But recentlyfiledfederalcourtdocumentsallegethat in the months before the collapse of Sam Bankman-Fried’s FTX crypto empire, he and other company insiders funnelled almost $5m to Lightcone, including $1m for a deposit to lock in the Rose Garden deal.
On 13 July and 18 August 2022, according to the complaint, the FTX Foundation also wired two payments of $500,000 each to a title company as a deposit for Lightcone RG’s purchase of the Rose Garden Inn. The complaint says these were intended as a loan but there is no evidence that the $1m was repaid.
Then, on 3 October, the FTX Foundation approved a $1.5m grant to Lightcone Infrastructure, according to FTX trustees.
The complaint alleges that Lightcone got another $20m loan to fund the Rose Garden Inn purchase from Slimrock Investments Pte Ltd, a Singapore-incorporated company owned by Estonian software billionaire, Skype inventor and EA/rationalism adherent Jaan Tallinn. This included the $16.5m purchase price and $3.5m for renovations and repairs.
(emphases mine).
These statements seem at least generally consistent with the complaint at first glance. Could someone point out where they are not?
I think it’s generally fair for media outlets to report what is being alleged in complaints filed in litigation of public importance. This isn’t a self-represented person alleging that the U.S. government is holding Elvis captive. This is a serious adversary complaint by a serious law firm, that is subject to the norms and sanctions of Bankruptcy Rule 8011.
The complaint may be wrong, of course—many complaints ultimately are show to be, or are at least shown to be unproven. But money is fungible, it is undisputed that one transfer from an FTX source was somehow related to the Rose Garden Inn, and it it appears that at least some significant FTX funding was legally unrestricted. I do not think the Guardian was obliged not to report the allegations because Lightcone denied them, nor was it obliged to conduct a forensic audit of Lightcone’s books before reporting on what was alleged in a public court complaint.
I believe the estate has a strategic litigation reason for claiming that FTX money was involved with the RG Inn, and so I would temper any credence in the allegations in light of that angle. But what’s sauce for the goose is for the gander as well—Lightcone may have a countervailing strategic litigation reason for denying a connection.
These statements seem at least generally consistent with the complaint at first glance. Could someone point out where they are not?
Sure, they hedged in some places. But the literal title just states it outright:
Sam Bankman-Fried funded a group with racist ties.
Now I know people often say that writers do not choose their titles. But the Guardian as a newspaper did, so I think they can fairly be criticized for it, and somehow I doubt the author registered any objection to the title.
Nor did the article in any way alert the reader, likely less knowledgeable about bankruptcy procedures than you, about the potential fallibility of bankruptcy complaints, or the strategic issues involved. Even after the corrections made to the article, they wait until the 10th paragraph to mention the fact Habryka denies it, and not until the 50th paragraph do we learn that he presented evidence the allegations are false.
Agreed that there are significant problems with the article as a whole. My reaction was specific to the statements about the finances of the RG Inn purchase and renovation.
One major crux for me is whether the Guardian actually sent a request for comment to Habryka. If they didn’t, that would update my view of the fairness of the representations downward significantly. If they did—and the internet ate the e-mail somehow—then the allegations in the complaint were uncontested on the evidence before them despite having given Lightcone an opportunity to respond. Not commenting is the ordinary response where litigation is pending, so there would have been nothing to clue the Guardian in that the lack of response was due to technological failure.
Although the ordinary reader doesn’t have an attorney’s skeptical eye in reading complaints, it is clear enough that the complaint was written in an attempt to get a court to command Lightcone et al. to fork over ~$5MM to the plaintiffs. To me, that does put the reader on notice that the complaint may take a one-sided perspective and include copious amounts of spin. Does anyone expect that they will see truth-seeking behavior out of (at least!) ordinary private litigants?
To be fair to the Guardian, the article is citing those allegations to the complaint filed against Lightcone and related entities in bankruptcy court.
Here are relevant quotes from the complaint (click here and search for 24-50066)
[Note: Upon information and belief is lawyer-speak for we are guessing that . . . . But that’s usually considered OK in the context of a complaint, because the plaintiff hasn’t had a chance to dig through the defendant’s records, depose their officers, and otherwise prove up their case.]
Turning to the article:
(emphases mine).
These statements seem at least generally consistent with the complaint at first glance. Could someone point out where they are not?
I think it’s generally fair for media outlets to report what is being alleged in complaints filed in litigation of public importance. This isn’t a self-represented person alleging that the U.S. government is holding Elvis captive. This is a serious adversary complaint by a serious law firm, that is subject to the norms and sanctions of Bankruptcy Rule 8011.
The complaint may be wrong, of course—many complaints ultimately are show to be, or are at least shown to be unproven. But money is fungible, it is undisputed that one transfer from an FTX source was somehow related to the Rose Garden Inn, and it it appears that at least some significant FTX funding was legally unrestricted. I do not think the Guardian was obliged not to report the allegations because Lightcone denied them, nor was it obliged to conduct a forensic audit of Lightcone’s books before reporting on what was alleged in a public court complaint.
I believe the estate has a strategic litigation reason for claiming that FTX money was involved with the RG Inn, and so I would temper any credence in the allegations in light of that angle. But what’s sauce for the goose is for the gander as well—Lightcone may have a countervailing strategic litigation reason for denying a connection.
Sure, they hedged in some places. But the literal title just states it outright:
Now I know people often say that writers do not choose their titles. But the Guardian as a newspaper did, so I think they can fairly be criticized for it, and somehow I doubt the author registered any objection to the title.
Nor did the article in any way alert the reader, likely less knowledgeable about bankruptcy procedures than you, about the potential fallibility of bankruptcy complaints, or the strategic issues involved. Even after the corrections made to the article, they wait until the 10th paragraph to mention the fact Habryka denies it, and not until the 50th paragraph do we learn that he presented evidence the allegations are false.
Agreed that there are significant problems with the article as a whole. My reaction was specific to the statements about the finances of the RG Inn purchase and renovation.
One major crux for me is whether the Guardian actually sent a request for comment to Habryka. If they didn’t, that would update my view of the fairness of the representations downward significantly. If they did—and the internet ate the e-mail somehow—then the allegations in the complaint were uncontested on the evidence before them despite having given Lightcone an opportunity to respond. Not commenting is the ordinary response where litigation is pending, so there would have been nothing to clue the Guardian in that the lack of response was due to technological failure.
Although the ordinary reader doesn’t have an attorney’s skeptical eye in reading complaints, it is clear enough that the complaint was written in an attempt to get a court to command Lightcone et al. to fork over ~$5MM to the plaintiffs. To me, that does put the reader on notice that the complaint may take a one-sided perspective and include copious amounts of spin. Does anyone expect that they will see truth-seeking behavior out of (at least!) ordinary private litigants?