These are very sound, reasonable points. Agreed that the allegation that he repeatedly raised Alameda’s line of credit, and its ability to carry negative balances, seems troubling and inconsistent with his claims that, “I had no idea.” But complaints always sound bad. Hard to know what to make of the story until we’ve heard the other side.
I also would feel more convinced if they stated in the complaint something like the following, “When other employees raised concerns that turning off risk controls for Alameda would be unfair and fraudulent, Bankman-Fried responded, ‘I don’t care if it’s dishonest. We need to make money.’ ”
Complaints don’t have to go into that level of detail, but given the public nature of this prosecution, if I were the USAtty, I would have chosen to do so. The other side will get this evidence eventually, anyways, because it’s legally required discovery. And it will build more public confidence in the prosecution—that it is a legitimate prosecution rather than mob mentality—if they show that they have clear evidence of fraud.
If they have evidence of this sort and are hiding the ball, the best explanation to me is that they are trying to soft pedal their witnesses, to prevent them from backing out of their commitment to provide testimony.
This updates me to 90-10 fraud. Sophisticated parties generally don’t plead guilty to crimes they did not commit, and both Ellison and Wang are well-represented. I was probably overly optimistic with earlier predictions, perhaps in part due to positive personal interactions with Sam.
Very sad for everyone involved.