Sam Bankman-Fried Steered Misuse of Funds
This is a big one, ie: example of “the law” unfolding. He’s only 31years old and already Sam Bankman-Fried is on trial for one of the most outrageous and costly frauds ever witnessed, with billions of investor funds up in smoke. Think Madoff for the size and devastation. But Madoff was by far the more-clever fraudster, largely by virtue of keeping his circle of conspirators extremely small.
In this case, all three of Bank-man Fried’s “close friends” and “partners in crime,” have admitted their own guilt and agreed to testify against him, which pretty much blows any chance he has to walk away unscathed. The others will likely get reduced sentences due to their cooperation. However, Bankman-Fried is toast and will likely have a long time to consider whether his short reign competing for the title of “Guru of Crypto,” was worth the price he now faces.
Not to mention that his parents are also at risk, from however they may have been ensnared in their son’s criminal enterprise. They seem simply to be loving parents, but even giving them the benefit of doubt, they must be asking themselves how they had raised one of the worst business cheats/criminals in history and where they went so wrong? Certainly, they flopped badly in teaching him “The Law of Cause & Effect,” even though I’d bet all three of them used the words, “What Goes Around Comes Around” many times in describing the foibles of other people!
Actually, it is an object lesson for all parents! Children need to know that “Cause & Effect” is the fundamental Law of Nature, every branch of science and all human experience! In other words, an unavoidable “Law of physics.” How we teach them, is a function of how we live that truth, in our lives!
Hmmmm…
Find Rob’s book & ebook “What Goes Around Comes Around – A Guide To How Life REALLY Works” at Amazon or Audible
Kirkus Reviews says:
A stable, nonpreachy, objective voice makes the book stand apart from others in the genre. A successful guide that uses anecdotes of real human experiences to reveal powerful truths about life.
Gary Wang, an FTX Founder, Says Sam Bankman-Fried Steered Misuse of Funds
Mr. Wang is one of three key witnesses who pleaded guilty and agreed to cooperate against Mr. Bankman-Fried, the onetime crypto mogul on trial for fraud.
David Yaffe-Bellany, J. Edward Moreno and
Reporting from the Daniel Patrick Moynihan U.S. Courthouse in Manhattan.
Gary Wang, a former top executive of the failed FTX cryptocurrency exchange, testified that Sam Bankman-Fried, the company’s founder, was the final decision maker at the firm and directed a closely related hedge fund to misuse as it pleased billions of dollars in money from FTX customers.
Over more than six hours of testimony in federal court in Manhattan on Thursday and Friday, Mr. Wang said Mr. Bankman-Fried was fully aware that a sister cryptocurrency trading firm, Alameda Research, had siphoned off $8 billion in customer money from FTX. He said Mr. Bankman-Fried had lied in his public statements in November about FTX customer assets being safe and secure.
Mr. Bankman-Fried called the shots on big issues at FTX, Mr. Wang told the jury of nine women and three men. “In the end, it was Sam’s decision,” he said.
Mr. Wang, 30, who was also a founder of FTX and programmed its code base, is a crucial witness in Mr. Bankman-Fried’s high-profile criminal fraud trial. Mr. Wang is one of Mr. Bankman-Fried’s three close advisers who have pleaded guilty and agreed to cooperateagainst the entrepreneur, who has been charged with orchestrating a conspiracy to use as much as $10 billion of FTX customer money for all manner of personal projects.
The saga of FTX’s rise and fall has gripped the public for months with its mixture of corporate hubris and personal intrigue. Since the exchange collapsed in November, Mr. Bankman-Fried has become a symbol of the crypto industry’s excesses, and his trial is seen by some as a credibility test for the digital currency industry.
A run on deposits last year exposed an $8 billion hole in FTX’s accounts, which prosecutors allege stems in large part from “special privileges” that allowed Alameda to tap into FTX customer money. FTX filed for bankruptcy and Mr. Bankman-Fried was charged a month later with wire fraud, securities fraud, money laundering and related conspiracy charges. He has pleaded not guilty and faces what could amount to a life sentence if convicted.
Within weeks of FTX’s implosion, Mr. Wang, a friend of Mr. Bankman-Fried’s from high school math camp, pleaded guilty to aiding him in that conspiracy. Nishad Singh and Caroline Ellison, two other top executives in Mr. Bankman-Fried’s business empire, have also pleaded guilty and are cooperating with prosecutors.
Mr. Wang and Mr. Singh, who also programmed the code underlying FTX’s business, have admitted to creating a secret backdoor that allowed Alameda to borrow a virtually unlimited amount of money from the exchange. Prosecutors have argued that this backdoor was one of the primary engines of the scheme to pilfer customer accounts.
Mr. Bankman-Fried’s legal team has argued that FTX and Alameda had an appropriate business relationship and “were not set up to create some grand fraudulent scheme.”
In court on Thursday and Friday, Mr. Wang walked the jury through FTX’s early days in 2019 to its stunning collapse last year.
Mr. Wang said that he and Mr. Singh had written FTX’s computer code to grant Alameda special privileges at Mr. Bankman-Fried’s direction beginning in 2019. “He asked us to do it, and we told him we did it,” Mr. Wang said.
That effectively allowed the trading platform to make unlimited withdrawals from the exchange, he said. None of that was disclosed to customers, investors or lenders to the firms, he added.
“We gave special privileges to Alameda Research on FTX,” Mr. Wang said. “And we lied about this to the public.”
Alameda at first was allowed to take out only as much as FTX’s revenue from trading fees, which was about $300 million at the time, Mr. Wang said. But that credit line increased over time, growing to tens of billions of dollars, he said. Mr. Bankman-Fried said he had no issues with this, Mr. Wang said.
Since FTX imploded, Mr. Bankman-Fried has repeatedly said he was only vaguely aware of the amount that Alameda was borrowing from the exchange. But Mr. Wang testified that Mr. Bankman-Fried had Alameda’s balance visible on one of his computer screens at the office. Mr. Wang said that he, Mr. Bankman-Fried, Mr. Singh and Ms. Ellison discussed the money that Alameda owed at a meeting in June 2022.
At the end of the meeting in FTX’s office in the Bahamas, Mr. Wang said, Mr. Bankman-Fried turned to Ms. Ellison and told her she could use more customer funds to pay back Alameda’s creditors.
Under cross-examination, Mr. Wang said some special privileges that Alameda had were part of its role as a trading partner to enable FTX customers to freely buy and sell cryptocurrencies. He is scheduled to answer more questions from defense lawyers when the trial resumes on Tuesday.
Mr. Wang and Mr. Bankman-Fried were classmates at the Massachusetts Institute of Technology before founding FTX together in 2019.
Like Mr. Bankman-Fried, Mr. Wang became enormously rich, with an estimated net worth of nearly $5 billion. Within FTX, he and Mr. Bankman-Fried were regarded as opposites. While Mr. Bankman-Fried was the garrulous pitchman, Mr. Wang was the shy coder who showed up for work in the middle of the afternoon and labored through the night.
They were also close friends who lived together with eight other roommates in a luxury penthouse in the Bahamas, where FTX was based. That relationship ended in December when Mr. Wang pleaded guilty to federal fraud charges, saying he knew “what I was doing was wrong.”
Before Mr. Wang took the stand, lawyers questioned a witness who was one of Mr. Bankman-Fried’s M.I.T. classmates, Adam Yedidia. Mr. Yedidia, who worked as a developer at FTX, recounted a conversation he had with Mr. Bankman-Fried in mid-2022, months before FTX failed, in which the founder admitted that his firm was on shaky footing.
“Sam said something like, ‘We were bulletproof last year, but we’re not bulletproof this year,’” Mr. Yedidia said. He said Mr. Bankman-Fried explained that it could take six months to three years to make the company “bulletproof again.”
Mr. Yedidia was followed on the witness stand by Matt Huang, a founder of Paradigm, a venture capital firm that was one of FTX’s biggest backers. Mr. Huang said he would have had qualms about authorizing investments in FTX if he had known the full extent of the exchange’s relationship with Alameda.
Kirkus Reviews, the gold-standard for independent & accurate reviews, has this to say about
What Goes Around Comes Around:
A successful guide that uses anecdotes to reveal powerful truths about life.
The stable, positive, non-preachy and objective voice makes the book stand apart from others in the genre.
~ Kirkus Reviews
“I’ve read a number of books that focus on sharing a similar message, including “The Secret” by Rhonda Byrne, “The Answer” by John Assaraf & Murray Smith, “The Celestine Prophecy” by James Redfield, “Think and Grow Rich,” by Napoleon Hill, and I must say that I find Rob’s to be my favorite.” – Sheryl Woodhouse, founder of Livelihood Matters LLC
Sam Bankman-Fried Steered Misuse of Funds
Sam Bankman-Fried Steered Misuse of Funds
New research shows small gestures matter even more than we may think.
I wonder about when this train actually went off the rail and Balwani and Holmes both knew it. It reminds me somewhat of Bernie Madoff’s $20 Billion deception in that if Bernie had fessed up when his performance first went south and he tried to cover it up, only to make it worse, he might largely have been forgiven and returned to his original trading business. But he just couldn’t do that and as time went on…well we know the result.
Was there a similar trajectory for this pair? A time when they looked at each other and said, “Uh oh!” Not that it matters really. Somewhere along the way they knew what was going down and kept it going for as long as they could. Now have to face the music as eventually, always is the case. It is simply “The Law of Cause and Effect” unfolding. Hopefully for them there will be less tragic endings than Bernie. It depends on how they handle what they have wrought! We’ll see.