I don’t think he is in Rikers. IIRC Rikers is a NYC prison and SBF is a federal prisoner
I said someplace like Rikers, as I had no idea where he’d be sent other than somewhere near NYC and that’s the most famous place I could think of.
A google told me he’s been sent here, which doesn’t sound very nice either:
He might get a good view of the Statue of Liberty, if he’s lucky. 
The judge commented that it is not on any 5 star lists
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It’s rated pretty well on yelp
https://www.bloomberg.com/opinion/articles/2023-10-12/ftx-had-many-bad-spreadsheets
If you’re going to do a fraud…
FTX Had Many Bad Spreadsheets
7 different balance sheets to choose from!
SBF Stuff
In June 2022, as crypto prices spiraled and Alameda’s lenders were calling in their loans, [Caroline] Ellison said she prepared seven “alternative balance sheets” that would conceal Alameda’s large borrowing from FTX customers, in response to a request for financial information from one of its lenders, Genesis. Alameda had borrowed around $10 billion from FTX customers and had loaned around $5 billion to FTX executives and affiliated entities. “He suggested I should prepare some alternative ways of presenting the information and send it to him,” she said. “I understood him to be directing me to come up with ways to conceal things in our balance sheet we both agreed would look bad.” Bankman-Fried told her to send Genesis her Alternative 7 — which didn’t disclose money taken from FTX customers. It cut Alameda’s liabilities from $15 billion to around $10 billion. She testified that the document was “dishonest.”
If you prepare a balance sheet for a lender and your boss says “why don’t we present this information in a different way,” you probably need a lawyer. If you prepare SEVEN BALANCE SHEETS and your boss is like “let’s go with Alternative 7” then one of you is going to prison absolutely forever. Caroline Ellison smartly decided it wasn’t going to be her.
Ellison, the chief executive officer of Sam Bankman-Fried’s crypto trading firm Alameda Research, has been testifying in Bankman-Fried’s criminal trial this week. Bankman-Fried’s defense, in the press and to Congress and in his lawyer’s opening statement, has been something to the effect of, sure, FTX made some mistakes and lost some customer money, but it was all a series of good-faith accidents; we were just kids who didn’t know what we were doing. We innocently lost track of the money.
And in fact it does seem like FTX couldn’t keep track of its money. When it filed for bankruptcy, John Ray (who ran Enron’s bankruptcy) came in as CEO and filed a very grumpy report saying “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here” and complaining that FTX executives “approved disbursements by responding with personalized emojis” on Slack. And when Bankman-Fried was trying to stave off bankruptcy last November, he circulated a spreadsheet listing FTX’s assets and liabilities — a “balance sheet,” I and others called it, though it was not laid out anything like a traditional balance sheet — with an $8 billion entry for “Hidden, poorly internally labeled ‘fiat@’ account.” The defense is that they forgot that $8 billion was missing, because they were bad at spreadsheets.
Look: The proper number of balance sheets is one.[1] Zero is very bad! At some level I can see “we were careless kids and we never could keep track of how much money we had” as a partial defense to fraud charges. I don’t think it works — I think FTX represented that it was being careful with money, and if it wasn’t that’s fraud — but it has an intuitive appeal.
Seven is much worse! That’s not “we couldn’t keep track of our money, oops.” That’s “we had lots of different ways to keep track of our money, depending on the audience, and we kept coming up with new ways until we got one that looked good.” That’s not “we misplaced our money carelessly”; that’s “we misplaced our money and then very carefully covered it up.” Zero balance sheets is hapless fraud; seven balance sheets is calculating fraud.
Somehow the story gets worse. For one thing: It’s eight? “Seven alternative balance sheets,” plus the main one. Molly White has the spreadsheets; the alts are different tabs in the Google Sheet. “The ‘main’ spreadsheet was only used internally, as it accurately reflected Alameda’s terrible financial position,” White writes. I mean, not that terrible, in June 2022: It shows $21.1 billion of assets, $14.9 billion of liabilities and a net asset value of $6.2 billion. The spreadsheets have quadrants for liquid assets, liquid (i.e. short-term) liabilities, long-term assets and long-term liabilities. The liquid liabilities here include $9.9 billion of “exchange borrows”; the long-term assets include $4.6 billion of “related party loans.”
Alternative 7, the one they sent to Genesis, deletes the related party loans entirely, because they look bad, reducing Alameda’s assets from $21.1 billion to $16.5 billion. It keeps the net asset value the same, at $6.2 billion, and solves for this by reducing the liabilities to $10.3 billion. It deletes the entry for “exchange borrows,” reducing Alameda’s displayed short-term borrowing from $10.7 billion (“exchange borrows” plus “OT loans,” i.e. open term loans) to $1.8 billion (just the OT loans). It combines the $9.9 billion of exchange borrowing with $2.9 billion of longer-term loans to get, uh, well, my math would say that’s $12.8 billion of loans, but Alternative 7 reports $8.2 billion of loans. The difference is $4.6 billion, which is exactly what they lopped off the assets by deleting the related party loans.
The result is a balance sheet that is less levered (liabilities of 63% of assets instead of 71%) and more liquid (liquid assets of 395% of “liquid liabilities,” instead of just 61%).
Which seems like fraud. Possibly more offensive is the fact that they seem to have started with a net asset value of $6.2 billion and USED THE ENTRY FOR “LOANS” AS A PLUG. I am not an accountant or anything but I will say that the good way to do a balance sheet is:
- Add up your assets.
- Add up your liabilities.
- Subtract the liabilities from the assets to get your net asset value.
And a bad way would be:
- Start with the net asset value you want.
- Add up your assets.
- Delete the embarrassing ones.
- Subtract the assets you have left from your net asset value to get your liabilities.
- Just make up some numbers for individual liabilities to get the right total.
My conclusion from this is that FTX was in fact extremely bad at accounting, but not in a charming innocent way.
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I was thinking that was where Epstein was held but he was held at the Metropolitan Correctional Center, New York.
Wonder if they will do a better job keeping SBF from committing suicide.
He has a lot less reason to commit suicide. And many fewer people who want him dead.
Amazing how fast the jury deliberated. The jury expert interviewed in Michael Lewis’ podcast estimated it’d be at least 1.5-2 days regardless of outcome. Even just the document explaining how to consider the charges was ~60 pages.
If only SBF had seen one of those SoA advertisements pushing young mathematicians to do good this could have all been avoided.
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Interesting:
He faces up to 110 years for the stuff he was already found guilty of, but sentencing is March 24. Seems prudent to see what kind of sentence he gets before deciding whether to bother with the other trial.
Yes, bit of kicking a dead horse I think. Although realistically I can’t imagine he gets more than… 15-20 years? The max sentence is 110 years I believe but it seems almost a skewed result because of the extreme dollar value.
At the end of it I don’t think any customers will really lose money (although SBF will have put them at risk of losing it). I’m not sure it makes sense for him to get more than he would if he’d raped someone.
I expect him to serve a lot of those years concurrently, and to actually serve 10-30 years for what he’s already been convicted of.
I don’t know if i will live long enough to see him leave jail and write his memoirs, but i expect that will happen.
Yeah I’m not clamoring for all 110 years, but what he did was pretty bad. Differently bad from raping someone, but bad. It seems like they should wait to see what the sentence is (I think “concurrently served” is part of the sentencing determination) and then make a decision on the other charges. Which may well happen, dunno.
After the ex testified against him I somewhat thought he was done for. She tore apart his character and left him looking like a grifter. That image is probably what he wanted to push against when he took the stand but he made it worse with his dissembling.
Yeah, Michael Lewis described it as him being on the stand is throwing a hail mary, but then when he was on the stand it was like he never threw the ball. What’s the point in taking the stand in self defense if you’re going to just say I can’t recall to every question?
Maybe all he saw was the ‘risk is opportunity’ thing.
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The thing was on direct examination he laid out a great defense for how others were responsible and that he made mistakes but didn’t commit crimes. The trouble was he had no supporting evidence for his fairy tale, and on cross examination he couldn’t recall anything. It basically made him sound like a lying liar who lies a lot.
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My understanding is the crypto assets in people’s accounts were given to Alameda, which lost them trading. Is this incorrect?
I haven’t followed this closely, how does it compare to Madoff?