Our last piece on the Bankmanocaust was quite long, but near the end we were introduced to one Coffeezilla. He did the only serious interview of Sam Bankman-Fried out there, and was pressing him the entire time. The problem is that Sam Bankman-Fried’s favourite phrase in the English language is “I don’t know,” followed closely by “I don’t have the data right now,” “I’m not sure about the details,” and “my best guess is.” In short, he’s a weaselly little racial stereotype if ever there was one.
When feigning ignorance doesn’t work Der Ewige Bankman shifts all responsibility over to Alameda. This doesn’t really absolve him of anything, since he also owns that corporation, but he pretends that it’s all Caroline Ellison or maybe some other unnamed persons over there. To be clear, he’s obviously guilty as sin of simply embezzling funds, but the precise mechanism through which this was achieved is something of a mystery.
We know that FTX had to have committed fraud, since they explicitly state in their user agreement that users funds cannot be removed. Therefore everyone should have simply been able to reclaim their funds. Instead, when people went to do that they found they didn’t have any of their own money left. This is essentially no different than a bank which promises to hold your money for you in a storage deposit box. Then you go to withdraw your fee…
Sam Bankman-Fried is saying that he has no idea how the funds went missing, even to the point of pretending that he’s not sure if the funds are still there. Again, since he loves throwing up his hands and saying “I have zero idea how the most basic aspects of my own two corporations work,” it’s going to be hard for a non-state actor to pin him down on this, no matter how obvious it is that he’s lying. However, the more people get Bankman to talk, the deeper a hole he digs himself into.
Before I go any further I need to say that Coffeezilla is an excellent and very coherent explainer. He starts off by building a picture of how Bankman pretends that he never knowingly co-mingled customer funds so they could then be lost by Alameda. SBF took an hour long interview with Aaron Ross Sorkin, who asked him where the funds are if FTX guarantees its customers that they won’t do anything with their funds. That’s the same interview where SBF is seen chuckling as he learns of a goy losing his life savings.
In an hour long interview it’s not really possible for Bankman-Fried to just plead the fifth over and over, so he came up with this prepared excuse. He claims that there were multiple terms of services, and one of those involved margin trading, which is where you go into debt to invest and may need FTX to instantaneously use your deposits as collateral to, say, cover a margin call. This was a tiny amount of FTX’s business, and was not relevant to the majority of its customers. Those customers who this was relevant to had to sign a different user agreement for that specifically, so it shouldn’t have applied.
This was enough for (((Sorkin))) although I am skeptical of how serious Sorkin was in getting to the bottom of this. However, in the two hour interview with George Stephanopolous the goy interviewer is not thrown off by this, and repeatedly refuses to get lead astray. At this point SBF tried a new trick where he claims that when the companies, Alameda and FTX were new people were wiring funds directly to Alameda. He then claims that maybe this grew behind the scenes over the years. And of course he follows this up with “boy I really should have paid more attention to this but waddya know.”
So Coffeezilla goes into his third twitter space interview involving SBF with a plan. He’s going to laser in on why the clients who didn’t sign up for wire transfers or margin trading saw their assets disappear. The answers he gets are revealing.
Coffeezilla: Can you just tell us yes or no were you treating client assets on the regular digital asset side different from the margin trading side?
This question is asked at the 10 minute mark, and the interview is over ten minutes later. During this time SBF mostly filibusters. He starts trying different tacts, but the filibuster and feigned ignorance game is on point.
Coffeezilla: If it’s true that you didn’t invest client assets, why do those client assets no longer exist?
SBF: Well I’m trying to answer that question but I don’t have the data.
The filibustering continues for a very long time with SBF repeatedly talking around the question without really answering it. Or rather, he very slowly answers the questions in dribs and drabs. First he does this bizarre thing where he pretends that the clients assets still existed. But then he says that everyone got to withdraw their funds in a first in first out manner.
Now this is probably a terrible way to do things for the risky traders, but it also shouldn’t have affected the normal people who just stashed their assets with FTX, since FTX promised not to do anything with them. Again, they should still be there. Coffeezilla repeatedly cuts through the filibuster and then gets Sam Bankman-Fried to admit something he shouldn’t have.
Sam Bankman-Fried: When the collapse sort of completed the uhm that effectively meant there was – if you want to put it this way – there was fungibility created between those assets for people who had and had not been using those features.
Coffeezilla: But that means that there is no separation of funds. If there’s fungibility between two seperate buckets that means there are no buckets. There’s just one bucket. Which means anyone who had your terms of service with digital assets wasn’t actually subject to those terms of service. They were actually subject to the terms of service for your margin trading, right. Which is your more risky product.
So you subjected everyone to the higher risk product because fundamentally when it came down to it you’re saying there’s fungibility. It’s a dollar here it’s a dollar there, everyone can take out as much as they want. Don’t you see that as defrauding your customers. Everyone who trusted you?
If I can exchange 1:1 and I’m the one who put risky stuff on with risky assets with risky terms of service, I can [withdraw] the money of someone who didn’t sign up to those same risky terms, didn’t agree to, isn’t that fraud?
SBF: So… *pregnant silence* I’m specifically talking about what happened in the days immediately uhm during and following the crash. In that three or say – so period. And during that period uhm, I think we may have allowed you know to generalize withdrawals.
I’ll get to why this is so ridiculous in a second, using a better version of the analogy Coffeezilla ends the video with.
If you’re saying we should have held up withdrawals for everyone who had open futures positions with open drawback or something like that that might have been the right thing to do.
For the record, this bit is just nonsense and not what Coffeezilla is talking about at all. Boy does Der Bankman love to filibuster and talk about irrelevant asides.
I hear where you’re coming from on that. I felt at the time that we wanted to treat customers equally.
Coffeezilla: But they agreed to different things so you can’t treat them equally. I mean this is the problem with FTX and Alameda is that all the funds are being co-mingled. Except now this is FTX so you can’t pass the blame to Alameda now. This is your company, your funds, but you are treating all the clients the same when they clearly signed up to different terms of service.
SBF: Okay I really respect your question but you have monopolized all these discussions Coffeezilla. You need to let others speak and you need to respond to what I’m saying and not grandstand as much here.
That butthurt monologue is the end of the interview. In my opinion Sam Bankman-Fried did in fact confess to fraud. Coffeezilla uses a bank/hedge fund analogy, but I think an even better way of explaining what happened is a bank investment/deposit box analogy.
Imagine there’s a bank that has two ways for you to deposit cash. You can purchase a deposit box, where they charge you a very small fee to keep your cash safe. This has the guarantee that you can’t lose your money. If the bank goes under it doesn’t matter, those are still your assets. The bank agrees that they will not be doing anything with them.
The other way you can give them your money is if you give it to the bank and let them loan it out. However, in that case it’s possible that you can lose money, it’s risky. Now let’s say that the bank does go under. Sam Bankman-Fried is saying “we treated every customer the same” when defending what is the equivalent practice of letting people who invested their money, accepting risk, take out cash that is in the storage deposit boxes, provided that it isn’t more cash than their account is worth.
This is how people who deposited their money in the storage boxes show up to find that they’ve somehow lost everything, even though the money should have always been in the box the entire time. The only answer is that FTX committed fraud, and since Der Bankman admits that they let the investors take out money from one giant pile of funds, he can’t blame Alameda for this. That’s 100% on him.
Look, I get that this might be a bit confusing to you. If you don’t quite get it, don’t worry, it doesn’t appear to matter anyway.
House Financial Services Committee Chair Maxine Waters told Democrats she doesn’t plan to subpoena former FTX CEO Sam Bankman-Fried to testify at Tuesday’s hearing about the crypto exchange’s rapid demise, according to people with direct knowledge of the conversation.
Waters informed committee members of her decision at a private meeting Tuesday with Securities and Exchange Commission Chair (((Gary Gensler))) on Capitol Hill, these people said, declining to be named in order to speak freely about private conversations.
Those at the meeting say Waters said she wants committee staff to try to convince Bankman-Fried to voluntarily testify, those with knowledge of the meeting said. As of late Wednesday, Bankman-Fried has yet to agree to voluntarily testify to the House committee, two of the people explained.
So she doesn’t want to force him to testify for… reasons. But she really wants him to voluntarily testify. Oh but he has decided to not do that. If only there was some way she could like, force him to testify. Well she could but she doesn’t want to because that would be mean or something.
Sam Bankman-Fried is a shifty, arrogance, disgusting little rat. He is that way partly due to genetics, but mostly because he knows he has the entirety of the (((Democracy Class))) behind him, which is why he goes on these twitter spaces interviews despite what must be the recommendations of his lawyers. Why should he be worried about confessing to fraud, is (((Gary Gensler))) going to prosecute him? I doubt it.