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SBF’s legal defense is being funded with Alameda money he gave his father (forbes.com/sites/sarahemerson)
344 points by lxm on March 29, 2023 | hide | past | favorite | 221 comments



Well most fraud trials involve a person stealing directly from their company.

Atleast SBF took the extra step of first funneling money to Alameda and then directing Alameda to send it back to him and then send it to his dad as a tax free gift.

That way he could honestly say he personally has no money left.

That atleast makes it harder for FTX to claw back that money.

One interesting thing a lawyer pointed out to me is that a lawyer has a duty to ensure that the money used to pay them wasn't from the proceeds of a crime.

I wonder how SBF's lawyers have done thier diligence in this case and satisified themselves that this wont' get them into trouble with the state bar.


Aren't tax free gifts capped at $14,000.00 per year?

Edit: Er, I guess it's $16,000.00 without needing to report it, and then anything above that can be offset against a $12 ish million lifetime exclusion.

https://money.usnews.com/money/personal-finance/taxes/articl...


The gift tax thing seems like a distraction. He would have needed to file a gift tax return for giving $10 million, but no taxes would be due. But he could just as easily have given $100 million, filed the return, and paid a large gift tax—he had plenty of cash floating around back then.

I guess what I’m saying is, it wasn’t a way to hide the gift, because it still triggered the need for a gift tax return filing.


Yeah that's how I read it. He gave [possibly ill-gotten] money to his parents. If tax was involved, then the treasury might need to give that fraction back to the bankruptcy trustee. If not, great, then it's just the family that needs to disclose to the trustee.


You need to report a gift over $14k but you don't owe until much higher limits. Same as how people who make very little money have to report income even if it's lower than the lowest tax bracket.

Also, as a reminder, the gifter pays the tax and not the person who received the gift. If someone gifts you an illiquid asset, you aren't forced to go into debt to pay a tax. But the gifter has to figure things out on their end.


This is correct. The tax thresholds are of the order of 12mm


What does the gifter pay tax on? -$14k?


Gifts larger than 14k essentially count against your eventual estate tax exclusion.

If you give away $12.06 million on the day before you die (which would be tax-free), then the entirety of your estate is taxed at 40% (both 2022 numbers). If you die without having made any gifts exceeding $14k, then the first $12.06 million of your estate is not taxed at all, and the remainder is taxed at 40%


Not investing or financial advice. If your estate will incur said tax, be giving up to your annual exclusion till death.


The exclusion amount is also per recipient.


It's sort of how you handle assisted living costs. Everything's cheaper if you've distributed your assets beforehand.


It's also why means-testing an end of life program that only looks back X number of years is inevitably not actually testing means.

Every rich person has a guy who will tell them how to avoid it legally. Every poor person never had any money in the first place. It only ever hits middle class and upper-low class people who saved money for some of their life and were never told that they had to disburse their assets at X-1 years before they planned to need care and get hit with a huge penalty to their assistance when they inevitably have to move some of their cash around to pay for some of their expensive care.

If you don't want rich people getting public funds for things, you have to be able to look beyond their money games, which is hard, expensive, often purposely sandbagged, and not usually successful.

So just tax them their whole life instead, and let them get back some of what they put in with every other person.


I would go a step further and call for an end to all means testing for anything government funded.

I am relatively poor and this will help me because even though I am poor I still have to prove I am poor which is burdensome.


This isn't an income or gains tax. Not all taxes are about money gained. For example, sales tax when you pay $100 isn't negative $8, it's $8.

When gifting large amounts of money, the IRS gets more money on top (so, if you're super rich, don't gift ALL off your money, and leave some aside for tax season).


It says so in the article, but here's some corroboration

https://www.schwab.com/learn/story/estate-tax-and-lifetime-g...

EDIT: read a little further, guess the 11-12 million exemption only lasts until 2025, so if you can use, do it fast.


if the gift isn’t cash Alameda can determine the value of the gift mor or less.


[flagged]


FWIW, that law also capped the SALT deduction (a deduction which almost exclusively benefitted the rich), and increased the standard deduction, which was a huge benefit to most normal people.

Say what you will about the other parts of it, but it didn't fall cleanly on party, plutocrat or ideological lines. The fact that the GOP effectively raised taxes for a big chunk of the moderately wealthy was a weird change of pace.


I think it’s not a weird change of pace at all, the SALT deduction was mostly enjoyed by people with high state and local taxes, which are mostly blue states. A policy that gives wealthy people in Texas and Kentucky loopholes while raising taxes on residents of California and New York seems fairly partisan to me.


It didn't raise taxes on people in California and New York - California and New York did that. It's just that until that law passed, those states were able to hide this by cutting into federal tax receipts via the SALT deduction.

Why should the federal government subsidise runaway state taxes though? Which colour states does that advantage? And what kind of incentive does that create for states?

If the residents of California and New York want lower state taxes, I strongly encourage them to lobby / vote for lower state taxes, rather than demanding to be subsidised by poorer states.

Edit: I'm seeing responses to things I'm "suggesting" or "essentially arguing", but which actually appear nowhere in what I wrote. My comment is about the SALT deduction.


That’s a very odd take, California and New York heavily subsidize poor states via federal taxes.

So you’re essentially arguing “Poor/Red” states need an even larger handout from “Rich/Blue” states.

As to lowering state taxes, high taxes are a major reason rich states are rich. People want the services those taxes provided.


I disagree with this bitching that rich states are “subsidizing” the poor “handout” states through federal progressive taxes. This is how progressive taxation is supposed to work, and it would be clearly insensitive and arguably incorrect for a rich individual in the rich state to complain that he is subsidizing the poor person in a poor state. Rich states collect rents from winner-take-all markets that serve the nation, and it is good pro-equality policy to return some of the wealth back with the rest of the country to reduce inequality and promote opportunity.

Edit: to respond to the comment below: I’m not arguing that local taxes should be low; in fact, I think property taxes should be much higher and fairer in California. My point is that the federal government should not provide a federal tax break for local spending e.g. on education. The coasts already do too much opportunity hoarding.


What bitching? My comment was purely descriptive.

The winner takes all nature is a result of those high taxes and the services they provide. Arguing for lower state taxes in rich states is arguing to destroy the very thing that enables these subsidies in the first place.

NYC for example couldn’t survive without the infrastructure its taxes pay for.


Do you also agree with the assessment that the highest income earners heavily subsidize the poor? Because that's the same reasoning behind the "blue states subsidize red states" trope.

The federal balance of payments with the various states is a function of tax receipts from that state against federal spending in that state. States with lots of high income earners will, by progressive taxation, naturally contribute more to the federal pool. States with lots of recipients of federal benefits, on the flip side of the coin, naturally receive more from the federal pool. There are outlier states on either side.

Looking at 2019 data as the last "normal" year (since post-Covid, every single state received more in federal spending than they gave in taxes), Connecticut, Massaschusetts, and New Jersey (all blue states) are the clear outliers in per-capita balance of payments, where each resident in net gave north of $2000. Among outliers in the receivers, Kentucky, New Mexico, and Virginia (one red state, two blue states) stand out . KY I'm not sure why, but NM and VA are clear destinations for lots and lots of federal spending, with many federal programs being run in those states. California is touted as "paying" for a lot of stuff, but on a per capita basis it was only about $300.

Among the rest, there are a good mix of red states and blue states that receive more than they pay. Alabama? Red state, net recipient. Maryland? Blue state, net recipient. Utah? Red state, net payer. Washington? Blue state, net payer.

That having been said, the implicit argument behind your point is that blue states are rich because of their blue policies and red states are poor because of their red policies. I have yet to be convinced of this.


There are many ways to slice and dice these numbers.

Work out how much that 300$/year from birth would add to someone’s retirement and say it’s not a lot of money.


Real estate taxes are a necessary expense to earn income in the first place, and therefore make sense as a deduction.

It's the multitude of exceptions that prevent individuals from deducting necessary and customary expenses required to earn their income that are the problem. Glaringly - a W2 employee needs a car to get to work? Or more recently, a W2 employee needs a home office to work remotely? The tax code says fuck em, they can pay for those twice!

The disparity is why the plebs get all uppity when some ragebait article highlights some seemingly-ridiculous expense that businesses write off. When the right answer is to make it so that individuals can deduct expenses the same way businesses do.


Why don’t poorer states stop being subsidized by CA and NY? Why are you only suggesting changes to blue states? Do you have underlying motive?


I think a more honest take was it leveled the playing field by removing a loophole. I think it's hard to argue that the deduction was anything more than pandering to rich people in blue states...


It always made sense to me as a subsidy to states and local municipalities, who would otherwise might rely on a much more inefficient process of asking for federal funds to make obligations to their citizens like schools and infrastructure a reality. The rich people can (and often do) move for tax reasons, so I don’t see it as a handout to them. I do see it as a subsidy to states who want to run more of their own infrastructure and function as the “laboratories of democracy”


> The fact that the GOP effectively raised taxes for a big chunk of the moderately wealthy was a weird change of pace.

It was a genius political move, because it also mostly only affected rich people in Democrat led states. If Democrats want to get rid of it, they would have to explicitly campaign to lower taxes on the top 20% of income/wealth, which would not be a good look for them.


> "it also mostly only affected rich people in Democrat led states"

Please could you explain why? (Assuming it's not just that Democratic states have more wealthy people?)

edit: thanks for the replies!


Democrat led states have higher state and local taxes. Some of it due to policies that redistribute wealth, some of it due to mismanagement of the state.

Edit: also, Democrat led states have higher land prices, so generally, percent based taxes like property tax will be nominally much higher and hit the SALT deduction cap quicker.

It disproportionately punishes richer people in states with higher taxes (usually Democrat led) compared to richer people in states with lower taxes (usually Republican led), giving more incentive for richer people in states with higher taxes to either vote for lower taxes in their own state (i.e. vote Republican), or move to a state with lower taxes (a Republican led state).


> Democrat led states have higher state and local taxes.

“More concentrated on higher-income earners” is both more accurate, and more relevant to the effect of the SALT limit (though having higher average income is also relevant to the SALT limit, overall tax burden and distribution across the income spectrum aside.)

E.g., R-trifecta Iowa has a higher overall tax burden than D-trifecta California, but substantially lower high-end taxes. [0][1]

[0] https://wallethub.com/edu/states-with-highest-lowest-tax-bur...

[1] actual total state & local tax burden by income is hard to find, but top income tax rates are indicative here: https://turbotax.intuit.com/tax-tips/fun-facts/states-with-t...


Do high earners consume progressively more proportion of their income in public resources than the poor? Why would you jack up their tax rate? Also note you picked the literally only one of 11 states in [0] above California that is (R).


Because high earners are rich people but not rich enough to be capitalists. So they get screwed and somehow capital gains isn’t blamed or tax loopholes but poor people.

Edit: my context was about taxes in general not specific enough to SALT


> Because high earners are rich people but not rich enough to be capitalists

“High earners” includes capitalists; one of the reasons the SALT cap hits hard in California is that California not only has the highest high-end income tax rate, it (unlike many states and the federal government) taxes capital gains as normal income, not at a reduced rate. Both parts of this policy are things that the SALT cap is designed to put pressure against.

The SALT cap, not the state and local taxes it targets, is pro-capitalist and anti-worker.


Ah thank you. You corrected my misconceptions in a few lines. Welp I hate it now! Thanks for solidifying my view.


> Please could you explain why?

Because instead of eliminating deductibility they capped it, and Democratic states in general have more people with state and local taxes above the cap, because of a combination of higher average income and more progressive state taxes (often characterized as higher, but even when this is true in overall tax burden, its often still lower for same-income taxpayers for low- to moderate-income.)


Because blue states have both the highest state/city income taxes, property taxes, and home values. The changes reduced the ability to subtract those things when determining federal taxes.


Cities almost always vote democratic, the bigger they are, the more true it is.

Cities have high cost of living, and also tend to have high income earners. So tax burdens (and incomes, and expenses) tend to be much higher. In some cases, 5-10x higher.

The largest cities in the US are also in democratically controlled states with high taxes.

SALT allowed many of those high earners in those states to offset some of the tax burden by offsetting their federal taxes. Essentially moving tax revenue from the fed to the state.

So the GOP managed to screw over the primary fundraisers of their opponents and increase tax transfers to the federal gov’t at the same time by capping SALT.

Most of their supporters (and all their key votes) are in rural areas with lower cost of living (and often state taxes) which generally fit well under the cap.


> SALT allowed many of those high earners in those states to offset some of the tax burden by offsetting their federal taxes.

More accurately, before the limit, SALT excluded all covered state and local for the purposes of federal income tax, keeping federal tax policy neutral on state tax policy.

With the limit, there is a cap on the absolute amount of state and local taxes per person that get that treatment, creating a federal tax penalty for both strongly progressive taxes (which concentrate tax burden on a smaller number of rich taxpayers) and state economic success (which, for any tax policy less regressive than a straight capitation, increases the absolute tax liability per individual.)


Eh - that’s what we like to say to ourselves, but the first part isn’t true I think.

For instance, for pre-cap SALT to have resulted in a truly neutral federal tax policy, it would have had to not existed at all and have federal taxes be unaffected by state taxes.

Since it did exist, assuming a population has some fixed amount of taxes they consider ‘too much’ and all gov’t actors are looking to maximize towards that limit, it incentivizes states to take as much as they can, since the federal taxes ‘give way’.

The cap basically says ‘eh, we’ll let you do that, but only so much’. The ‘how much’ just so happens to still benefit their constituents while not helping their opponent’s constituents.

Which yes, has those effects you are stating, as their constituents tend to be more rural, which tends to have less economic activity in general, have lower incomes, etc, and hence aren’t hurt in the same way.

Though many of their donors tend to have higher incomes, and I imagine it took some convincing that it was worth taking a potential hit to ‘stick it to the libs’.


The states with the highest local tax burden are the most progressive states. A $180,000 fixer-upper in my town already exceeds $10,000 in property taxes. Like 80% of that is school tax. Rather than beg for federal money to educate our children or shortchange them by cheaping out, we pay for it ourselves. Rather than beg for federal money to fix our pipes, we fix them before they utterly fail.

The lowest tax burden states have the worst schools, poorest health outcomes, crumbling infrastructure, and expect the federal government to bail them out. Forget that, I'm tired of subsidizing the lazy states.


Where is this? I have never heard of a 5.5% property tax rate in the US. Most I have seen is NJ/IL cities at 2.5%, maybe 3%.


Its a genius political move because you can sell opposing it as serving the rich, while the primary effect (and the entire intent) is to create political pressure on states to transfer tax burden from the rich downward to the less rich.


The SALT deduction did not mostly benefit the rich. It benefited people who live in states that actually provide services to their constituents.


...who mostly happen to be rich. Particularly if they make enough money and/or pay enough in tax to hit the cap.


It was a middle class tax increase for California and New York.


You can say that, but no, it's for certain parts of those states, and middle class for those parts of California and New York is de facto rich for most of the country.

I say this as someone who would actually benefit from the deduction. Do I swim in my Scrooge McDuck coin vault every evening? No. But I'm not going to pretend that I'm not well-off.


The standard deduction is IMO a load of crap. With a large standard deduction, only high-income people can make tax-deductible charitable contributions.

The right way to do it would be to make the standard and itemized deductions additive.


I make tax-deductible charitable contributions all the time. They're not tax-deductible for me, but I don't judge my charitable giving solely on whether I am able to ultimately deduct that particular donation from my taxes.


How is the standard deduction stopping non high income people from making tax free charitable contributions?

I thought all charity is deductible from taxable income.


Because you're better off taking the standard deduction so you have no tax incentive to make charitable contributions.


Yes, that I knew. I would not summarize that as

> only high-income people can make tax-free charitable contributions


Okay, so you can donate $100 to charity, feel warm and fuzzy because it’s tax-free or however you want to think about it, and pay exactly the same amount of tax as if you didn’t give the gift.


Right. You can also create a charity, which you run, and donate millions of dollars to it, and write that off against your taxes as a charitable donation.

Then, because you run that charity, you can still spend the money (mostly) as you please.


Exactly. But the point here is this is only available to people who wish to donate more than about $13k per year.


Yes, that's how the standard deduction works.


You can’t deduct charitable donations unless you don’t take the standard deduction. Instead, you must itemize your deductions. In practice this means you take the standard deduction because most people don’t total more than the standard deduction when they itemize (you have to be decently rich to afford to donate that much!).

Last year you could deduct up to $300 in donations on top of the standard deduction, but I didn’t see it this year.


> In practice this means you take the standard deduction because most people don’t total more than the standard deduction when they itemize (you have to be decently rich to afford to donate that much!).

Charitable donations aren’t the only itemizable deductions.


Ok, I’m sorry for not enumerating all possible itemized deductions when we’re talking about charity specifically.

However, charity is probably the most well-known deduction that you can control (in contrast to stuff like state taxes, which are more or less predetermined). And even among the deductions you control, those deductions require some spending. Can a non-rich person really spend enough to itemize beyond the standardized deduction? If you know how, please let me know because I’ve never gotten close to the standard by itemizing! Even when I’ve had large purchases to compute sales tax for I’m still far away.

Otherwise, it’s pretty clear that, generally speaking, charitable donations aren’t helpful for reducing one’s taxes. I’m sure people donate because they want to, but the tax benefits are not part of the calculus.


How do you donate $15K if you’re not high income? If you donate $2500 nothing changes. You pay taxes on it.

Really no charity is deductible except rich people charity.


Why does this matter? A $100 deduction in income has a very, very, very small effect on your overall tax liability.


If we look at the amount of money people earn, pay taxes on, and how wealthy they are, many patterns show up. Including rich people donating to avoid taxes and poor people without much income not being able to deduct $1K. Or $2K. Pick any number. $100 is the unimportant part.

I changed the number to $2500 if that makes it easier. That does dilute the importance because a lot if not majority of the country can’t donate $2500 extra a year from their current budget and income.


Say you can afford to donate $x. If it's tax deductible, you can then afford to donate $x / (1-T) where T is your effective tax rate.


Turns out there's a workaround for people who have pass through companies (LLCs and S-Corps). If you pre-pay your state taxes from your company those will be excluded from the new, lower deduction cap.

Wild.


s/moderately wealthy/already highly taxed/g

Fuck that noise about capping the SALT deduction. Seriously. I live in a place that has high property and state taxes because we pay our fair share to give residents of my state a decent life. Property taxes for fixer-upper starter homes in my area exceed the SALT deduction cap. The cap hits people who are "moderately wealthy", but that definition of moderately wealthy cuts into what is decidedly the middle class.

You can try to twist it like it was some win for the working class, but it was aimed smack at blue states as a punishment for doing the right thing.

Good schools, effective municipal services, and so on. The bullshit federal money sucking states, with their lower property and state taxes, discovered it's easier to just get the federal government to pay for your stuff. Poor people do worse, rich people do better.


> I live in a place that has high property and state taxes because we pay our fair share to give residents of my state a decent life.

What if the high taxes are because politicians and union leaders from decades ago promised lavish post retirement benefits to government employees in exchange for low taxes, then underfunded the savings and/or made corrupt investments, and now find themselves taking taxes from taxpayers today to pay for labor performed decades ago?

See IL/NJ/CT.

Also, in NJ’s case, high taxes because of 500 different governments with redundant police/schools/fire/other government employees.


Most of those raises on the moderately wealthy will expire December 31, 2025, the ones on the middle class won't


The SALT deduction cap definitely raised taxes for me and I wouldn't call myself any kind of rich. As a Massachusetts resident I took it for what it is, an attack on people that live in blue states. I am sure it gave D.T. a deep sadistic pleasure to claim "I lowered your taxes" knowing he raised them for millions of people. The cap is fundamentally unjust since I am paying Federal Tax on money that I use to pay taxes to city, state etc.


If the fact that gifts above 14K a year are taxed sends you to the barricades, you may want to check which side of the barricades you’re on.


Gifts above $14k are not taxed in the US. Currently, you have to give away $13M+ in your lifetime before you are subject to estate tax.


The French, despite having a bad rap, have it right.

Their government fears them, not the other way around. And they don't even use guns.


Careful now. "Intellectuals" don't tend to do very well when things go that way. A heck of a lot of them will wind up losing their heads along with the elite. Techies, journalists, and other well-ish off white collar cogs in the machine would do well to think a little more about what people outside their bubble think about their profession's effect on society.


It's OK, the TCJA was from the party they oppose, so they don't mind you bad-mouthing that law. You had better not question the ACA or the "inflation reduction act."


Slow your roll. You have no idea who I am or what I stand for - and I'd bet we're more aligned than you think.

I'm of the opinion that both parties have been captured by criminals, so even if you fall on partisan lines, we agree on at least half. The ACA was a distraction tactic so the banks could rob us blind and the inflation reduction act isn't a lot better - so great, the top 1% are gonna pay 0.2% more in taxes. Whee.

The solution isn't to back the lesser evil, it's to stop backing evils altogether.


This. Y'all need to read more history.


The interesting history is people will behead even themselves to get at the elite. See everyone in Zim / Rhodesia driving out the farmers that they surely knew they needed to eat, followed by utter destruction of their foodstocks and hyperinflation.


Not only that, merely naming their laws with words that are opposite to what they do appears to completely take the heat off them.


Er, there have been several elections since 2017, when that bill was passed. The Republicans had control of the Presidency, House, and Senate in 2017. They eventually lost all three, but recently gained back the House. Locked up the Supreme Court though.


>That atleast makes it harder for FTX to claw back that money.

The 'Madoff Recovery Initiative' was incredibly aggressive in going after all of Madoff's family and acquaintances. SBF's family and acquaintances are going to be fighting lawsuits for years and will lose millions.


>and will lose millions.

millions they arguably shouldn't have had in the first place, since they were proceeds of crime.


>> Atleast SBF took the extra step of first funneling money to Alameda and then directing Alameda to send it back to him and then send it to his dad as a tax free gift.

I am pretty sure it's the source of the money that matters more (legal vs. illegal) than whether the accounting tricks are legally sound.

What you're saying sounds like "at least he wasn't a complete numb-nuts", but that's not much of an "at least" in this scenario.

I am pretty sure the courts will be looking for an "at least he wasn't stealing from his customers".

At least, that's the sane hope.


Also if the father is “in on it”, then this would also lead to an additional conspiracy charge that adds him to the cabal.


> One interesting thing a lawyer pointed out to me is that a lawyer has a duty to ensure that the money used to pay them wasn't from the proceeds of a crime.

I don't think this is true in the US. Lawyers do not have any obligations under the Bank Secrecy Act or laws that would require this and there are other things like the text below that would make prosecuting a lawyer for this very difficult,

https://www.law.cornell.edu/uscode/text/18/1957

> (1)the term “monetary transaction” means the deposit, withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument (as defined in section 1956(c)(5) of this title) by, through, or to a financial institution (as defined in section 1956 of this title), including any transaction that would be a financial transaction under section 1956(c)(4)(B) of this title, but such term *does not include any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution;*

https://www.justice.gov/jm/jm-9-105000-money-laundering

> Because the Department firmly believes that attorneys representing clients in criminal matters must not be hampered in their ability to effectively and ethically represent their clients within the bounds of the law, the Department, as a matter of policy, will not prosecute attorneys under § 1957 based upon the receipt of property constituting bona fide fees for the legitimate representation in a criminal matter, except if (1) *there is proof beyond a reasonable doubt that the attorney had actual knowledge of the illegal origin of the specific property received (prosecution is not permitted if the only proof of knowledge is evidence of willful blindness);* and (2) such evidence does not consist of (a) confidential communications made by the client preliminary to and with regard to undertaking representation in the criminal matter; or (b) confidential communications made during the course of representation in the criminal matter; or (c) other information obtained by the attorney during the course of the representation and in furtherance of the obligation to effectively represent the client.


I appreciate your response and this is what I also countered with, though not as nicely cited:)

this is a good response

https://www.moneylaunderingnews.com/2018/09/use-of-tainted-a...

Turns out its not black and white as people expect

- lawyers fees can be clawed back due to asset forfeiture.

> Federal forfeiture laws, on the other hand, pose a different kind of risk for lawyers — one that the Safe Harbor Provision does not protect against. Forfeiture laws are premised, in part, on the notion that tainted assets belong to the government as of the date the underlying offense was committed

- while its true that courts have decided that taking all of a persons money so they can't pay for their defense has been ruled illegal by the courts the amount of money that lawyers think the client has can be significantly reduced by the courts. So if SBF has say $20M now, the courts can claw back 75% of that leaving the client with far less to pay than the lawyers originally though.

Or put another way, you are entitled to a defense, you are not entitled to have unlimited funds to pay for your defense.

Also given that the money is coming from SBF' dad( a third party) and not SBF this seems to be relevant.

> Moreover, the Fourth Circuit has held in a divided decision that the Safe Harbor Provision does not apply in instances whereupon an attorney “receives and deposits” tainted funds from a third-party payer.


Yes that's true, in fact they can freeze some of your untainted money pending trial in order to preserve it for forfeiture. I just don't think the lawyer would get in trouble for it and in the worst case would have to give back some of the money. If you read the Blair decision it is way different than this case because he was laundering money on behalf of his narcotics trafficking clients through real estate.


“I’ll give my ill gotten gains to someone who technically wasn’t involved (until they accepted my money)” couldn’t possibly be a new trick. (Hypothetically that is, if SBF actually did a crime; I’m not following the case).


> One interesting thing a lawyer pointed out to me is that a lawyer has a duty to ensure that the money used to pay them wasn't from the proceeds of a crime.

If that's true, it seems a bit ridiculous. SBF is pleading not guilty. Are his lawyers supposed to do their own little investigation to figure out whether their client is actually guilty?


> Are his lawyers supposed to do their own little investigation to figure out whether their client is actually guilty?

Umm, yes? Not because of the money thing, but in order to do their job properly.

I'd think that if they were doing their job properly, it would be pretty clear pretty quickly whether or not their client is guilty. And whether or not their client is guilty is important for them to know, because it will definitely affect how they proceed with defending their client.


Well as I had it explained to me.

Run the following thought experiment.

You are a lawyer. Your client is accused of robbing a bank. The bank has the serial numbers of the bills taken. Your client pays you in cash and the serial numbers match the stolen ones.

if you agree that you are being paid by the proceeds of a crime, then congrats you agree with the law and now all you are figuring out is where the line is.

Turns out its somewhere between a forensic audit of your client and 100% certainty that you're being paid with stolen funds.

The government or prosecution claiming the funds you're being paid with are from the proceeds of crime is well within the ethical and legal bounds that lawyers are held to.

Like many issues when it comes to professionals, there is often a burden on the professional to make sure they are acting ethically. Engineers can't build a building to a clients spec if it would be dangerous. Doctors have a duty of care to not harm a patient even if the patient wants to be harmed and lawyers have a duty of care to know the origins of the funds paying them.

That's one of the burdens of being a professional

Courts are more than happy to adjudicate if there is a gray area.

Also if that doesn't convince you then remember, people can be forced to hand back assets that were stolen even if the owner had no way of knowing ti was stolen. The lawyers don't want to spend all that time defending SBF and be paid with stolen funds, just to have the courts come and tell them to pay back the money as it never belonged to SBF at all.

It's in their own best interests to know and vet where the money came from.


In the sense of whether their client has committed the underlying acts they are accused of, yes, this is something a lawyer would definitely want to know, and try to find out, as it effects what legal defenses can actually work vs. are likely to be swiftly rebutted.

(I realize there a much broader claims being made in this thread, like about where the payment money is bad and what obligations that prompts. I'm not attempting to address issues such as those, just the narrower topic above.)


> Are his lawyers supposed to do their own little investigation to figure out whether their client is actually guilty?

Actually yes, they are supposed to do that. Not because of money, but as they are preparing the defense.


That's besides the point though. Consider the legal principle of "innocent until proven guilty" - a fundamental pillar of the justice system. It is not the job of a lawyer to determine whether a defendant is guilty or innocent; they are only responsible for presenting evidence and arguments to support their client's case. Ultimately, it is the judge or jury who must decide whether to convict or acquit. The whole process is designed to determine guilt. Requiring a lawyer to know whether their client is guilty in advance amounts to asking them to predict the outcome of that process, to foresee the future.

PS: I am not trying to defend SBF here and I hope that that any money linked to Alameda/FTX, including the money he sent to friends and family, is clawed back. But that's a separate issue.


> Consider the legal principle of "innocent until proven guilty" - a fundamental pillar of the justice system.

It's "innocent until proven guilty in a court of law". Not necessarily in your lawyer's office.

> Requiring a lawyer to know whether their client is guilty in advance amounts to asking them to predict the outcome of that process, to foresee the future.

No, that's a different thing. Requiring a lawyer to know the facts is not requiring the lawyer to know how the court will rule in the case.


They can form an opinion on whether their client is guilty. But they can't know whether they are correct until the verdict.


Well, sure they can, unless you mean "guilty" in the sense of a court finding them guilty rather than in the sense that they actually committed the crime.


>Consider the legal principle of "innocent until proven guilty" - a fundamental pillar of the justice system.

Let's not put the cart before the horse. It's the law firms obligations to make sure they aren't participating in a crime, it has nothing to do with assuming someone's guilt.


So tell me: if the lawyers get paid by SBF, are they participating in a crime? Doesn't the answer depend on whether SBF is guilty or not?


If they're knowingly being paid from the proceeds of a crime then yes, they're participating in the crime.


That's different from "has a duty to ensure that the money used to pay them wasn't from the proceeds of a crime" though. If their client claims they're innocent, would they be clear because they don't know that their client is guilty?


No, because "knowingly" isn't an element.


If he's convicted, yeah. Based on the facts, they are getting paid by money he stole himself and directed to his family.


the issue might be not the lawyers getting into trouble necessarily but for those fees to be confiscated. Why would you as a lawyer sign up to do all this work when there is a chance your fees will evaporate?


Indeed. If that's what OP meant, it makes a lot more sense.


Sorry, do you think ignorance is an excuse for a crime? I don't believe there is an intent requirement, so their mental state at the time of receiving the money is of no consequence.


Yes, it ought to be. Otherwise, you would be taking a big gamble anytime you accepted money from strangers. It would be quite impractical. Also, it goes beyond mere ignorance, it's unknowable. SBF's lawyers will find out whether he is guilty on the day that the verdict is pronounced.


>Yes, it ought to be.

Lol, since when? Oh, your honor, I didn't know murder was BAD!

> Otherwise, you would be taking a big gamble anytime you accepted money from strangers.

Really? Hasn't been an issue for me at all. Are you sure it's that big of a gamble? Maybe you should think about the kind of people you are accepting money from?

> It would be quite impractical.

As I said, hasn't been a problem for me. And I'm an attorney too! I get paid!

> Also, it goes beyond mere ignorance, it's unknowable. SBF's lawyers will find out whether he is guilty on the day that the verdict is pronounced.

This is literally the opposite of what you described. They are lawyers with expertise in this exact kind of crime and they are well aware of the risk presented by taking money from him. They know he stole money. They know he stole money and saved it for himself.


I was not talking about murder, I was talking about receiving money. It has to be the least enforced law ever... Because the chances of breaking that law as a phone company, or as a taxi driver are close to 100%.

It's a bit sad that you are an attorney and don't seem to believe in due process. If his lawyers "know" that he is guilty, I hope for his sake that he finds lawyers that don't "know" it, given that he is pleading not guilty.


>I was not talking about murder, I was talking about receiving money.

Well, when should it be an excuse? You didn't really seem to offer any bounds, and I put it as "a crime".

>It has to be the least enforced law ever... Because the chances of breaking that law as a phone company, or as a taxi driver are close to 100%.

I don't think the law is really targeting taxi companies or phone companies. It's targeting people who abet criminals by taking their money in exchange for services or goods.

>It's a bit sad that you are an attorney and don't seem to believe in due process.

It's not a surprise that you think that considering you clearly have no idea what due process is.

>If his lawyers "know" that he is guilty, I hope for his sake that he finds lawyers that don't "know" it, given that he is pleading not guilty.

Geez, I can't state it enough for you, huh? "Knowledge" is not an element of the crime. So everytime you say they "know" something, it's completely irrelevant to the issue and only reflects your willful misunderstanding of this entire conversation.


> Atleast SBF took the extra step of first funneling money to Alameda and then directing Alameda to send it back to him and then send it to his dad as a tax free gift.

Isn't this worse for him in the long run if he's found guilty though? Words like "structuring", "posturing", "evasion" come to mind...


> Words like "structuring"

As much as I want to see that scammer and his family rot in jail , as much as I find "structuring" totally unfair.

If you set the limit to, say "$1 K / day" and then someone does "$1 K / day, everyday", it's not doing anything wrong. Instead of inventing the concept of "structuring", instead write the actual limits more clearly: "$1 K / day, $10 K / year max" (for example). Then it's clear that the limit is $1 K / day max and that you can only do it up to 10 times a year.

For otherwise it's just one of the oh-so-many arbitrary rules invented so that even honest people may be, unknowingly, doing something illegal.

Laws against structuring makes me think of this: "The more numerous the laws, the more corrupt the state".

The state should make the law clear or go fuck itself.


I’m sure Stanford considers this ethical behavior by his father.


Ah, The Floor Is Lava defense.


Stealing money then gifting to yourself via a trusted straw man? Now that's effective altruism!


(tangent) Ok this confuses me:

> (in December, their $1.8 million Palo Alto home was used to secure a $250 million bail package after Bankman-Fried was released on a personal recognizance bond.

Their Palo Alto home is worth only $1.8M? Do they live in a 1BR/0.5BA shed?

edit: Apparently the assessed value (for property taxes) is $1.8M. But realtor sites estimate it at $3.1M, and it was apparently renting for $12,000/month back in 2013. Still cheaper than I thought for a 4-br home on Stanford's Dish

https://sfstandard.com/business/inside-sam-bankman-frieds-pa...


The house is on the Stanford campus, and is under Stanford’s control. It can only be sold to Stanford employees, so it limits the value.


It seems weird that they could us a property constrained like that to secure a bail.


Why not? Many houses can be constrained by a HOA, state law etc. It‘s value and market value can presumably still be determined, so I would assume it can be used.


$250 million bail secured by a $1.8 million house and that's the weird part?


There’s actually nothing at all weird about that.


Only because federal courts are consistently weird about it! :-p

From an objective, outside perspective, it's definitely weird to say, "Put up $X to assure us you'll actually appear for trial. Oh, you're putting up .01X? Okay, we're cool."

Like, even accepting the validity/logic of the cash bail system, they should just be honest and call it .01X bail. The full X is never actually used for anything beyond "look at us, we're a serious court, taking this flight risk seriously".

(To pre-empt a thoroughly well-tread response from the previous threads: Yes, I know, in SBF's case, the parents are on the hook for the rest of the X, so X is, in a sense, "used". But their net worth is nowhere near X -- more like .04X -- so that just pushes the farce ratio down to .96X, which, while better than .99X, is still pretty darn close to X.)

My earlier comments about this absurdity:

https://news.ycombinator.com/item?id=34810830

https://news.ycombinator.com/item?id=34599868


> From an objective, outside perspective, it's definitely weird to say, "Put up $X to assure us you'll actually appear for trial. Oh, you're putting up .01X? Okay, we're cool."

What is historically weird in the history of money-involved bail is the practice of having a penalty plus either full-value security or arms-length employment of a government-licensed agent as surety with a government-set fee schedule; penalty, surety, and security are three separate levers to acheive compliance.

What’s weird from a system outside of money bail world is...money bail.

The federal system of the courts having freedom to adjust the compliance levers independently to acheive what they feel is necessary sufficiently acheive compliance is weird only from the perspective of the system that has evolved away from that in state practice (and the even more divergent image of that state practice that has been advanced by popular media portrayals and misunderstandings.)

> Like, even accepting the validity/logic of the cash bail system, they should just be honest and call it .01X bail

Would you view a $100,000 non-dischargeable, non-expiring debt to the federal government when you have $100,000 in current assets as equivalent to $10 million non-dischargeable, non-expiring debt to the federal government when you have $100,000 in current assets?


I wasn't criticizing additional means to achieve compliance -- I don't know what you think you were addressing there.

>Would you view a $100,000 non-dischargeable, non-expiring debt to the federal government when you have $100,000 in current assets as equivalent to $10 million non-dischargeable, non-expiring debt to the federal government when you have $100,000 in current assets?

Would you view the $10 million as anything other than a number that attempts to sound big but will not have any meaningful impact?

I can see $100k vs $200k as being a meaningful distinction, but not $100k vs $10 million (re-read the farce-ratio part).

>What’s weird from a system outside of money bail world is...money bail.

Did you miss this part?

>>Like, even accepting the validity/logic of the cash bail system,


> Did you miss this part?

Well, I addressed:

(1) What was weird within the history of money-involved bail, and

(2) What was weird outside that context, and

(3) Why the federal system was not #1, and

(4) What context the federal system was weird in.

So…no?

Did you miss…my entire post?


I missed what it was responding to beyond “look I can show off my knowledge and my proud opposition to cash bail”.

If you want to dispute the “not weird” label, you should reply to the person originally making it. As it stands, you’re responding to something I didn’t say while implying you’re correcting something about it and getting in your virtuous anti-cash bail jabs (to say nothing of the word salad in your paragraphs 1 and 4 — try quotes or something to make it easier to parse).


It’s a silly game they play, but the fact that it’s common means there’s nothing weird about it happening here.


That's exactly the distinction I was making in the first two paragraphs, about "weird" relative to existing practice vs "weird" relative to the outside world's standards for reasonable behavior.


I suppose Stanford could buy it back for the agreed to price thus providing them cash. Seems they don't need it however.


I think you make a great point and I agree, but to play devils advocate for a second...

Do we think Stanford is lacking in people willing to live there? I bet it may even increase the chance (so long as the HOA is not all that bad!)


You're right, the thing limiting the value is not demand - there are more than enough faculty and high-level staff that want to live there.

The thing limiting the value is the other restrictions that Stanford imposes on these houses - namely they essentially control the price the houses sell for because they all have to be financed through a Stanford-controlled lending program.


The house is on Stanford land and so does can only be sold to Stanford faculty or staff. In fact, it's technically not even owned, it is leased from the university.

This changes the pool of potential buyers, and therefore the market is quite different than the normal Palo Alto market.


They live in housing that can only be purchased by Stanford professors.


Talk about being sheltered.


It's a big club but you ain't in it.


Looking right now at listings in Palo Alto, the few things in that range ($1.5M-$2M) are 2-3 bedroom, 1-3 bath, 1,200-1,900 sq. ft.


Whoa.

My GUESS is that since he's being prosecuted for fraud, et al, they can't say these were illegally obtained (innocent until proven guilty) and therefore they can't seize the funds yet.

And if the lawyers are in on it, they're over billing and keeping building an escrow fund that would go back to one of them at the end.

The scumminess is rather impressive.


Prosecutors might not be able to immediately seize assets, however if they have evidence that those assets were obtained through criminal activity then they can ask the court to freeze the assets pending the outcome of a criminal trial.


> And if the lawyers are in on it, they're over billing and keeping building an escrow fund that would go back to one of them at the end.

The ones in charge of the bankruptcy are also bleeding the customers and investors dry. They charged $700 million in the Madoff case. There are $10 bn missing here. It's not unthinkable they'll steal 10% of that.

They are vermins, just as scummy as SBF. But it's legal.


Civil forfeiture law says the money can be seized on mere suspicion of being involved in a crime.


There's an interesting ethical dilemma and it must apply to lots of cases.

It seems obvious that nobody should benefit from the results of their crime.* But if the accused is innocent until convicted, shouldn't it be OK to spend the ill gotten gains on their defense? After all, if they win the gains were legitimate, and by induction they were legit until conviction.

How is this circle squared in practice?

* this principle is more easily stated than enforced. Some places don't allow convicted criminals to earn any money from writing a book about their crimes (this rule seems reasonable) but where does it end? Apparently Bernie Madoff got respect in prison for the magnitude of his theft. That was a benefit of sorts...


This is basically what civil forfeiture is designed for (although it's being severely abused). The cops arrest you and seize all assets that are suspected of being used in or obtained by the suspected crime.

This has been heavily abused in California and elsewhere [1][2] to seize assets from marijuana dispensaries or "suspected drug criminals". Cops seize product and money, never file charges, and then let the business owners fight for months/years to get their property back (often times with the seized product having long since expired), despite no charges having been filed.

IMO it's an egregious violation of the 4th amendment and it's maddening that more isn't being done to stop the practice.

[1] https://reason.com/2022/02/04/a-california-sheriff-remains-f... [2] https://www.newyorker.com/magazine/2013/08/12/taken


> This is basically what civil forfeiture is designed for (although it’s being severely abused).

No, this is basically what criminal forfeiture, and freezing assets potentially subject to it, is designed for.

Civil forfeiture was designed for trade protectionism in the British Empire, but then it became an end-run around criminal process in the US, particularly around Prohibition.


How does the law work? If you nab a pile of money from your customers and give it to your family, and then get sued, what happens? If you lose, does the court reverse all the transactions and give it to the creditors? Or can you just have your parents give you money to live off when you're out of jail? Surely not?


FTX creditors will presumably sue SBF's parents in US civil court and claim fraudulent conveyance. The plaintiffs will certainly ask the court to freeze those assets and not allow them to be squandered on criminal trial defense, but who knows whether the court would approve such a motion.


I believe the creditors would have to challenge the gift as a "fraudulent transfer", based on the idea that at the time the giver knew they were open to a huge liability from having taken the money in the first place. And then another similar step to go after the money that went to the attorneys.

And in this case the "creditor" would be the FTX bankruptcy estate, led by whomever has been appointed the receiver. Theoretically they should be working for creditors of FTX, but can obviously have their own motivations of expediency, not wanting to rock the boat by suing another firm, etc.


You always hear RICO get thrown around in these sorts of things, which allegedly allows the government to seize anything obtained as part of a criminal enterprise, but I'd need a lawyer to weigh in and determine whether that's actually true and whether RICO would apply to this case.


A good guideline to use in internet discussions where this is raised is: It’s never lupus. Er, RICO, never RICO.

This is…not an exceptional case in that regard, AFAICT.

(RICO has a very specific definition of a criminal enterprise which, while it may occasionally apply to something that doesn’t look very much like the Mafia, usually doesn’t. It is not “any enterprise that involves crime”. There are a whole lot of predicate offenses, but they aren’t all crimes, and the enterprise has to relate to them in a particular way.)



It takes time to investigate the transfers and prove they were fraud proceeds before possibly clawing them back...as the investigation lingers, prosecutors will likely ask SBF's dad to return that money.


As far as I understand the law, not being an actual lawyer, this is the "rationale" behind asset seizure: prevent a criminal from funding his or her defense with the proceeds of criminal activity. Obviously in the poster-child case, they haven't been convicted of anything yet.

I'm not defending asset seizure: it's become a way for the government to steal assets without trial. But SBF cleverly made it what lawyers like to call a "close legal question" by funneling the money to his father as a gift.


This isn’t that money! It’s entirely different money I saved while spending the Alameda cash!


Forbes has carved a uniquely slimely niche for itself. (These days I almost look at a Forbes promotion of a startup as a negative signal.) At the bottom of that article there are "more from Forbes" stories on the (now) 'bad bad' Sam. Search for Forbes articles from before the reveal for "more from Forbes" stories which I guess they didn't have room to link to in the bottom.

(Naturally pointing out Forbes' role in pimping Sam Bankman-Fried in no way is supporting the 'wunderkind' or his & co.'s fraud.)


Here are 2 questions I have about this whole FTX saga:

1. How is it that a supposed $250 million bond was secured with (according to news articles) significantly less value than that in assets? How does that work? The collateral seems to be his parents' house, a few hundred thousand in cash assets and little else beyond that. Huh? So what makes this a $250 million bond?

2. The government can (and routinely does) seize assets without the owner being convicted of anything. Hell, they do it when the owner never gets even charged with anything. To me, this is a clear 4A violation and should be unconstitutional but the 4A holds no sway over current judicial politics so here we are.

In this case we have clear evidence of fraud. Pretty much anything SBF touched with FTX or Alameda money can quite reasonably be presumed to be the proceeds of crime. Why on Earth in this case is the government not seizing, well, everything?

Bear in mind that the legal standard for this is quite broad. If you buy a $1 million home with $100,000 of fruad proceeds and $900,000 of your own money, those fraud proceeds taint the entire asset, not just the portion directly tied to fraud. As such, any money given by SBF to anyone poisons pretty much every asset the gift-receiver owns. The government would be well within its right to seize or at least freeze pretty much everything.

So how have SBF's parents escaped the government's seizure net?

If you think about it, it's the equivalent of robbing a bank and then using those stolen funds to pay for your bond and lawyer. The government wouldn't stand for that in the case of armed robbery. Why are they here?


> How is it that a supposed $250 million bond was secured with (according to news articles) significantly less value than that in assets? How does that work?

That’s…just the way federal bail tend to work [0].

> So what makes this a $250 million bond?

Because that’s what SBF and his parents have consented to become jointly and severally liable for, with essentially no available defense (bail forfeiture is essentially an automatic default judgement) if he fails to appear, etc. The “bond” is the agreement to be subject to that liability. Security for the bond is a separate thing, and unlike many state systems, full-value security or the involvement of a licensed bail agent isn’t a norm that applies.

> The government can (and routinely does) seize assets without the owner being convicted of anything. Hell, they do it when the owner never gets even charged with anything. To me, this is a clear 4A violation and should be unconstitutional but the 4A holds no sway over current judicial politics so here we are.

> In this case we have clear evidence of fraud. Pretty much anything SBF touched with FTX or Alameda money can quite reasonably be presumed to be the proceeds of crime. Why on Earth in this case is the government not seizing, well, everything?

Believe it or not, even if you don’t like the process, there is legal process involved in seizures of assets suspected to be proceeds of a crime (including if they are not going through civil forfeiture, but being held as subject to future criminal forfeiture, which seems more likely in this case). “It appeared in a news article” does not fulfill the procedural requirements on its own.

[0] actually, its more of a mixed bag, IIRC, because the individual districts have their own practice, but its how federal bail often works, and in SDNY particulary.


> 1. How is it that a supposed $250 million bond was secured with (according to news articles) significantly less value than that in assets? How does that work? The collateral seems to be his parents' house, a few hundred thousand in cash assets and little else beyond that. Huh? So what makes this a $250 million bond?

I believe it boils down to "making a statement". Even if SBF's friends and family were only able to offer up $2.5m in assets (i.e. 1% of a $250M bond, instead of the more common 10% threshold), it's still (according to the court) a massive disincentive for SBF to flee. But the court still wants to assert that he's accused of crimes that merit such a massive bond.

From Bloomberg:

https://www.bnnbloomberg.ca/sbf-s-250-million-bail-is-one-of...

> Such bonds also signal the seriousness of the crime being charged, and federal prosecutor Nicholas Roos made that point in court.

> “Mr. Bankman-Fried perpetuated a fraud of epic proportions stealing billions for customers lenders and defrauding investors,” Roos said.

That said, with the revelation in today's Forbes story, I wonder if knowing that Mr. Bankman had $10M worth of gift money from his son was known to the court at the time, or relevant to the bond agreement? i.e. would the court have demanded that money be stashed as collateral along with SBF's home? At the time the bail was announced, SBF was claiming his personal assets were in the $100,000 range


> Even if SBF’s friends and family were only able to offer up $2.5m in assets (i.e. 1% of a $250M bond, instead of the more common 10% threshold)

The “more common 10% ‘threshold’” isn’t actually a threshold for security pledged to the court, It’s the fee paid to a licensed bail agent (very often, legislated as the fixed or minimum fee for that service in state law) to stand as surety as an alternative to the defendant offering full value security.

But, again, that’s a common feature of state bail systems, not the federal system, which can be much more flexible.

> That said, with the revelation in today’s Forbes story, I wonder if knowing that Mr. Bankman had $10M worth of gift money from his son was known to the court at the time, or relevant to the bond agreement

If it wasn’t (or if the evidence that it was stolen hasn’t already been reviewed and considered by prosecutors), I would expect further action related to bail conditions and possibly freezing/seizure of that money in the near future.


Just compare [1] how swifty and unilaterally the government can act in seizing assets. In this case, Amazon alleged to the Department of Justice (specifically the US Attorney's office for the Eastern District of Virginia) that Carl Nelson, a former employee, had committed the obscure crime of "honest services fraud" and, based on that, the US attorney seized the assets of Carl Nelson, his family, a bunch of associates and even their lawyers.

By the way, that was 2 years ago. The government ultimately settled and returned most of the money. No one has ever been charged.

So why is SBF getting the kid glove treatment? In other circumstances, based those gifts, SBF's parents' assets would 100% be seized.

I stand by my assertion that SBF secured his release with the proceeds of the crimes he committed.

[1]: https://reason.com/2022/02/18/fbi-seized-almost-1-million-fr...


This guy just won't quit. It's a circle firing squad of a mess. Even the cynic in me, who from the beginning of this affair thought he would never go to prison, is starting to gain hope that he actually will..


The FTX bankruptcy trustee will be able to claw it back as an avoidable transaction.


The FTX bankruptcy trustee will charge $18 million in fees to claw back that 10 mil


The FTX bankruptcy trustee is charging $18 million in fees (or however much he's charging) to run a team of people who have been auditing and unfucking FTX's and Alameda's books for the past four months, and will continue to for a long, long while going forward.

He's not paid $18 million to deal with any single problem with the money of a firm that kept no ~books, but had >100 offshore shell companies to conceal the flow of money, and a million people screaming at it that they are owed money. He and his team is paid to deal with the whole thing.

Also, about $10 million of that has been legal fees. [1]

[1] https://www.cnbc.com/2023/02/08/ftx-bankruptcy-fees-near-20-...


> The FTX bankruptcy trustee will charge $18 million in fees to claw back that 10 mil

$18 m? I thought they charged $700 m to claw back money in the Madoff case. (I may be off by one order of magnitude though). People in charge of these claw backs are thieves too and they go for easy money, legally, with the benediction of the state, at the expense of people who've been scammed.


The real Effective Altruism is the altruism we gave ourselves along the way.


There is a sick irony in this


And Dad is a Law Professor. Hope he's not teaching the ethics course.


I've known a few people who have taught ethics courses. None of them were ethical by any stretch of the imagination.

Maybe I've just met a bad batch.


There are studies that show ethicists are no more ethical than the general population.

https://www.tandfonline.com/doi/full/10.1080/09515089.2012.7...

> However, on no issue did ethicists show unequivocally better behavior than the two comparison groups.

https://www.tandfonline.com/doi/abs/10.1080/09515089.2019.15...

> Our results indicate a successful replication of the original effect that ethicists do not behave any morally better compared to other academics across the vast majority of normative issues.


Kinda like how marriage therapists have slightly higher divorce rates than the national average?

https://psychcentral.com/pro/do-marriage-family-therapists-h...


And IT people can't get the printer to work either?


Makes sense to me. I suspect most people are not quick to end a bad marriage, and will hold out hoping things will improve. Marriage therapists might be more likely to act on a bad situation and extricate themselves from it.


Why would anyone expect this in the first place? It'd be like expecting the pastor to be more or less religious, or more moral than his following. Ultimately they are just going to be a single sampling of the population, which means they have a pretty reasonable probability of being average.


Ehn, yes. If I see the pope in a strip club, I'll be damn shocked, but not if I see a random catholic. The difference is that the latter is a random member and the former is the literal face of his church, so he has to abide to certain tenets or at least pretend to.


I would in fact expect pastors to be more religious on average than their congregations[1], though not particularly more moral. And I would expect professional ethicists to be more interested in ethics than the population at large, though again not particularly better.

[1] It would depend a bit on what sort of pastor and what sort of congregation.


???

You'd expect Pastors or Ethicists to be more moral/ethical because they spend a lot of time thinking about being moral/ethical compared to members of the general population. Seems pretty intuitive to me.


I'd expect ethicists to have thought more about ethics and morals. I wouldn't necessarily expect them to be more moral or ethical. As C. S. Lewis says in The Abolition of Man, it's not theorems that make the difference when the chips are down.

Pastors... it depends on the pastor. Is it a job, or something they actually believe? Is it just a theory to them, or do they have any actual power helping them live it out?


Ok, so imagine that everyone has the about the same propensity to make the correct ethical decision when faced with a circumstance. You might expect there to be some number of circumstances for which the lay person may be wrong about the appropriate ethical decision and thus fail to make it correctly, whereas the ethicist would be better prepared for such. If this were the case, then you'd expect ethicists to be more ethical despite having the same ethical character as regular people.

In fact, on this interpretation, if we find ethicists are no more ethical, then we must conclude they are actually _less_ ethical than normal people, since they have more occasions where they could make an ethical decision but do not. Or we have to admit that most ethical quandaries are trivial, so that being an ethicists doesn't give you any special advantage.


Well yes, I think the usual intuition is that the people who preach something (religiously or not) should be better at what they are preaching than the ones they are preaching to. Right or wrong, I think that's a pretty common presumption to make.

Might be small sample, but that sample is also biased to have a lot of knowledge about what they are preaching (supposedly), meaning they put higher importance about it compared to other things.


Well idk about you but if I wanted to learn karate I would find an instructor who is better at karate than the average person to learn from.


We are talking about being taught in an academic context, not a practical context. So, a better analogue might be that you wouldn't necessarily expect a martial arts historian to be better at the application of martial arts than the average person.


I think I would?


How can they claim any could have "unequivocally better behavior"? What is their ground source of truth for morals?


Well, asking the ethicists if the ethicists are acting ethically would not be unbiased.


I wonder if fundamental ethical values are mostly absorbed in childhood or through genetic instinct. At some point it seems most people would just use greater knowledge of law, ethics, etc to either become better at arguing why what they did was right or wrong or use the details to get better at not getting caught. Teaching a grown adult to internalize a new value system would appear quite difficult from my observation.


I have not met many people who wouldn't compromise their ethics for some benefit. This is especially true if they think nobody will find out. So I am not sure there are fundamental ethical values.


Also, the tendency to do so depends on your financial status. Poor people will happily sell thei ethics, those who are more well off don't have to.


The situation we're discussing involves wealthy folk doing unethical things.


I'd argue that the opposite is more common. People who are well off can often feel that they are entitled to things.


I've usually seen the opposite.


You've got to know where the line is to teach people not to cross it!


Yeah for most of us, ethics is more of a “know it when you see it, don’t get to close to the line” sort of thing. Although there definitely are hard ethical question out there, so the study of it is good, they just don’t show up that often in day-to-day life.


"None of them were ethical by any stretch of the imagination."

At least they know the course material well. Isn't that the reason why you're really enrolling in the class for?


Naturally Voldemort cosplaying as a "defense against the dark arts" instructor was clearly an implication that regulatory capture is way to hide power.


If I was a student in his ethics course it would be a great opportunity to practice grilling a hostile witness


On his staff page he's described as a "leading scholar in the field of tax law". Maybe he was the one that got FTX on QuickBooks after having been paid for 11 months there.


Ethics course is not supposed to make you better person. It teaches you some theories relevant to law practice and regulations layers are under.


...Actually, it's supposed to equip you to see your actions don't occur in the void; and ensure you at least have some introductory calibration to a moral compass.

Is altering a digital artifact for someone else to be used for financial gain on their part ethical?

Transitive property says no; you're an accomplice intheir deception. The only people who tend to assert Ethics courses aren't there to help you be a better person are those that never started out with an intention to be ethical at all. At least in my experience.


Has anyone ever studied ethics at Stanford? As far as I can tell the subject is not required. CS undergrads must fulfill a "Technology in Society" requirement but it can be satisfied with bullshit like "Technology Entrepreneurship", a series of guest lectures by VCs, which is almost the opposite of studying ethics.

Nothing about a university that would let Condi Rice serve as provost screams "ethics", frankly. Their history is not one that suggests a strong ethical culture.


Portfolio diversification


[flagged]


You may be around 400 years too late to this battle, apparently.

https://www.merriam-webster.com/words-at-play/gift-as-a-verb


Webster's 1913 lists only the sense:

Gift, v. t. [imp. & p. p. Gifted; p. pr. & vb. n. Gifting.] To endow with some power or faculty.

Your link notes that much older examples exist for "to give as a gift", but also that it wasn't popularized until the 1990s, probably by Seinfeld. Might be why it strikes bradleyjg as odd—it was unusual until fairly recently, so one is unlikely to encounter it used that way in older media.

[EDIT] Are the downvotes because readers are taking the "probably by Seinfeld" as my own speculation? It's not, it's from the parent's link.


Despite other arguments, even taking at face value that gift as a verb was popularized in the 1990's, why are you fighthing about language which at the worst, has been in common parlance for nearly 30 years, and if we take other sources, even longer?


Who are you responding to? I wasn't fighting about anything.


Maybe because "gift" has a specific meaning in the tax code, especially with money transfers that involve immediate family members. No idea if that's why Forbes is using that language though.


I’d think that gift is slightly different in this situation in that a gift severs control completely vs theoretically you can give someone an item with the expectation of getting it back.

It’s really splitting hairs though, what is your problem with the word gifted? I’ve never seen someone critique it’s use before


It's not slightly different at all. If I say, "The server at the restaurant gave the man a fork", would you think the man expected to walk away with the fork?

Or to put it differently: Depositors gave money to FTX, which gave the money to Almeda Research, which gave the money to SBF, who gave it to his father. But only one of these four transactions was a gift.


To me, using Gift implies his father wrote it off on taxes as part of his lifetime gift exemption ($12.06 million). It just means SBF gave $10M to his father and his father didn't have to pay taxes on that money because he reported it as a gift.

It doesn't add much to the story though.

Edit: Thanks to comments below I found out the sender pays the tax if over $12.06M not the receiver of the gift.


Just a random bit of information but I am clearly astonished by the amount of the American gift exemption !

In France, as far as I know, it is $150k€ every 10 years to your children only.

Edit : above it has to be integrated to your income tax IIRC, paid by the receiver only.


It's tied to the estate tax exclusion. The first ~$12million of estate isn't taxed, and you can give that money away before or after you die.


> To me, using Gift implies his father wrote it off on taxes as part of his lifetime gift exemption ($12.06 million).

The gift exemption and gift taxes apply to the giver, not the recipient. (The gift and estate tax are effectively one combined tax.)


The gift exemption is for the giver, not the recipient of a gift. Recipients don't pay gift taxes in the US; givers do.


This is not quite correct. If you receive a large cash gift you may be subject to income tax on that money. This is a separate issue from The Gift Giver claiming a deduction on their taxes. The gift tax is a transfer tax, and my understanding is that it could be paid in theory by either party.

Most people don't want to pay income tax or a windfall tax on the gift so it makes more sense for the Giver to pay the transfer tax

https://www.irs.gov/businesses/small-businesses-self-employe...


The IRS link you provided supports what I said.

> The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead.

The lifetime exemption on gifts and annual exemption on gifts are thresholds for the giver; not the recipient of the gift.

> If you receive a large cash gift you may be subject to income tax on that money.

This is more or less not true? Other than the (very weird) situation of agreeing to pay the gift tax, as the recipient you generally do not owe income taxes on the gift. If you were gifted something that generates income (e.g., stock or rental property), you will owe tax on that income after you receive it.


>Why do we need gift as a verb all of a sudden?

All of a sudden? I'm in my 30's and "gifting" as a verb has been pretty commonplace for as long as I can remember...

Is there something inherently wrong with that?


Same, nothing about the verbiage struck me as odd. Perhaps the Germans in here think SBF has poisoned his father?


Gifting is a subset of giving.


tax exemption


Because "gave" could encompass a wide variety of transactions and "gifted" is a specific one.


Jumps out at me too - it's a meme spreading all over the online discussion world. not that it's improper use or a new idea or anything, but it's become really popular in the last several months. It is a useful nuance - signifying that ownership has transferred, not just possession. But, also cringe it seems like a lot of users are trying so so hard to fit in with the cool trendy kids.


I don't know about trends, but might also have something to do with non-native English speakers. In at least some other languages clearly distinguishing between to give and to gift is very common.


We give presents and we present gifts. He gifted me a bitcoin has always sounded weird to me.

It is a shortcut though. He gave me a bitcoin should be good enough. One may want more specificity. He presented me a bitcoin gift. Or he gave me a bitcoin present. Gifted makes the point quickly even if it grates on me.


This isn't new...




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