A lot of checks and balances in there to make sure the defendant knows what they’re doing and can’t claim later they want to change their mind. The government’s strategy on these sort of cases is to take out the little people with deals, get them to flip on the big boss, and then throw the book at the boss. They seem to be following that playbook here.
> THE COURT: And I say that because no one here knows for sure what your sentence will be -- your lawyers don't, the government doesn't, I don't -- because that's not going to be determined until a later date, after I get a presentence report from the probation department, I calculate the guidelines, I get submissions from you, the government and the probation department.
> But even if your sentence is different from what you had hoped for or expected, you won't be allowed to withdraw your plea on that basis.
IANAL but this makes it look like the case is so strong against her that she's just throwing herself at the mercy of the courts. All the cooperation buys her is brownie points with the judge, who might decide to make an example out of her anyway.
They didn't even really have to flip her, she just walked in the front door.
That’s a standard admonishment given to the accused when they are accepting a plea deal. The only thing the prosecution can offer is a recommendation to the sentencing judge. Usually the judges agree, but they don’t always.
But if judges keept fucking people who enter those pleas to get a lighter sentence, that would defeat the purpose of those plea deals, and people would take their chance at trial, so I'd assume there is an incentive for the court to play ball.
It's worth reading. Pretty vanilla fraud. Take funds from entity X, lend them to entity Y, lend them to Mr BF. Don't tell anyone it's being done, including and especially all the people putting money into entity X. Make up some nice fake balance sheets to hide it.
I think it's not really worth reading. No new information. Other than her saying yup and yes to almost every question, we also know she had a beer last night at 8pm.
It's information to me (and it will be to a lot of people i suspect). I never saw what happened reported anywhere so succinctly. There was a lot of speculation reported.
The relevant bit is her testimony, during which she throws SBF under the bus and drives back and forth to make sure he's going down with her:
THE COURT: Now, tell me in your own words what you
did that makes you believe that you are guilty of these crimes.
THE DEFENDANT: From approximately March 2018 through
November 2022, I worked at Alameda Research, a cryptocurrency
trading firm principally owned by Sam Bankman-Fried. At
Alameda Research, I first worked as a cryptocurrency trader and
was later appointed by Mr. Bankman-Fried as the co-CEO and
eventually CEO of Alameda Research Ltd., the subsidiary that
housed the firm's main trading and market making operations.
In those roles, I reported to Mr. Bankman-Fried.
From 2019 through 2022, I was aware that Alameda was
provided access to a borrowing facility on FTX.com, the
cryptocurrency exchange run by Mr. Bankman-Fried. I understood
that FTX executives had implemented special settings on
Alameda's FTX.com account that permitted Alameda to maintain
negative balances in various fiat currencies and crypto
currencies. In practical terms, this arrangement permitted
Alameda access to an unlimited line of credit without being
required to post collateral, without having to pay interest on
negative balances and without being subject to margin calls or
FTX.com's liquidation protocols.
I understood that if
Alameda's FTX accounts had significant negative balances in any
particular currency, it meant that Alameda was borrowing funds
that FTX's customers had deposited onto the exchange.
While I was co-CEO and then CEO, I understood that
Alameda had made numerous large illiquid venture investments
and had lent money to Mr. Bankman-Fried and other FTX
executives.
I also understood that Alameda had financed these
investments with short-term and open-term loans worth several
billion dollars from external lenders in the cryptocurrency
industry. When many of those loans were recalled by Alameda's
lenders in and around June 2022, I agreed with others to borrow
several billion dollars from FTX to repay those loans.
I understood that FTX would need to use customer funds to finance
its loans to Alameda. I also understood that many FTX
customers invested in crypto derivatives and that most FTX
customers did not expect that FTX would lend out their digital
asset holdings and fiat currency deposits to Alameda in this
fashion.
From in and around July 2022 through at least
October 2022, I agreed with Mr. Bankman-Fried and others to
provide materially misleading financial statements to Alameda's
lenders. In furtherance of this agreement, for example, we
prepared certain quarterly balance sheets that concealed the
extent of Alameda's borrowing and the billions of dollars in
loans that Alameda had made to FTX executives and to related
parties.
I also understood that FTX had not disclosed to FTX's
equity investors that Alameda could borrow a potentially
unlimited amount from FTX, thereby putting customer assets at
risk. I agreed with Mr. Bankman-Fried and others not to
publicly disclose the true nature of the relationship between
Alameda and FTX, including Alameda's credit arrangement.
I also understood that Mr. Bankman-Fried and others
funded certain investments in amounts more than $10,000 with
customer funds that FTX had lent to Alameda. The investments
were done in the name of Alameda instead of FTX in order to
conceal the source and nature of those funds.
I am truly sorry for what I did. I knew that it was
wrong. And I want to apologize for my actions to the affected
customers of FTX, lenders to Alameda and investors in FTX.
Since FTX and Alameda collapsed in November 2022, I have worked
hard to assist with the recovery of assets for the benefit of
customers and to cooperate with the government's investigation.
I am here today to accept responsibility for my actions by
pleading guilty.
This reminds of a concept from a partially-discredited researcher on patterns of deceit and human nature. Here, we basically have 2 parties completing a deceit, FTX grants excessive financial privileges to related party Alameda which then does things with the money FTX never could do itself. So the objective to move money to unrelated parties was effectuated using 2 related parties so each only needed to go halfway to a blatant in-your-face wrong that would have made even this crowd queasy in the first instance.
Where this gets interesting, and where the cynic smiles at their naïveté, is, thank goodness they didn't build more actors into this pipeline. Because while the research was somewhat discredited, I still think it's about right that with each participant covering 50% of the way to a fraud, you have indictments, but when each participant covers only say, 15% of the distance you instead have a shady little cottage industry.
If there are ,,others'' involved, it's strange that she wasn't asked (even if it would be redacted).
This was an organized crime where many people have taken part of it (I think Blockfi people knew what's going on as well for example, that's why they went so silent)
> If there are ,,others'' involved, it's strange that she wasn't asked (even if it would be redacted).
No, its not. This isn’t her testimony against other people, her cooperation with prosecutors, or anything other than her statements confirming her understanding of her guilt that arr necessary to validate that her guilty plea is entered into voluntarily, and under an understanding of the facts that represents actual guilt of the crime.
All those other things will happen or have, in part, already happened outside of this court proceeding. They are separate-but-related events that will be taken into account in sentencing.
Can somebody explain to me what their endgame plan was? They stole what, $10B? Did they think that would just blow over or something?
Follow-up question: Let's say that 6-12 months ago Alameda went bust, and FTX didn't steal all their customers funds to bail them out. Presumably Alameda fails. Maybe FTX fails too depending on their state, but they return all their customers funds first. Is that possible? I dunno if any crypto-related company has ever shut down cleanly so I don't know how it would work. It seems like it would be a better option though, they'd have dented reputations from a failed hedge fund/business but y'know, not any fraud.
Started out making investments/bets with loan money thinking they would make it back with profit since they're oh so smart. Bets fail, they pour more money into it on hail Mary shots, they lose that too. Lenders want their money back so they use customer funds to pay them back because they have access to it and loans have to be paid back.
Meanwhile they've also been enriching themselves personally, living large in the Bahamas and what not.
Boils down to 2 things.
1. They were unscrupulous from day 1 and implemented a system with no restrictions or checks on their ability to move money around. In addition, they were comfortable with straight up lying to customers and lenders about the
> So the maximum sentences for Counts One, Two, Three
and Four are all the same, so I'm going to read them together,
okay, at once. So with respect to your liberty, the maximum
term of imprisonment for each of the four counts, One through
Four, is 20 years in prison.
> With respect to your liberty on Counts Five and Six,
the maximum term of imprisonment for each count is five years
> And then lastly, on Count Seven, that has a maximum
term of imprisonment of 20 years
The maximum total is not the realistic maximum that she would get if tried. Criminal offense category, concurrent sentences, and criminal history all need to be taken into account.
"It is better that ten guilty persons escape than that one innocent suffer." That comes from Blackstone (https://en.wikipedia.org/wiki/Blackstone%27s_ratio), and has been a bedrock principle of justice in English, English inspired justice systems, including the US.
Historically unanimous juries were required in criminal trials through the English speaking world, and that's still true in the US, Canada, and NZ at least.
For a period of time criminal trials at a state level could have majority verdicts in Louisiana and Oregon, but a recent Supreme Court case (Ramos v. Louisiana) declared this unconstituional, and federal cases (as here) always required unanimous verdicts. Somewhat oddly the UK has allowed majority verdicts in some criminal trials since 1967 (although I believe they're generally rare and somewhat controvesial), as does Australia. But they're very much the outliers.
> Unanimous seems pretty risky.
Generally speaking, allowing a pure majority has been seen as the risky option, given the stakes. (Much the same logic applies to the standard of proof required, which is "beyond reasonable doubt", otherwise phrased as there being no plausible reason to believe the accused might not be guilty. Obviously it would be much easier to achieve a guilty verdict if the standard was "preponderance of the evidence", but the goal of the system is justice, not guilty verdicts.)
> So, one bad/corrupt juror could render anyone not guilty?
No. If all 12 agree, that's the verdict. Guilty or Not Guilty, whichever was voted by all 12.
If they cannot agree, they are allowed time to argue and convince each other. Since they are agreeing on an interpretation of facts based on the same evidence provided, that can work. Maybe one person can hear a compelling argument from another juror.
If all 12 still cannot agree and don't think more talking will resolve the issue (and the judge agrees!), they are a hung jury. At that point, the state can retry the case or let the defendant go. If all 12 have voted Not Guilty, the state is not allowed to retry the case - a verdict has been given.
Juries are picked randomly from the population, right? What are the dynamics within those juries like? How often do they not agree? Not knowing anything about it, I'd expect it to be extraordinarily unusual for 12 random people to agree unanimously on pretty much anything.
Hmm. How can I explain this. Human beings are social animals and go along with the crowd.
There are not 12 independent decision makers on a jury. Most jurors are followers, and will be persuaded by another member of the jury. We decide what to think based upon what others think.
>So, one bad/corrupt juror could render anyone not guilty?
No, that's called a hung jury. Gov't can try again.
Readit News
> But even if your sentence is different from what you had hoped for or expected, you won't be allowed to withdraw your plea on that basis.
IANAL but this makes it look like the case is so strong against her that she's just throwing herself at the mercy of the courts. All the cooperation buys her is brownie points with the judge, who might decide to make an example out of her anyway.
They didn't even really have to flip her, she just walked in the front door.
Deleted Comment
It’s not clear to me that ~100% of the blame for all this falls on the one guy.
Deleted Comment
THE COURT: Now, tell me in your own words what you did that makes you believe that you are guilty of these crimes.
THE DEFENDANT: From approximately March 2018 through November 2022, I worked at Alameda Research, a cryptocurrency trading firm principally owned by Sam Bankman-Fried. At Alameda Research, I first worked as a cryptocurrency trader and was later appointed by Mr. Bankman-Fried as the co-CEO and eventually CEO of Alameda Research Ltd., the subsidiary that housed the firm's main trading and market making operations. In those roles, I reported to Mr. Bankman-Fried.
From 2019 through 2022, I was aware that Alameda was provided access to a borrowing facility on FTX.com, the cryptocurrency exchange run by Mr. Bankman-Fried. I understood that FTX executives had implemented special settings on Alameda's FTX.com account that permitted Alameda to maintain negative balances in various fiat currencies and crypto currencies. In practical terms, this arrangement permitted Alameda access to an unlimited line of credit without being required to post collateral, without having to pay interest on negative balances and without being subject to margin calls or FTX.com's liquidation protocols.
I understood that if Alameda's FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing funds that FTX's customers had deposited onto the exchange.
While I was co-CEO and then CEO, I understood that Alameda had made numerous large illiquid venture investments and had lent money to Mr. Bankman-Fried and other FTX executives.
I also understood that Alameda had financed these investments with short-term and open-term loans worth several billion dollars from external lenders in the cryptocurrency industry. When many of those loans were recalled by Alameda's lenders in and around June 2022, I agreed with others to borrow several billion dollars from FTX to repay those loans.
I understood that FTX would need to use customer funds to finance its loans to Alameda. I also understood that many FTX customers invested in crypto derivatives and that most FTX customers did not expect that FTX would lend out their digital asset holdings and fiat currency deposits to Alameda in this fashion.
From in and around July 2022 through at least October 2022, I agreed with Mr. Bankman-Fried and others to provide materially misleading financial statements to Alameda's lenders. In furtherance of this agreement, for example, we prepared certain quarterly balance sheets that concealed the extent of Alameda's borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties.
I also understood that FTX had not disclosed to FTX's equity investors that Alameda could borrow a potentially unlimited amount from FTX, thereby putting customer assets at risk. I agreed with Mr. Bankman-Fried and others not to publicly disclose the true nature of the relationship between Alameda and FTX, including Alameda's credit arrangement.
I also understood that Mr. Bankman-Fried and others funded certain investments in amounts more than $10,000 with customer funds that FTX had lent to Alameda. The investments were done in the name of Alameda instead of FTX in order to conceal the source and nature of those funds.
I am truly sorry for what I did. I knew that it was wrong. And I want to apologize for my actions to the affected customers of FTX, lenders to Alameda and investors in FTX. Since FTX and Alameda collapsed in November 2022, I have worked hard to assist with the recovery of assets for the benefit of customers and to cooperate with the government's investigation. I am here today to accept responsibility for my actions by pleading guilty.
Where this gets interesting, and where the cynic smiles at their naïveté, is, thank goodness they didn't build more actors into this pipeline. Because while the research was somewhat discredited, I still think it's about right that with each participant covering 50% of the way to a fraud, you have indictments, but when each participant covers only say, 15% of the distance you instead have a shady little cottage industry.
> And if we hadn't caught you?
"Umm, well..."
This was an organized crime where many people have taken part of it (I think Blockfi people knew what's going on as well for example, that's why they went so silent)
No, its not. This isn’t her testimony against other people, her cooperation with prosecutors, or anything other than her statements confirming her understanding of her guilt that arr necessary to validate that her guilty plea is entered into voluntarily, and under an understanding of the facts that represents actual guilt of the crime.
All those other things will happen or have, in part, already happened outside of this court proceeding. They are separate-but-related events that will be taken into account in sentencing.
Follow-up question: Let's say that 6-12 months ago Alameda went bust, and FTX didn't steal all their customers funds to bail them out. Presumably Alameda fails. Maybe FTX fails too depending on their state, but they return all their customers funds first. Is that possible? I dunno if any crypto-related company has ever shut down cleanly so I don't know how it would work. It seems like it would be a better option though, they'd have dented reputations from a failed hedge fund/business but y'know, not any fraud.
Meanwhile they've also been enriching themselves personally, living large in the Bahamas and what not.
Boils down to 2 things.
1. They were unscrupulous from day 1 and implemented a system with no restrictions or checks on their ability to move money around. In addition, they were comfortable with straight up lying to customers and lenders about the
2. They believed their own hype.
Deleted Comment
> With respect to your liberty on Counts Five and Six, the maximum term of imprisonment for each count is five years
> And then lastly, on Count Seven, that has a maximum term of imprisonment of 20 years
Whoa
They need to unanimously agree? So, one bad/corrupt juror could render anyone not guilty?
I thought it would be majority or 3/4 majority (as they do for some bills in parliament). Unanimous seems pretty risky.
Historically unanimous juries were required in criminal trials through the English speaking world, and that's still true in the US, Canada, and NZ at least.
For a period of time criminal trials at a state level could have majority verdicts in Louisiana and Oregon, but a recent Supreme Court case (Ramos v. Louisiana) declared this unconstituional, and federal cases (as here) always required unanimous verdicts. Somewhat oddly the UK has allowed majority verdicts in some criminal trials since 1967 (although I believe they're generally rare and somewhat controvesial), as does Australia. But they're very much the outliers.
> Unanimous seems pretty risky.
Generally speaking, allowing a pure majority has been seen as the risky option, given the stakes. (Much the same logic applies to the standard of proof required, which is "beyond reasonable doubt", otherwise phrased as there being no plausible reason to believe the accused might not be guilty. Obviously it would be much easier to achieve a guilty verdict if the standard was "preponderance of the evidence", but the goal of the system is justice, not guilty verdicts.)
Some history here: https://corkerbinning.com/jury-unanimity-uk-us-verdict/
No, they need to unanimously agree on either guilty or not guilty. A hung jury would result in a retrial.
No. If all 12 agree, that's the verdict. Guilty or Not Guilty, whichever was voted by all 12.
If they cannot agree, they are allowed time to argue and convince each other. Since they are agreeing on an interpretation of facts based on the same evidence provided, that can work. Maybe one person can hear a compelling argument from another juror.
If all 12 still cannot agree and don't think more talking will resolve the issue (and the judge agrees!), they are a hung jury. At that point, the state can retry the case or let the defendant go. If all 12 have voted Not Guilty, the state is not allowed to retry the case - a verdict has been given.
Hmm. How can I explain this. Human beings are social animals and go along with the crowd.
There are not 12 independent decision makers on a jury. Most jurors are followers, and will be persuaded by another member of the jury. We decide what to think based upon what others think.
>So, one bad/corrupt juror could render anyone not guilty?
No, that's called a hung jury. Gov't can try again.
Deleted Comment