I’m looking for the reasoning behind Bankman-Fried FTX scheme being claimed to have zero harm to customers, lenders, and investors.
THe knee jerk reaction is that his defense attorneys are wrong and that they are trying to do their best for their client…but I’d like to know the factual reason why they base their claim that the “harm to customers, lenders, and investors is zero.”
I’m not quickly finding whatever document originally contained that phrase, however, if you google “harm to customers, lenders, and investors is zero.”, you’ll get loads of results from people discussing the case saying it’s just an outright lie, period. Though I’m also curious as to what their reasoning was or if they even attempted to defend that statement.
It’s on page 26 of the PDF linked here
https://www.courtlistener.com/docket/66631291/407/united-states-v-bankman-fried/
The PDF defends their reasoning for making that statement over the next few pages, but the short version appears to be:
(Note, these are direct quotes)
For Customers: The $8 billion figure for customers that the government uses does not reflect customer losses as of the bankruptcy petition date. It reflects the temporary shortfall in liquid assets to cover the unprecedented level of customer withdrawal requests beginning on November6, 2022, which reached $4 billion per day the morning of November 8, 2022. 5 For example, if FTX had halted withdrawals on November 8th with $8 billion in withdrawal requests pending and then resumed withdrawals on November 15th after selling sufficient assets to cover the $8billion, then there would not have been any customer “losses.” Thus, as of the bankruptcy petition date, a reasonable measure of customer losses is the amount that liabilities exceeded the assets—that is, the extent of insolvency.
For Lenders: The government is asserting that losses as of petition date were $1.3 billion, equal to the outstanding balance of all loans to Alameda from third party lenders. But FTX’s liabilities to third-party lenders are reflected in Sam’s finding that both exchanges had positive NAVs as of the petition date and by the Debtor’s Estate recent announcement of repayment to creditors
For Investors: Given the sheer amount of assets identified, there is no basis on which to conclude that
investors will suffer any losses due to the charged crimes, regardless of the Debtor Estate’s
decision to exclude them from the bankruptcy recovery.
The “reasoning” as seen from the view of his legal team, is that he has no defense. So, as lawyers will often do, they came up with this off-the-wall weird angle view of the situation in the hope that the judge/jury will buy it. It’s good lawyering.
As the value of FTX has recovered, aren’t the lawyers correct, in that the investors will recover their losses?
My ignorance on such matters is deep and wide.
Well, if I drive drunk but don’t hit anyone or anything, should the action be ignored? Are we to take a, “no harm; no foul”, approach to law and order?
Every con man claims the Music Man defense.
[Moderating]
The only factual answer to this question is trivial: They’re claiming that because they think that will help their defense of their client. Any more detailed answer would be for IMHO. Moving.
The time value of money is a thing. If somebody had assets on deposit/invested and they wanted/needed to withdraw in say December 2022 but couldn’t, and instead had to take a loan (paying interest) or sell something else (possibly taking a loss, paying unfavorable short-term capital gains taxes, etc), then they were damaged. Getting their assets back a year and a half (or more) later doesn’t undo that.
It’s weird that FTX even has apparently a current positive value of $2 and something cents (per share I think) versus the higher pre-bankruptcy value. I was reading some analysts’ statements on Coinbase. They said it’s a bear and cautions investors away from it. But that only speaks to potential investors now and is as not relevant, right?
There’s a pool hall in town?
That means trouble with a capital T that rhymes with B and that stands for billiards.
Anyone know how many years until he is released? But I think there is a good chance he will be pardoned before then.
15% off for “good time” in federal prisons. The last 6 months or so can be in a halfway house.
Or they could commute the remainder of his time without a pardon.
According to this article theres’s a newish program called the “First Step Act” which can reduce the sentence up to 50% for non-violent offenders.
And it’s a federal crime, so it takes the President to pardon or commute, right? I can’t see either victor in November doing so.
I can see it happening 10 or 15 years from now. Not in the next four.
Just curious why you think so? The reasons pardons happen are either a gross miscarriage of justice or a naked bid to get votes. I don’t see either of those applying ever.
I’m not saying it will happen, but that it could. Rich people sometimes get a break.
Great cite but I think here and now that B stands for “Bankman-Fried” .