BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

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In summary: I don't know if this actually happened, but...?In summary, the website of major bitcoin exchange MtGox was offline Tuesday amid reports it suffered a debilitating theft. Around midmorning in the U.S., the company released a statement saying it had closed off transactions "to protect the site and our users." It offered no further details.
  • #526
Office_Shredder said:
I didn't say she was unaware of anything, I simply said as CEO of Alameda, perhaps she didn't have a legal obligation to uphold the terms of service of FTX, a totally different company. She could know exactly what SBF was doing, and not have any legal liability perhaps, depending on what SBF was doing.
Knowingly accepting stolen money? Her accepting it was what made it stolen!
 
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  • #527
I have a hard time charging Tom Brady. Where does it stop? Actors? Cartoon characters? Will we really be suing Coiunt Chocula and Captain Crunch because their products are sugar bombs? (And would we collect in cartoon dollars?)

It's not clear what we would charge the CEO of a hedge fund for. Bad investments? Not illegal. High fees? Welcome to the club. I don't think it's even illegal for a fund manager to buy an overvalued asset hoping it goes even higher (the "greater fool theory"). Unwise, but people have becomes zillionaires doing it, so what do I know? These funds have pretty tough contracts.
 
  • #528
russ_watters said:
I hope that doesn't keep her out of jail.
I'm pretty sure that little coffee break was orchestrated by the SDNY as a public show of, she's on 'our' side. People have done a lot worse (Sammy ‘The Bull’ Gravano turned on John Gotti) and received a tap on the wrist when the 'Boss' is the target.
Sam Bankman-Fried's ex-girlfriend Caroline Ellison recruits legal team of former SEC official and a lawyer who probed Bernie Madoff Ponzi scheme - as FTX founder's parents fear legal bills will 'wipe them out'
https://www.dailymail.co.uk/news/ar...-Alameda-CEO-Caroline-Ellison-lawyers-up.html
 
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  • #529
Vanadium 50 said:
It's not clear what we would charge the CEO of a hedge fund for.
I may be wrong but in this case of stolen/redirected (ahem...) money (valuables) only the 'knowingly' part might offer any potential/leverage.
 
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  • #530
Is she the one accused of doing the stealing?
 
  • #531
Vanadium 50 said:
Is she the one accused of doing the stealing?

Pure Speculation.
IMO she was likely being set up as the 'fall' person for the fraud. The interviews he did recently, all directed blame mainly to Alameda where she was CEO.
 
  • #532
Vanadium 50 said:
It's not clear what we would charge the CEO of a hedge fund for.
Conspiracy to commit fraud. That's assuming everything about the hedge fund itself was above-board and there's no internal crimes.
 
  • #533
nsaspook said:
Pure Speculation.
IMO she was likely being set up as the 'fall' person for the fraud. The interviews he did recently, all directed blame mainly to Alameda where she was CEO.
Didn't watch the video yet, but from what I've seen he's not accusing her of fraud (that would be higly elastic mud and a risky sling), he's accusing her of running a failed hedge fund. That's not a crime. The crime is in illegally transferring his clients' money to prop it up.
 
  • #534
russ_watters said:
Conspiracy to commit fraud.
That's tough to show. Usually the contract says "You give me $100. I'll keep $10 and invest the other $90. We hope it goes up, but it might go down." This is intended to insulate the fund against angry clients who are unhappy that the fund invested in diseased cattle.

Now, if the reported financials are not what actually happened, that's a whole 'nother kettle of fish.
 
  • #536
Vanadium 50 said:
Is she the one accused of doing the stealing?
Usually just knowingly handling dirty money is already a difficult legal position: no need to do the tricky part personally.

If the basic stuff around the hedge fund were done, then I see no other accusation what could be 'sticky' enough...

Of course: this is just speculation.
 
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  • #537
Vanadium 50 said:
This is intended to insulate the fund...
Insulation is difficult to achieve when the conductors are physically touching. We'll see.
 
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  • #538
I believe Ellison was to SBF what Sunny Balwani was to Elizabeth Holmes, just switched genders.
I mean they were in their 20s and ran business together as well as were in a relationship, there is no way she doesn't know what he knows.
Not sure whether it can be proved legally but she is an accomplice to all the charges of SBF.
 
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  • #539
artis said:
there is no way she doesn't know what he knows.
She may even strike a good deal based on that.
 
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  • #540
Vanadium 50 said:
I have a hard time charging Tom Brady. Where does it stop?
Nobody ever said Brady should be charged with a crime, but I guess this is good to know.
 
  • #541
Rive said:
knowingly handling dirty money
Right.,..but who is to say the money is dirty? That's a whole 'nother prosecution. "You can't argue that I should have known if you, with the full power and authroity of the federal government, can't prove it yourself." is an argument that juries can sympathize with.

This is even one step removed when the activity was all in the Bahamas.
 
  • #542
Vanadium 50 said:
Right.,..but who is to say the money is dirty?
Might be one really difficult and long case, sure. Yet, this one alone may stick - stick enough so a deal could be a tempting offer.
We'll see.
 
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  • #543
https://www.cnbc.com/2022/12/13/us-...ud-securities-fraud-and-money-laundering.html

Sam Bankman-Fried criminal charges unsealed: Conspiracy to defraud the U.S., wire fraud, securities fraud, and money laundering​

Civil charges
https://www.sec.gov/litigation/complaints/2022/comp-pr2022-219.pdf
COMPLAINT
Plaintiff Securities and Exchange Commission (the “Commission”), for its complaint
against Defendant, Samuel Bankman-Fried (“Bankman-Fried”), alleges as follows:
SUMMARY
1. From at least May 2019 through November 2022, Bankman-Fried engaged in a
scheme to defraud equity investors in FTX Trading Ltd. (“FTX”), the crypto asset trading
platform of which he was CEO and co-founder, at the same time that he was also defrauding the
platform’s customers. Bankman-Fried raised more than $1.8 billion from investors, including
U.S. investors, who bought an equity stake in FTX believing that FTX had appropriate controls
and risk management measures. Unbeknownst to those investors (and to FTX’s trading
customers), Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of
dollars of the trading platform’s customer funds for his own personal benefit and to help grow
his crypto empire.
...
5. But Bankman-Fried did not stop there. Even as it was increasingly clear that
Alameda and FTX could not make customers whole, Bankman-Fried continued to
misappropriate FTX customer funds. Through the summer of 2022, he directed hundreds of
millions more in FTX customer funds to Alameda, which he then used for additional venture
investments and for “loans” to himself and other FTX executives. All the while, he continued to
make misleading statements to investors about FTX’s financial condition and risk management.
Even in November 2022, faced with billions of dollars in customer withdrawal demands that
FTX could not fulfill, Bankman-Fried misled investors from whom he needed money to plug a
multi-billion-dollar hole. His brazen, multi-year scheme finally came to an end when FTX,
Alameda, and their tangled web of affiliated entities filed for bankruptcy on November 11, 2022.
32. Bankman-Fried diverted FTX customer funds to Alameda in essentially two
ways: (1) by directing FTX customers to deposit fiat currency (e.g., U.S. Dollars) into bank
accounts controlled by Alameda; and (2) by enabling Alameda to draw down from a virtually
limitless “line of credit” at FTX, which was funded by FTX customer assets.
33. As a result, there was no meaningful distinction between FTX customer funds and
Alameda’s own funds. Bankman-Fried thus gave Alameda carte blanche to use FTX customer
assets for its own trading operations and for whatever other purposes Bankman-Fried saw fit. In essence, Bankman-Fried placed billions of dollars of FTX customer funds into Alameda. He
then used Alameda as his personal piggy bank to buy luxury condominiums, support political
campaigns, and make private investments, among other uses. None of this was disclosed to FTX equity investors or to the platform’s trading customers.
 
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  • #544
https://www.axios.com/2022/12/13/sam-bankman-fried-criminal-fraud-money-laundering
Criminal charges.
https://s3.documentcloud.org/documents/23450583/sam-bankman-fried-indictment.pdf
1670964187941.png
 
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  • #545
Just a summary
Bankman-Fried was charged with eight criminal counts, including conspiracy and wire fraud, earlier in the day, for allegedly misusing billions of dollars in customer funds to prop up his Alameda Research crypto fund. Bankman-Fried was arrested Monday in the Bahamas, where he was living.
https://finance.yahoo.com/news/bankman-fried-ftx-fraud-probe-193135904.html
Up to 20 years per count.

(Reuters) - In mid-2020, FTX's chief engineer made a secret change to the cryptocurrency exchange’s software.

He tweaked the code to exempt Alameda Research, a hedge fund owned by FTX founder Sam Bankman-Fried, from a feature on the trading platform that would have automatically sold off Alameda's assets if it was losing too much borrowed money.

In a note explaining the change, the engineer, Nishad Singh, . . . .
https://finance.yahoo.com/news/exclusive-secret-software-change-allowed-205742135.html
The exemption allowed Alameda to keep borrowing funds from FTX irrespective of the value of the collateral securing those loans. That tweak in the code got the attention of the U.S. Securities and Exchange Commission, . . .
I presume the tweak in the code will be used to show 'intent', in conjunction with the transfer of customer funds.
 
  • #546
Sounds like somebody has been a very bad boy.
 
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  • #547
He had the means motive and opportunity to flee to Cuba. Like Ghislaine Maxwell could be living the high life in Paris. (French citizens cannot be extradited). Surely
he was aware of the crimes, as outlined above. Therefore he has to be delusional to carry on as if he is untouchable.
 
  • #548

New FTX CEO: ‘This is old-fashioned embezzlement’​

 
  • #549
morrobay said:
He had the means motive and opportunity to flee to Cuba. Like Ghislaine Maxwell could be living the high life in Paris. (French citizens cannot be extradited). Surely
he was aware of the crimes, as outlined above. Therefore he has to be delusional to carry on as if he is untouchable.
But Ghislaine Maxwell as far as I know isn't living the "high life" in Paris, she is instead sentenced to 20 years in prison. Given she is 60 that is pretty much for life.
She is in prison now.
https://www.justice.gov/usao-sdny/p...son-conspiring-jeffrey-epstein-sexually-abuse
 
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  • #550
So basically the picture I now have of SBF is this.

Guy uses tricks and the crypto boom to make investors and clients deposit their actual worth something fiat currency in his exchange , in exchange he gives them the pretty much worthless experiment of a currency crypto and uses their real fiat currency to back up his pockets and plans through his backdoor company.
As long as crypto's booming no one notices but then when crypto faces the problems it should have long before faced , all of a sudden turns out his just another guy who lived on debt and now can't repay...

So his life achievement is that he was smarter than others who live on debt so he managed to live better while acquiring bigger debt.So the morale of the story is this, if you simply wish to have what you can't buy - take a loan if they give you one, but if you wish to have all of the things in the world that you can't buy - create a crypto exchange and defraud your investors....
Definitely not original.
 
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  • #552
(Bloomberg) -- Sam Bankman-Fried’s trading house Alameda Research had a secret speed advantage when executing orders on his now-collapsed FTX crypto exchange, according to the US Commodity Futures Trading Commission.

Alameda, which also tumbled into bankruptcy last month along with FTX, was able to skirt certain portions of the exchange’s trading architecture and sidestep some automated verification processes, the CFTC said in a complaint filed Tuesday in Manhattan federal court.
https://www.yahoo.com/finance/news/ftx-systems-gave-alameda-trades-055134191.html

SBF has a heapin' helpin' of trouble.
 
  • #553
morrobay said:
Understood: Just saying they both coulda, shoulda, woulda.
Not that I worry about it, but are you saying that you wish for a large scale thief to get away from the consequences of his actions?Although I agree if I was him and realized that I'm about to get at least 10 years behind bars I would probably take a route B after my massive crypto defrauding scheme goes bust.
The question is why he isn't running , is it because he suddenly has become a devout christian and is willing to pay for his sins or the more likely option that maybe he thought till the very end that he could somehow clean up this mess and save his name to a degree. But if that's the case I have to say his very naive. I have a hard time believing a man who managed to get so far even with thievery and questionable intent can be so naive.
I guess time will answer these puzzles.
 
  • #554
artis said:
The question is why he isn't running
He's under arrest.

More damning information
https://www.yahoo.com/finance/news/ftx-executives-used-korea-account-214446326.html
(Bloomberg) -- A GitHub account bearing the name of former FTX executive Nishad Singh authored code that hid Alameda Research’s ballooning liabilities on the now-collapsed cryptocurrency exchange, according to internal documentation reviewed by Bloomberg News.

The documentation, in the form of comments associated with specific lines of code, offers clues to the origins of a mysterious account on FTX that a regulator alleges helped mask mounting debts of its sister trading firm Alameda Research. The relationship between the two firms, and alleged misuse of FTX customer funds, led to criminal charges against founder Sam Bankman-Fried.
. . .
The code and available information could be used to show intent.
 
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  • #556
A new horror series:
1671126431441.png
 
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  • #557
Astronuc said:
He's under arrest.
That is only for the last couple of days. He was free for like a month after FTX filed for bankruptcy and given he knew what he was doing and where it was all heading I'd say he was well aware of the possible outcome at least a month prior to that , so at least two months. I mean plenty of time.
 
  • #558
artis said:
Not that I worry about it, but are you saying that you wish for a large scale thief to get away from the consequences of his actions?
That isn't how I read @morrobay 's post, at all.
 
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  • #560
gmax137 said:
That isn't how I read @morrobay 's post, at all.
I might have got the wrong impression that's why I asked.
 
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