2 Burst results for "Sam Bankman Friedman"
Crypto Critics' Corner
"sam bankman friedman" Discussed on Crypto Critics' Corner
"And at least, you know, my Michael Lewis did not seem surprised by anything that Sam said, which kind of I should have said that before, which kind of goes to what we're talking about now, but also what you were asking earlier around whether we've learned anything super, super, super new. This is kind of the narrative that he's laid out, with the exception of some of these weird things like this naming of Alameda Research, where they're reframed for a jury. Yeah, it just goes against hasn't that video actually been entered into evidence of Sam saying what it was actually for, which was essentially bank fraud? Like I thought that that video had been entered into evidence as an exhibit. And if so, it goes like if I was a juror, I would be like, which one do I trust? The the version of Sam Bankman-Fried that feels like he doesn't have to lie about it and is just talking openly on a podcast or the one that's here under oath? Like, I know which one I'm going to believe, but I guess I'm not a juror. So luckily, I guess a more sympathetic to Sam view of this is it was more it wasn't that he directly, I think, disputed that video and why he named things the way he did. It's just that, you know, he might have also chosen Alameda because it was a town in California, and he might have also liked it better than Wireless Mouse. So that's not necessarily a lie as much as it is a very convenient, you know, excerpt of the the truth. Fair enough. Yeah. So those I do I did want to bring that up just because it seems like untrustworthy witness. And I'm I'm wondering if that is the sense that that is felt in the courtroom, maybe just from the journalists. But I assume journalists feel that way just because they they remember the apology tour that he did post collapse. But I guess I'm wondering if like there's a sense that this is the way it's coming across in court as well. Everything is going to hinge on the cross when Danielle Sassoon, the very capable prosecutor who will be asking him questions starting on Monday, has a chance to kind of dig into his testimony. And that's the most important thing. I do think, though, if we're to back up a little bit and just, you know, look at his testimony from Friday, he, in my view, did a pretty good job of explaining things clearly, coming off as sympathetic and like a kind person, if that's even a fair characterization. But like he you know, he was very upbeat. He seemed confident. He seemed poised. He didn't actually seem as scripted as some others, even though he was clearly well prepared, like he was coached, but he didn't seem to have his, you know, all of his things like word for word nailed down. I don't think he did a poor job, but it almost doesn't matter because the cross is really all of these. And I also don't think, by the way, that the jury is going to pick up on most of these little nuances and distinctions that we've been talking about here, because we've been following this for a year on top of, you know, really scrutinizing these transcripts in a way that I doubt the jury's able to do. Were there any differences between Sam Bankman-Fried's testimony and those of other people in the inner circle that you want to highlight or draw attention to? The first one that was pretty glaringly different from previous testimony centered around the, quote unquote, special privileges. I don't think that's the word that Sam ever used in his testimony, but the prosecutors used to describe these privileges that Alameda had on the FTS exchange that other market makers and customers, clients of FTX did not have. The key one being this allow negative feature, which altogether kind of allowed Alameda to withdraw infinite money, you know, not get liquidated. I don't know if that was all grouped under this allow negative thing, but it all kind of grew into this like big set of, you know, basket of capabilities for Alameda, Sam's own firm. Briefly, in the shod and Gary Wang's telling, they in 2019 implemented a version of this allow negative feature. That feature was to kind of accomplish the even in their, you know, testimony, more innocuous role of backstopping certain bad bugs or things that can happen with liquidity providers, market makers on FTX. It was like this weird kind of like fixed patch sort of a thing. Whether you believe that or whatever is besides the point. But anyway, they say it started in 2019. And then over the years, the capabilities of this, this, you know, function were expanded so much that, you know, Alameda could withdraw infinitely, pull out infinite lines of credit, so on and so forth. But anyway, that's the allow negative feature. In Sam's telling, he instructed Wang and Singh to implement a fix for a bug on the exchange, which he expected to be, you know, a sort of flag or something like that that would allow Alameda or rather FTX to take action if Alameda's balance dropped below zero. So he thought it would be a flag or an alert, he said. But, you know, his deputies went off and implemented this thing that he says is the allow negative feature. But the timeline, this was years after 2019, his timeline. I'm wondering what you think the explanation is for such a large discrepancy in the timeline, because the timeline differs by like a year plus, right? Like, how is there such a large discrepancy between what Gary Wang and Nishad Singh think and when this happened and these meetings that occurred with Sam versus what Sam recollects as happening way later and with under totally different circumstances? So he could have misremembered, which we can probably throw that one out of the way. He could have lied, like outright. He could have instructed, you know, either about the timeline or about his role. He might have directed them to do exactly what the feature ultimately allowed, which was these infinite withdraws or which is much more sympathetic. But I think it's also possible is like, I don't know, I struggle with whether this makes sense, but I do think it might be possible that there was this kind of allow negative function in the code that they did implement in 2019, which was this more innocuous thing. And that what Sam was talking about on the stand on Friday was the expansion of the capabilities of the allow negative function, not the allow negative function itself. And so there is some, you know, I think they'd be more explicit about that if that was the case. But I think you are exactly right that there was one version of it and then it got built on to form the other one. And I think that matches up with all of the timelines given so far, except for Sam pretending he didn't know when this feature was implemented, because when FTX started, Alameda Research was approximately 50 percent of the total volume was the backstop liquidity provider for any trades that went wrong. And supposedly like that was like Alameda was only supposed to then step in and it would then be covered by the Backstop Insurance Fund, which, as previously testified about, did not actually exist and was just a random number they were putting in this function for a while until the mobile coin issue, where someone was able to take out this massive position in Alameda, then as the backstop liquidity provider had to step in at an unreasonable price when they got liquidated. Sam Bankman-Fried then testified about telling Gary Wang and Nashad Singh to go in and add in additional speed bumps related to erroneous liquidation. So I think what Sam Bankman-Fried is talking about is Alameda Research's exemption from auto liquidation was, I think, added after mobile coin. But I think the allow negative feature based on all the testimony so far predates that and goes back to Alameda's institution as the primary market maker in the backstop liquidity provider for FTX. And so what changed at this point is the exemption from automatic liquidation. And it was important for Alameda Research to be exempted from automatic liquidation because they were still at this point the entire backstop liquidity provider. And so there were cases where if Alameda Research's own position was liquidated, they would end up on the bad side, on both the bad sides of that trade, having to effectively step in to fill their own false liquid, their own bad liquidation. And so by exempting Alameda Research from liquidation, you make it so Alameda Research never has to step in to fill in for Alameda Research's own bad trade. But that means the bad trade can now balloon because you've already implemented this allow negative related to all these other activities Alameda is doing. And then you end up after a variety of other bad decisions with an $8 billion hole. You just did a much more thorough and better job explaining that whole thing that I said was kind of new to me in this testimony, which was explaining the rationale behind this feature. And I actually do find that as a sort of believable thing, whether or not what he knew about things, what he directed or didn't direct, you know, all those elements of his testimony, whether those things are true. But I do think I can see a world where it was a more benign sort of a thing that came about in result, you know, of these problems with how the exchange was architected. Well, I was going to have a bit of a digression about the risk engine. I just think it's interesting, at least we who have been following this know and been following FTX since before collapse, know that this risk engine, this, you know, cross margining system was supposed to be the state of the art thing that worked on FTX and for some reason really no other major exchanges. And the fact that that was essentially false advertising, it seems at this point, that thing that you just explained, Bennett, actually undermines other pieces of, you know, Sam's case, which is that this was an upright, you know, very straightforward, trustworthy business, because if that stuff is true, then this system did not work like he advertised it to have worked. Well, yes. And like in that very same vein, in his testimony to Congress when he was effectively advocating for the DCCPA, we can discuss what he was actually doing. He talked about how he specifically said Alameda was not exempted from any of the like normal margin processes on FTX as part of his testimony before the agricultural committee or whoever it was at the time. And so like him now saying, oh, I told them to put in speed bumps related to liquidation. That's, I imagine, could come up on cross. And like, I think more directly speaking to it, we're like, there might be more benign explanations for certain decisions made like the allow negative could have been a choice made because of legitimate difficulties in moving certain assets and it may have been made with good intentions. However, my trouble with Sam Bankman freedom, whenever he starts trying to make it seem that way, is like often companies that are providing financial services are governed by a set of rules that only very barely touch on what your intentions are when you're doing certain things and very often describe what actions you're supposed to take. And at a basic level, you know, allowing your company to withdraw more assets than they have, regardless of whether or not you intend to do it or intend to do it a lot or only intend to do it for a couple of days while you send money over to Circle and Tether or whatever, your intent only matters up to a point, especially when there's eight billion missing. Absolutely. Also, one thing that I feel like isn't talked about enough or hasn't been talked about enough since Friday is we do really need to allow for the possibility or probability that many elements of the testimony that we've heard up to this point from either Gary, Nishad or Caroline and others has also been either, you know, embellished, manufactured for their own benefit. Like, it's not like Sam's the only one who has to testify in a certain way to negate his own role in what happened. I'd like to push back on that a little bit, because I think the benefit of the arrangement that the government has with those witnesses is in that if they are caught lying or if they didn't share some information that they should have with the government, they're liable to do a shit ton of prison time because the government can still get them for any of that. And so it almost makes you go like, well, they're going to they're going to give themselves up for everything that they think they're even possibly close to having committed in terms of crimes. And and I think that is where I see it as like it's hard to suggest that they're as unreliable as Sam Bankman Friedman. Well, yeah. And at a very basic level, all of them admit they committed crimes like Nishad, Gary, Caroline, Ryan. They all say I did crimes. I do want to go back to like something specific, though, which is this bug feature or this, you know, allow negative feature that we're talking about. Let's look at like the kind of like Occam's razor version of this, which is, you know, Sam, Gary and Nishad in a room talking about things. And I think it does make sense where they all kind of like had this vague sense of like how they were going to fix this bug or they were like, hey, we need to let them go more negative. Maybe it wasn't Sam who was like, hey, this is the solution. We need to do this thing. But I think it's easy to kind of like construe that conversation. However, it went down as, hey, Sam told us to do a thing. We did exactly that thing. I can't imagine that it's that simple or maybe I mean, maybe it is. But I guess what I'm saying is it's not about like, you know, it's I shouldn't say that they they it's likely that anybody outright, outright, outright lied. But I do think that there's like a way to believe and tell this story that does kind of inculcate your your own, you know, role in things. It's Nishad Singh talking about how bad he feels while buying his house. Right. It's Carolyn Ellison like being this this was all such a relief to me when I finally got to be honest about all this and all that. Right. And it's probably at some level true. They did feel bad or did feel relieved or whatever. But by presenting that story or in like Carolyn's case, framing her relationship with Sam in certain ways does, I agree, probably make certain things seem more striking. Now, just to head back to Sam's testimony and, you know, these holes that you can kind of poke by looking at past testimony, Sam makes it seem like he didn't know about this hole or the, you know, in Alameda and how it was, you know, using essentially FTX customer funds in effect until October of 2022, which was a month before it ultimately collapsed. And that goes, you know, in the telling of all the other witnesses, he had a sense that things were, you know, going in this direction at least June, as early as at least June of 2022. And that's just, you know, reconciling that statement with what we've heard from past witnesses is probably going to be a key point of focus for prosecutors. The point being, and this is why they needed those charts from Mr. Pinsley that we spoke about earlier, is they kind of want to make, you know, the prosecutors are going to want to show that Sam knew that he was drawing money. He knew about Alameda's finances and he knew that because of the levels of assets and liabilities that, you know, he had to be in effect drawing from customer funds because Alameda just did not have enough and FTX did not have enough of revenues to cover, you know, what he was drawing. Yeah, which to me means I expect we'll hear again about Alameda Research using FTX customer funds to buy back FTX equity before the series B1, before the 42069 round, because that's way before all the other things. And Carolyn already testified that that was using FTX customer funds at Sam's explicit request. So I imagine we're going to hear that in the cross. An issue that I've been coming away with that I've been noticing is that and you can scroll through the comments section of any of our videos, unfortunately, and see this is that there's this large swath of the population. I'm not sure how much is actually represented by the kind of weirdos that I interact with on Twitter and on YouTube. There's this there seems to be this belief that because of Sam's donations, because of his wealth, because of his background, because of who his parents are, because of who he knows, he's going to get off. He's not going to do any prison time. And it's hard for me to reconcile that perspective with the reality that I'm watching transpire in court. I know that you have to be open to the idea that there's a chance Sam Bankman-Fried doesn't do any prison time. But can you kind of speak to how people feel about those odds in the courtroom and after watching this day in and day out? Things are not going well for Sam in court.
Bloomberg Radio New York
"sam bankman friedman" Discussed on Bloomberg Radio New York
"New era, right? We have the worst war in 80 years, we tried to have some inflation in a modest amount over the last 25 years. Now we have inflation in spades and we can't we can't get rid of it fast enough. So there are variety of different risks that we face. There's not one overarching risk. And so I think we're going to be working through the inflation problem. We're going to be working through the interest rate cycle and we're going to be working through the commodity price cycle. And all of those things will manifest an attribute, but we go through that over the next one, two, three years from a position of absolute and relative strength, as you say. That was my conversation with co bank CEO Tom halverson from earlier this month. Now we want to keep up to date with news from all around the world that we turn to Mark crumpton here with the first word. David, thank you. The fraud case against FTX cofounders Sam bankman Friedman has been reassigned to U.S. district judge Lewis Kaplan, the switch comes after the original judge recused herself over a potential conflict of interest. U.S. district judge Ronnie Abrams stepped down from her case because her husband is a partner at law firm, Davis Polk and hardwell. She said the firm is currently representing parties that may be adverse to the preceding. In Michigan, the co leader of a plot to kidnap governor Gretchen Whitmer before the 2020 election to 16 years in prison. Adam Fox could have gotten a life sentence FBI informants helped law enforcement break up the plot before it could be carried out. Fox's lawyers says he was manipulated by the informants. China is reopening its borders to the world by removing the final COVID zero restrictions, starting January 8th, Beijing will no longer require inbound travelers to quarantine, though only have to obtain a negative COVID test within 48 hours. Meantime, the Chinese government may also reduce the frequency of reporting cases, ultimately changing to a monthly report. In South Korea, the military says it sent drones across the border into North Korea for the first time. It's an unprecedented move that followed North Korea's decision to send 5 unmanned aerial vehicles into South Korean airspace. North Korea's leader, Kim Jong-un, just opened a major political meeting to set security economic and political policy. Global news 24 hours a day on air and on Bloomberg quicktake powered by more than 2700