Thank you for replying despite understandably not wanting to get into it all again. I really appreciate it. And I do regret not finding the courage earlier to make myself the only (?) person on here to suggest that perhaps not all of the accusations are obviously true.
I do believe they knew about it. Most people do know about such things.
Do you think Caroline, Gary and Nishad lied[1] about this in their testimony then, but told the truth about everything they accused SBF of? (It’s possible. But it does seem a little cherry-picked.)
On priors, it does seem absurd to not know about it. But there also was another accounting error that made them think they had $8b less than they actually did for a while (I don’t know if it was coincidentally the same amount or somehow related). Moreover, the Alameda fall out in 2018 was sparked in part by SBF’s losing track of 10% of their transactions, only to find them again post-split. I think their accounting was just utter chaos.
Well Alameda could have not had a balance sheet mostly composed of FTT. And FTX could have not lent alameda the money in the first place. FTX could have admitted as soon as they found the mistake.
Your first point is a separate issue. The second one is not relevant to “when they discovered this mistake.”
What would have happened if FTX had admitted as soon as they found the mistake? I imagine everyone would be in much the same position as we’re in now, but they wouldn’t have had a shot at fixing everything.[2] Kaplan did not generally[3] permit the defense to talk about the legal advice/assistance SBF received lest it confuse the jury, so we don’t know what they thought their legal options were at the time.
This feels like exactly the kind of technicality that a trial would spot.
I think it did?[4] But we have no way of knowing which specific accusations members of the jury did or did not believe, just their overall verdict. So I’m curious to at least know which accusations people here believe.
Clients did not expect their money to be lent to a hedge fund.
I’m quite unsure about this one. People may say that now but it’s easy to say things like that with hindsight.[5] People knew that Alameda was not only a customer but a liquidity provider for FTX.[6][7] There were other hedge funds (not owned by SBF) who also acted as backstop liquidity providers for FTX.[8] Most of the assets on the exchange were part of the margin lending program.[9] It doesn’t look like these things worried people—it was the possibility that Alameda might be front running other customers that they expressed concern about.
They each themselves claim to have only found out about it over summer-fall 2022. None of them claimed SBF knew about it before that point and their narratives suggest that SBF only realized what might have happened when they explained it to him. Caroline’s testimony is particularly illuminating: she admitted SBF “might not know” that much of the fiat funds never made it to FTX, she couldn’t recall if she included the fiat funds when preparing scenario planning spreadsheets with SBF in 2021, the accountants she tried to hire at Alameda all left and she described her “keeping track” of Alameda’s borrows from FTX by mid-2022 as “Not necessarily carefully, but to some extent.”
Caroline even explained her reasoning for acting the way she did when she discovered their mistake: “Q. So why, given all that, did you proceed to use customer money to repay Alameda’s lenders? A. Because——I mean, because Sam told me to and because I thought that if Alameda just defaulted on its loans and went bankrupt right away, that would be really bad, and if we used customer money, at least there was some chance that we would be able to fix things somehow, that maybe Sam would be able to raise money to repay our loans.”
The best the prosecution could manage in their closing argument seems to have been “What this shows is that from June to November 2022, Alameda had taken between 8 and 12 billion, when there was at most 4 billion in the margin lending program”, which is consistent with “The funds Alameda otherwise borrowed from FTX came entirely from the margin lending program”. I find the witness for the defense on this topic a little hard to follow without access to the graph he is referencing, but he at least seems to be saying that as of November 2022, there was $6.91b in accounts that were enabled for spot margin, spot margin lending and had futures activity, with $4.54b of that in USD, ETH, BTC and Tether.
Reuters on Gary’s testimony: “Earlier on Friday, he testified about several changes Bankman-Fried asked him to make to FTX’s software code to allow Alameda to withdraw unlimited funds from the exchange. He said no other FTX users had those special privileges, which the exchange did not disclose to its investors or customers. During cross-examining on Friday afternoon by Bankman-Fried’s lawyer Christian Everdell, Wang agreed that the changes were necessary for Alameda to provide liquidity on the exchange.”
“And you recall we had testimony from Dr. Pimbley, who did an analysis of the data, and he concluded that 80 percent of the assets on FTX were margined assets used in futures trading. 80 percent are in this margin trading where customers are always borrowing other customers’ assets”
Thank you for replying despite understandably not wanting to get into it all again. I really appreciate it. And I do regret not finding the courage earlier to make myself the only (?) person on here to suggest that perhaps not all of the accusations are obviously true.
Do you think Caroline, Gary and Nishad lied[1] about this in their testimony then, but told the truth about everything they accused SBF of? (It’s possible. But it does seem a little cherry-picked.)
On priors, it does seem absurd to not know about it. But there also was another accounting error that made them think they had $8b less than they actually did for a while (I don’t know if it was coincidentally the same amount or somehow related). Moreover, the Alameda fall out in 2018 was sparked in part by SBF’s losing track of 10% of their transactions, only to find them again post-split. I think their accounting was just utter chaos.
Your first point is a separate issue. The second one is not relevant to “when they discovered this mistake.”
What would have happened if FTX had admitted as soon as they found the mistake? I imagine everyone would be in much the same position as we’re in now, but they wouldn’t have had a shot at fixing everything.[2] Kaplan did not generally[3] permit the defense to talk about the legal advice/assistance SBF received lest it confuse the jury, so we don’t know what they thought their legal options were at the time.
I think it did?[4] But we have no way of knowing which specific accusations members of the jury did or did not believe, just their overall verdict. So I’m curious to at least know which accusations people here believe.
I’m quite unsure about this one. People may say that now but it’s easy to say things like that with hindsight.[5] People knew that Alameda was not only a customer but a liquidity provider for FTX.[6][7] There were other hedge funds (not owned by SBF) who also acted as backstop liquidity providers for FTX.[8] Most of the assets on the exchange were part of the margin lending program.[9] It doesn’t look like these things worried people—it was the possibility that Alameda might be front running other customers that they expressed concern about.
They each themselves claim to have only found out about it over summer-fall 2022. None of them claimed SBF knew about it before that point and their narratives suggest that SBF only realized what might have happened when they explained it to him. Caroline’s testimony is particularly illuminating: she admitted SBF “might not know” that much of the fiat funds never made it to FTX, she couldn’t recall if she included the fiat funds when preparing scenario planning spreadsheets with SBF in 2021, the accountants she tried to hire at Alameda all left and she described her “keeping track” of Alameda’s borrows from FTX by mid-2022 as “Not necessarily carefully, but to some extent.”
Caroline even explained her reasoning for acting the way she did when she discovered their mistake: “Q. So why, given all that, did you proceed to use customer money to repay Alameda’s lenders? A. Because——I mean, because Sam told me to and because I thought that if Alameda just defaulted on its loans and went bankrupt right away, that would be really bad, and if we used customer money, at least there was some chance that we would be able to fix things somehow, that maybe Sam would be able to raise money to repay our loans.”
The one exception was around lawyers drafting FTX’s document retention policy.
The best the prosecution could manage in their closing argument seems to have been “What this shows is that from June to November 2022, Alameda had taken between 8 and 12 billion, when there was at most 4 billion in the margin lending program”, which is consistent with “The funds Alameda otherwise borrowed from FTX came entirely from the margin lending program”. I find the witness for the defense on this topic a little hard to follow without access to the graph he is referencing, but he at least seems to be saying that as of November 2022, there was $6.91b in accounts that were enabled for spot margin, spot margin lending and had futures activity, with $4.54b of that in USD, ETH, BTC and Tether.
I really appreciated So8res’ mindfulness of things like this in their reflections on SBF.
“Alameda’s role as a market maker on FTX was described in documents that FTX put out to the public, right? [Gary:] Yes.”
Reuters on Gary’s testimony: “Earlier on Friday, he testified about several changes Bankman-Fried asked him to make to FTX’s software code to allow Alameda to withdraw unlimited funds from the exchange. He said no other FTX users had those special privileges, which the exchange did not disclose to its investors or customers. During cross-examining on Friday afternoon by Bankman-Fried’s lawyer Christian Everdell, Wang agreed that the changes were necessary for Alameda to provide liquidity on the exchange.”
“Who are these backstop liquidity providers? [Gary:] These are typically hedge funds on trade on FTX.”
“And you recall we had testimony from Dr. Pimbley, who did an analysis of the data, and he concluded that 80 percent of the assets on FTX were margined assets used in futures trading. 80 percent are in this margin trading where customers are always borrowing other customers’ assets”