Putting aside the circumstances specific to SBF/FTX (being in the Bahamas, involving crypto, SBF's political connections, etc), there's not much reason to expect that SBF should have been arrested 5-6 weeks after FTX's collapse:
- Enron blew up in Dec. 2001. It wasn't until mid-July 2004 that Jeffrey Skilling and Kenneth Lay were finally arrested.
- The WSJ expose on Theranos was in 2015, Holmes wasn't indicted until 2018.
- Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.
Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.
Whether SBF is getting exceptionally soft treatment will be easier to discern in retrospect, but it might be many months or even years before he's indicted.
Just another data point. Billy McFarland was arrested by FBI agents Monday following the Fyre Festival for defrauding investors. He did not confess prior to his arrest.
Billy raised $20m with fake financials. SBF raised close to a $1B, and I’m sure he didn’t disclose the fact that customer deposits flowed to a hedge fund he controlled exclusively.
Harm caused to consumers and investors is just as obvious, if not more obvious in SBF’s case, when compared to Billy’s festival.
That's not quite true, there's plenty of precedent for fast prosecution. As an unfortunate example, take the Aaron Swartz case:
- September 25, 2010: Swartz begins using MIT network to pull JSTOR articles.
- Throughout September through December, a cat-and-mouse game ensues where JSTOR blocks access to certain MIT IPs, and then downloading starts again from a different range.
- January 5, 2011: MIT locates the laptop in a closet that Swartz had been using.
- January 6, 2011: Aaron Swartz is arrested.
- July 11, 2011: Swartz is indicted by a federal grand jury.
Additional indictments followed in November 2011 and September 2012. In Swartz's case, the judicial apparatus moved swiftly. As far as I understand, law enforcement became involved in late December 2010 or early January 2011. The timeline to arrest and indictment was short.
I would expect to see a reasonably quick (i.e. on the order of months) indictment of SBF. While other posters are correct to point out that there's a huge morass of complexity and murkiness around FTX/Alameda, my view is that this creates not one, but several cases -- some of them very straightforward and where I'd surely expect the DOJ to put a preliminary case together in a few months.
> Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.
Not only did he confess, saying it's "basically a giant Ponzi scheme," he also said that he planned to distribute the remaining $200-$300M in funds to family, friends, and employees in the next week.
This feels like the judicial equivalent of a product manager asking an engineer why hasn't the feature been shipped yet. Everyone's been talking about the PRD for over a week!
One thing about SBF and the FTX debacle is the record keeping and overall story seems incredibly confused and incomplete.
That a crime occurred seems very certain, but which exact crime is a lot less clear, and until a lot of digging and cross referencing of records happens, that’s likely to continue to be the case. To arrest, they need to be able to identify a specific crime with identified specific elements in a specific jurisdiction.
It seems like they have had an equivalent of a dump truck load of legos dropped in their lap, and it won’t be hard to assemble a Lego airplane out of it (probably), but yikes.
This is basically what the OP is saying: it's not something specific to SBF or related to his political connections, but a more general issue in prosecuting white-collar crimes.
> Madoff was arrested after he confessed privately to his own family
Including stating his imminent intent to surrender to authorities, he also admitted to massive fraud when interviewed by the FBI immediately after that, and before the arrest.
It would be nice if things could go a little faster. 3 years are a significant percentage of the average remaining life of an adult. The onus should be on the legal system to hurry up a little and streamline the process; these 3 years are quite unpleasant if you are accused of a crime, and have to wait and prepare for a trial, no? If you are guilty the time should be counted as served sentence (maybe at 50%), the innocent should be compensated for unreasonable extra waiting time.
> Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.
This doesn't seem like a good example. The way I understood the story, Shkreli ran an effort that collapsed. Then, he ran another effort that was very successful. Then, he took money from the successful effort and used it to pay back everyone who invested in the flop.
By that accounting, it doesn't really matter when the flop collapsed, because at that point he hadn't done anything wrong.
SBF will NOT go to jail. He is too politically connected and even his on/off gf is very deeply politically connected to MIT and other politicians. At this point its extremely naive to believe that he might get something more than a slap on the wrist, even if that.
He was on the same event with Janet Yellen whose signature will be on all US currencies.
1. Sam Bankman Fried is in the Bahamas
2. Sam Bankman Fried was Tether’s biggest customer and banked with Deltec, Tether’s bank
3. The attorney general of the Bahamas, the man with the power to arrest Sam, is Deltec’s former lawyer
The US system is probably content to watch while Sam confesses, but they can’t directly arrest him and Sam appears to have captured the local judicial apparatus.
"At the risk of stating the obvious, the reason Madoff was arrested so quickly is because he confessed to every element of criminal fraud — including both the underlying scheme and his criminal intent. This meant that the FBI had both that confession and highly potent, admissible evidence of guilt in the form of testimony from his adult children (who had no apparent axe to grind)."
Right, I mean, I'm not saying he's not guilty, but does anyone at this point really understand it deeply enough to file an arrest warrant? I understand the impatience emotionally, but not logically.
There are high-ranking government officials openly insider trading without any investigations. We have a woman who's been sentenced for sexual trafficking of minors to virtually "nobody in particular". We now have multiple massive crypto scams go completely over everyone's head because it's "internet nerd money".
This complete inaction on behalf of authorities is really starting to feel like any actual wrongdoing assumed by a normal person is just a whacky conspiracy theory that gets swept under the rug because nobody is getting punished for anything when the trail seemingly leads to "the establishment" or whatever you might call it. I mean, I feel a little kooky just typing all of this out.
US prosecutors don't want to get an indictment until they have enough info for a conviction. If they indict prematurely, the perp may get an acquittal. They only get one shot. That's what "double jeopardy" is about.
What ought to be the easy win here for prosecutors is theft, in the form of diversion of client funds. That's most likely to apply to FTX.us. Now, if FTX was registered as a "national securities exchange", or a broker/dealer, under US law, that would definitely apply. Without that, the jurisdiction issues are worse.
The US is corrupt but not that corrupt. There is separation of powers between congress and the DOJ. And even within the executive there are firewalls between the politicians and the prosecutors.
He is a an exceedingly large donor to the establishment, especially to the party currently in charge (matters not which one). With his connections, he is in the different tier. No judgement here on whether it’s good or bad.
Complexity is an enabling friend for criminals and the incompetent. And lobbyists. The executive branch has got work with the legislative branch to eliminate ways to draw out prosecution to play for time.
Second, consider this comment filed in the original article:
"He hasn't been prosecuted yet because he was a major contributor to the democrat party."
Another comment made reference to his alleged Jewish heritage.
Beyond this unwarranted untrue generalization, there's an interesting underlying emotional component to the hypercritical hyper divide in many big stories like this: self created, self imagined victimization. When we contextualize the world this way we see ourselves as victims from which we manufacture moral outrage, virtue signaling, and even a kind of perverse machismo that one had the courage to call out the truth eg he's a democratic funder and the rules don't apply to him ...but they do to us the hardworking guys trying to do the right thing.
Folks, it's a dead end. The linked article I think is much more helpful and insightful.
The real world doesn’t work like Law and Order. There will be an investigation before a grand jury. Evidence will be collected and a case built. Evidence and witnesses will be subpoenaed.
At the end of that will come a criminal indictment (unless the grand jury declined to issue an indictment, which is rare).
At that point the investigation is over. You don’t indict then build a case. Federal prosecutions don’t work that way.
This is a complicated case because it involves a lot of money, a tenuous paper trail, lots of communications and several jurisdictions. SBF may need to be extradited and whatever court hears that case will need a strong case. A failure to extradite Matt effectively kill the whole case.
This fraud is so egregious that the US government won’t let this stand. Stealing customer assets is as open and shut as a case gets.
Could you ELI5: what US federal crime(s) can one reasonably suspect SBF of having committed?
Also, how likely is it that he will never be convicted of violating US federal laws? (For any of the numerous possible reasons: he never did anything wrong, or it's too hard to prove, or US lacks jurisdiction, or due to political connections, or prosecutors don't prioritize this type of cases, etc.)
It seems that the discussions about the prosecution of SBF all assume that the U.S. will take the lead in prosecuting him, but couldn't he also face fraud charges in any of the countries where FTX operated? I hope that prosecutors in all of these countries are investigating this matter.
I hear a lot of people in the crypto sphere talk about regulation being a bad thing. The reality is that most regulation aims at financial institutions such as these while also protecting the consumer.
Will additional regulation have a negative effect on the value of crypto? It's likely. However, the tech itself will continue to provide value to those who use it to circumvent the banking system. For instance, you can still exchange coins and store them in cold, personal wallets.
The fallout of this collapse will be significant and I hope what emerges thereafter will be a more sensible approach to crypto and more stable value.
I’ve always imagined that piss enough people off like SBF did would increase your chances of accidentally falling down the stairs, or for it to happen to those around you (pay us first or we start on your loved ones).
To be clear, I don’t wish death on SBF, but presumably at least some of the people with money are dangerous. The case of Melissa caddick in aus (stole 40m, disappeared, only her foot was found) seems similar, but currently there’s no evidence of foul play.
From having been lawyer-adjacent, I have one thing to contribute:
Lawyers are pathologically risk-adverse
I use that adjective deliberately. Their favorite phrase is "out of an abundance of caution" which means "I can't think of any reason why I must do this, so I won't."
Cynicism. But to go out on a limb and get your ass kicked by his high-priced lawyers could be career-ending for them. Or rather, their career would become "chasing ambulances."
He hasn't been arrested yet because of one of the reasons below.:
- It's easier for the government to hunt down $600+ transactions instead of trying to navigate their own obtuse, complicated tax laws - wonder if that's intentional, but that's a tangent that doesn't need to be explored
- SBF donated millions of dollars to DNC causes and (SBF-admitted, which ANYBODY should take with a grain of salt since the guy's a sneaky little liar) to RNC causes. Why would politicians rush or push to prosecute someone who gave or could give them more money in the future?
- SBF has family that's tied to major political movements (I believe his mom runs/works for/with a larger financing arm of the DNC).
- It simply takes a long time for the evidence to be gathered, put on display, and have him sentenced/found guilty.
It is _VERY_ suspicious that most media outlets are being nice and trying to whitewash this into obscurity. The dude "LOST" 1-2 billion dollars.
SBF should be under witness protection, at the very least - if not jailed until trial.
The facetious, compulsively lying tech bro who only says "I'm sorry" after literally stealing investors' money should quite literally be barred from seeing the light of day ever again.
Not sure if SBF decided to run this racket for a self-corrupted version of "citizen justice" against a broken and unfair economic system, but he sure harmed a lot of innocent people in the crossfire if that was the intent.
I wouldn't be surprised if he's able to disappear from the eyes of the public due to the always-corporately-manipulated media conglomerates.
> At the risk of stating the obvious, the reason Madoff was arrested so quickly is because he confessed to every element of criminal fraud…
From a European perspective, this is strangely backwards: Madoff confessed and was fully cooperative, hence, there was no need to deprive him of freedoms without a process. In the SBF/FTX affair, on the other hand, there are no signs of full cooperation and there's some danger of obstruction of justice and tampering with potential evidence. (Which should be, apart from risk of recurrence and/or acute danger, the only reason for depriving anyone of granted freedoms without a due process.)
Short answer is, like anything in these cases, it has complications and an investigation unit is needed first in order to collect data and evidence, assess which, if any, laws were broken and file an appropriate warrant for arrest. Until that process happens, "innocent until proven guilty" applies here. Emphasis on the "proven" part as that is how our justice system is intended to be. Which also means "not fast"
[+] [-] danso|3 years ago|reply
- Enron blew up in Dec. 2001. It wasn't until mid-July 2004 that Jeffrey Skilling and Kenneth Lay were finally arrested.
- The WSJ expose on Theranos was in 2015, Holmes wasn't indicted until 2018.
- Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.
Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.
Whether SBF is getting exceptionally soft treatment will be easier to discern in retrospect, but it might be many months or even years before he's indicted.
[+] [-] ktorvald|3 years ago|reply
Billy raised $20m with fake financials. SBF raised close to a $1B, and I’m sure he didn’t disclose the fact that customer deposits flowed to a hedge fund he controlled exclusively.
Harm caused to consumers and investors is just as obvious, if not more obvious in SBF’s case, when compared to Billy’s festival.
https://youtu.be/pNS1khHWTmI
[+] [-] loeber|3 years ago|reply
- September 25, 2010: Swartz begins using MIT network to pull JSTOR articles.
- Throughout September through December, a cat-and-mouse game ensues where JSTOR blocks access to certain MIT IPs, and then downloading starts again from a different range.
- January 5, 2011: MIT locates the laptop in a closet that Swartz had been using.
- January 6, 2011: Aaron Swartz is arrested.
- July 11, 2011: Swartz is indicted by a federal grand jury.
Additional indictments followed in November 2011 and September 2012. In Swartz's case, the judicial apparatus moved swiftly. As far as I understand, law enforcement became involved in late December 2010 or early January 2011. The timeline to arrest and indictment was short.
I would expect to see a reasonably quick (i.e. on the order of months) indictment of SBF. While other posters are correct to point out that there's a huge morass of complexity and murkiness around FTX/Alameda, my view is that this creates not one, but several cases -- some of them very straightforward and where I'd surely expect the DOJ to put a preliminary case together in a few months.
[+] [-] jonas21|3 years ago|reply
Not only did he confess, saying it's "basically a giant Ponzi scheme," he also said that he planned to distribute the remaining $200-$300M in funds to family, friends, and employees in the next week.
[+] [-] madrox|3 years ago|reply
[+] [-] lazide|3 years ago|reply
That a crime occurred seems very certain, but which exact crime is a lot less clear, and until a lot of digging and cross referencing of records happens, that’s likely to continue to be the case. To arrest, they need to be able to identify a specific crime with identified specific elements in a specific jurisdiction.
It seems like they have had an equivalent of a dump truck load of legos dropped in their lap, and it won’t be hard to assemble a Lego airplane out of it (probably), but yikes.
[+] [-] jasonhansel|3 years ago|reply
[+] [-] dragonwriter|3 years ago|reply
Including stating his imminent intent to surrender to authorities, he also admitted to massive fraud when interviewed by the FBI immediately after that, and before the arrest.
SBF ain't in the same place as Madoff.
[+] [-] UweSchmidt|3 years ago|reply
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] Waterluvian|3 years ago|reply
[+] [-] thaumasiotes|3 years ago|reply
This doesn't seem like a good example. The way I understood the story, Shkreli ran an effort that collapsed. Then, he ran another effort that was very successful. Then, he took money from the successful effort and used it to pay back everyone who invested in the flop.
By that accounting, it doesn't really matter when the flop collapsed, because at that point he hadn't done anything wrong.
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] quickthrower2|3 years ago|reply
[+] [-] cabaalis|3 years ago|reply
[+] [-] tmaly|3 years ago|reply
[+] [-] fatneckbeardz|3 years ago|reply
[+] [-] jackmott|3 years ago|reply
[deleted]
[+] [-] ShivShankaran|3 years ago|reply
He was on the same event with Janet Yellen whose signature will be on all US currencies.
[+] [-] godmode2019|3 years ago|reply
He was convicted on a technically by telling early investors that he already had investors. When at that point his start up had none.
[+] [-] graeme|3 years ago|reply
1. Sam Bankman Fried is in the Bahamas 2. Sam Bankman Fried was Tether’s biggest customer and banked with Deltec, Tether’s bank 3. The attorney general of the Bahamas, the man with the power to arrest Sam, is Deltec’s former lawyer
The US system is probably content to watch while Sam confesses, but they can’t directly arrest him and Sam appears to have captured the local judicial apparatus.
[+] [-] mikkergp|3 years ago|reply
Right, I mean, I'm not saying he's not guilty, but does anyone at this point really understand it deeply enough to file an arrest warrant? I understand the impatience emotionally, but not logically.
[+] [-] sakopov|3 years ago|reply
This complete inaction on behalf of authorities is really starting to feel like any actual wrongdoing assumed by a normal person is just a whacky conspiracy theory that gets swept under the rug because nobody is getting punished for anything when the trail seemingly leads to "the establishment" or whatever you might call it. I mean, I feel a little kooky just typing all of this out.
[+] [-] SoftTalker|3 years ago|reply
[+] [-] Animats|3 years ago|reply
What ought to be the easy win here for prosecutors is theft, in the form of diversion of client funds. That's most likely to apply to FTX.us. Now, if FTX was registered as a "national securities exchange", or a broker/dealer, under US law, that would definitely apply. Without that, the jurisdiction issues are worse.
[1] https://www.justice.gov/usao-mdtn/pr/former-mid-state-securi...
[+] [-] wmf|3 years ago|reply
[+] [-] soumyadeb|3 years ago|reply
https://twitter.com/RepMaxineWaters/status/15986938112528752...
(For folks who don't know, Maxine is a congresswoman sitting on U.S. House Committee on Financial Services)
[+] [-] gjsman-1000|3 years ago|reply
Now: "SBF, would you join us for tea and coffee at a cordial executive meeting?"
[+] [-] tedunangst|3 years ago|reply
[+] [-] smcl|3 years ago|reply
[+] [-] guelo|3 years ago|reply
[+] [-] warinukraine|3 years ago|reply
[+] [-] NelsonMinar|3 years ago|reply
[+] [-] g42gregory|3 years ago|reply
[+] [-] scrubs|3 years ago|reply
Second, consider this comment filed in the original article:
"He hasn't been prosecuted yet because he was a major contributor to the democrat party."
Another comment made reference to his alleged Jewish heritage.
Beyond this unwarranted untrue generalization, there's an interesting underlying emotional component to the hypercritical hyper divide in many big stories like this: self created, self imagined victimization. When we contextualize the world this way we see ourselves as victims from which we manufacture moral outrage, virtue signaling, and even a kind of perverse machismo that one had the courage to call out the truth eg he's a democratic funder and the rules don't apply to him ...but they do to us the hardworking guys trying to do the right thing.
Folks, it's a dead end. The linked article I think is much more helpful and insightful.
[+] [-] fear_and_coffee|3 years ago|reply
[deleted]
[+] [-] jmyeet|3 years ago|reply
At the end of that will come a criminal indictment (unless the grand jury declined to issue an indictment, which is rare).
At that point the investigation is over. You don’t indict then build a case. Federal prosecutions don’t work that way.
This is a complicated case because it involves a lot of money, a tenuous paper trail, lots of communications and several jurisdictions. SBF may need to be extradited and whatever court hears that case will need a strong case. A failure to extradite Matt effectively kill the whole case.
This fraud is so egregious that the US government won’t let this stand. Stealing customer assets is as open and shut as a case gets.
[+] [-] _cs2017_|3 years ago|reply
Also, how likely is it that he will never be convicted of violating US federal laws? (For any of the numerous possible reasons: he never did anything wrong, or it's too hard to prove, or US lacks jurisdiction, or due to political connections, or prosecutors don't prioritize this type of cases, etc.)
[+] [-] stefan_|3 years ago|reply
[+] [-] olalonde|3 years ago|reply
[+] [-] rcurry|3 years ago|reply
[+] [-] fundad|3 years ago|reply
[+] [-] ppeetteerr|3 years ago|reply
Will additional regulation have a negative effect on the value of crypto? It's likely. However, the tech itself will continue to provide value to those who use it to circumvent the banking system. For instance, you can still exchange coins and store them in cold, personal wallets.
The fallout of this collapse will be significant and I hope what emerges thereafter will be a more sensible approach to crypto and more stable value.
[+] [-] hsbauauvhabzb|3 years ago|reply
To be clear, I don’t wish death on SBF, but presumably at least some of the people with money are dangerous. The case of Melissa caddick in aus (stole 40m, disappeared, only her foot was found) seems similar, but currently there’s no evidence of foul play.
[+] [-] AlbertCory|3 years ago|reply
Lawyers are pathologically risk-adverse
I use that adjective deliberately. Their favorite phrase is "out of an abundance of caution" which means "I can't think of any reason why I must do this, so I won't."
Cynicism. But to go out on a limb and get your ass kicked by his high-priced lawyers could be career-ending for them. Or rather, their career would become "chasing ambulances."
[+] [-] segmondy|3 years ago|reply
[+] [-] scohesc|3 years ago|reply
- It's easier for the government to hunt down $600+ transactions instead of trying to navigate their own obtuse, complicated tax laws - wonder if that's intentional, but that's a tangent that doesn't need to be explored
- SBF donated millions of dollars to DNC causes and (SBF-admitted, which ANYBODY should take with a grain of salt since the guy's a sneaky little liar) to RNC causes. Why would politicians rush or push to prosecute someone who gave or could give them more money in the future?
- SBF has family that's tied to major political movements (I believe his mom runs/works for/with a larger financing arm of the DNC).
- It simply takes a long time for the evidence to be gathered, put on display, and have him sentenced/found guilty.
It is _VERY_ suspicious that most media outlets are being nice and trying to whitewash this into obscurity. The dude "LOST" 1-2 billion dollars.
SBF should be under witness protection, at the very least - if not jailed until trial.
The facetious, compulsively lying tech bro who only says "I'm sorry" after literally stealing investors' money should quite literally be barred from seeing the light of day ever again.
Not sure if SBF decided to run this racket for a self-corrupted version of "citizen justice" against a broken and unfair economic system, but he sure harmed a lot of innocent people in the crossfire if that was the intent.
I wouldn't be surprised if he's able to disappear from the eyes of the public due to the always-corporately-manipulated media conglomerates.
[+] [-] tedunangst|3 years ago|reply
[+] [-] masswerk|3 years ago|reply
From a European perspective, this is strangely backwards: Madoff confessed and was fully cooperative, hence, there was no need to deprive him of freedoms without a process. In the SBF/FTX affair, on the other hand, there are no signs of full cooperation and there's some danger of obstruction of justice and tampering with potential evidence. (Which should be, apart from risk of recurrence and/or acute danger, the only reason for depriving anyone of granted freedoms without a due process.)
[+] [-] speby|3 years ago|reply