from Hacker News

Caroline Ellison and Gary Wang are cooperating in the criminal case against SBF

by infrawhispers on 12/22/22, 2:05 AM with 317 comments

  • by neonate on 12/22/22, 4:22 AM

  • by infrawhispers on 12/22/22, 2:14 AM

    SEC Complaint with more details. https://www.sec.gov/news/press-release/2022-234

    I have read more SEC complaints this year than in all of my previous years combined.

    —- Edit 1

    Caroline’s guilty plea: https://www.documentcloud.org/documents/23495436-crypto-coop...

  • by xxr on 12/22/22, 10:05 AM

    They all could have just been basic rich people pulling $600k[0] a year at Jane Street, but they just couldn’t get enough.

    [0]This number is completely made up and betrays my total lack of knowledge about what finance people make.

  • by shagie on 12/22/22, 2:46 AM

  • by SilverBirch on 12/22/22, 10:16 AM

    The thing that makes me very uneasy about this is... it's crypto. If you let people walk away with anything less than decades in prison you're setting a bad precedent. Why? Because the entire design of crypto is to allow you to squirrel money away, honestly what are the chances that these guys have some cold wallet lying around with a few million dollars in bitcoin? That's what I'd do if I was running this scam.

  • by DebtDeflation on 12/22/22, 11:56 AM

    The bigger story is that in their complaint, the SEC is declaring FTT to be an investment contract and therefore a "security".

    https://finance.yahoo.com/news/sec-calls-ftt-exchange-token-...

    Since all exchange native tokens more or less work the same way, that would mean they are all securities. That would include BNB. If this holds, the crypto exchange game is over.

  • by benjaminwootton on 12/22/22, 10:24 AM

    Having scanned the documents, I can imagine a dynamic where Ellison was the CEO, but SBF was really pulling the strings.

    I bet many companies are like that, where investors or a chairman are the real decision maker and the CEO is managing downwards only. Especially when you have a complex corporate setup where you are told to request funds and resources from a parent org etc.

    If I am in a C-level position again I would definetly avoid a situation where I was C-level in name only, if only to avoid the legal risk.

  • by paulpauper on 12/22/22, 4:07 AM

    This was inevitable. All their money and reputation is gone. They stand to face many decades in prison. What choice do they have. Anyone who engages in financial fraud should prepare for all their friends to rat them out. There are no friends.

  • by Aaronstotle on 12/22/22, 5:01 AM

    What about the previous CEO of Alameda, Sam Trabucco?

    Caroline only took over recently, I haven't heard anything about his legal standing at this point.

  • by 1vuio0pswjnm7 on 12/22/22, 7:57 AM

    There is a good chance SBF will be released on bail so he does not have to spend time in detention in NYC. The charges against him are all nonviolent crimes. The question I have is if the judge releases him from custody, "Will SBF do more interviews?"

    Lots of people are speculating on sentencing, some are comparing SBF to Holmes, but IMHO it's likely in this case he is going to plead guilty. Whatever comes out in a criminal trial, e.g., testimony, could be used against SBF in the civil cases brought by the SEC and CFTC. Assuming SBF will plead guilty, given the amount of the losses he has caused, which far exceed the amounts involved in Holmes' fraud, what sort of plea agreement will SBF be offered.

    One theory of why these charges against SBF were brought so quickly is that the US attorney is extraordinarily confident he can obtain a conviction. The "brilliant" SBF's idiotic public behaviour after the bankruptcy filing has no doubt has made the government's job much easier. This makes sense because as many readers will know, generally federal prosecutors do not like to lose and they will not gamble. Their egos and reputations may be at stake. They want slam dunks. For Damian Williams this is probably a slam dunk. Assuming he does not make any significant mistakes.

  • by lordfrito on 12/22/22, 3:53 AM

    Any ideas why these prosecutions are moving forward so fast? Usually this stuff takes forever as evidence is carefully gathered. Curious if anyone has any insights here.

  • by faizmokhtar on 12/22/22, 3:35 AM

    I find the timing of the announcement somewhat interesting. Just right when SBF is en route to NY.

  • by ericliuche on 12/22/22, 2:59 AM

    Curious to see if they also strike a deal with Nishad Singh. He was the director of engineering at FTX that supposedly authored the code that exempted Alameda from liquidation.

  • by TotoHorner on 12/22/22, 2:58 AM

    Hope both of them spend some time in prison too. It would be pretty insane if don't go to prison as part of a plea deal (where they testify against SBF or something).

  • by pseingatl on 12/23/22, 3:03 AM

    She has to hope that Sam goes to trial. If he does, her testimony against him earns her that 5k1.1. motion to reduce sentence. If he doesn't, the government may or may not file the motion. And if there's no 5k, there's no Rule 35.

    Despite the noise, it doesn't look like either Carol or SBF profited much from this scheme. At the end of the day, the "luxurious lifestyle" looks pretty spartan. Bernie funded years of living large off of his victims; not the case here.

    The clawbacks and value of the FTX positions long term will be interesting.

  • by moralestapia on 12/22/22, 3:24 AM

    I hope they get much more than a slap on the wrist, even though they're cooperating now.

    They're as much liable as SBF in this whole scheme.

    Also, where's Sam Trabucco?

  • by ceejayoz on 12/22/22, 2:36 AM

    Notably:

    > Ellison and Wang are cooperating with the SEC’s ongoing investigation...

  • by paulpauper on 12/22/22, 4:06 AM

    if you engage in financial fraud, prepare for everyone to snitch on you

  • by xiphias2 on 12/22/22, 3:28 AM

    Does this cooperation mean that those fraudsters don't go to prison?

    The whole team knew about stealing billions of dollars of money, clearly there's more than 1 person (and more than 1 company's executives) that need prison time.

  • by neilv on 12/22/22, 3:23 AM

    > Both were involved in effective altruism — a community focused on using data to maximize the long-term impact of charitable donations.

    > She got into crypto, she explained on another episode, because she was hoping to make lots of money to give away as part of her commitment to effective altruism.

    Should the term be capitalized, as Effective Altruism?

    It seems to be a new, branded definition, and not in common usage like the generic terms effective and altruism.

    It's also bringing some bad associations to good old-fashioned altruism.

    Also, in the space of questionable philosophy appealing to insulated rich kids, Objectivism is already capitalized.

  • by JKCalhoun on 12/22/22, 4:49 AM

    It's hard for me to fathom being so privileged and then essentially throwing away your life. I have no idea what they were thinking.

  • by meanmrmustard92 on 12/22/22, 5:10 AM

    Caroline's dad is an MIT econ prof and wrote a series of books titled Hard Math for X. New installment should surely be Hard Math for Crypto Fraud and Jail Evasion.

  • by somethoughts on 12/22/22, 3:50 AM

    Too bad HBO's Silicon Valley isn't still going. The writers would have had a field day.

  • by B4CKlash on 12/22/22, 2:30 AM

    The prisoner's dilemma strikes again.

  • by stinkythrowaway on 12/22/22, 7:28 AM

    Could Caroline have reported prior to collapse and earned a buttload of cash from the SEC for whistleblowing?

  • by TuringNYC on 12/22/22, 5:23 AM

    I have a feeling she took this course:

    MIT 15.025 | Spring | Graduate Game Theory For Strategic Advantage

  • by jcampbell1 on 12/22/22, 3:40 AM

    In previous discussions, I said there was a 0% chance she got some sort of deal. I was downvoted to hell, but this guilty plea shows how it works in real life, not TV. The deal is you cooperate voluntarily and the court is allowed to provide sentencing leniency. The only thing she gets is the prosecution agrees to tell the court she cooperated.

  • by carabiner on 12/22/22, 4:43 AM

    Release the tape.

  • by superkuh on 12/22/22, 3:08 AM

    Nothing here happened on a blockchain. If it had there wouldn't have been problems. This is a typical finance market scam.