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Overshadowed by Trump, Sam Bankman-Fried nonetheless gets his trial




Early this month, as Donald Trump made a point of showing up, unnecessarily, for the first three days of his civil trial in Manhattan, and with the press treating it with all the fanfare they have treated his four criminal indictments, Sam Bankman-Fried also went on trial. 

The SBF trial is criminal and it is very likely to put SBF in prison, perhaps for a very long time. Furthermore, since SBF was in his heyday, not TOO long ago, a billionaire whiz-kid at the very top of the cryptocurrency food chain, this trial in other circumstances would itself be a top-tier spectacle. At least as spectacular as would be the civil trial of a billionaire old-man in the middle of the reality-television food chain.

SBF ran both a crypto exchange (with some bank-like characteristics)  and a hedge fund, known as FTX and as Alameda Research, respectively. I admit having written confused things about this in the recent past. In this very blog, I once referred to Alameda Research as FTX's "data-crunching arm." Here is a correction: IT WAS NOT THAT. The name, with its reference to "research," was it seems a deliberate act of misdirection. Alameda was a hedge fund, and one that at times took money deposited (with the illusion of safety) with FTX.  

Making speculative bets with someone else's chips is a crime IF you have acquired possession of that money by telling that someone else that his money is safe because you're keeping it as cash in a vault or investing it all in US Treasuries. Since such lies generally involve telecommunications, they all get classified into the broad term "wire fraud" by US federal law enforcement.  

One of the specific factual disputes is somewhat fancier, involving the details of programming.  (I still call it "programming" rather than "coding". That is a generational thing.) Prosecutors contend that SBF intentionally created a backdoor in the FTX coding that eased the flow of money between his exchange and the hedge fund, allowing the latter to access funds on account with the former.  

Here is an intriguing point about the fall of SBF. Michael Lewis has written a book about it. The author of Flash Boys, Blind Side, The Big Short, and Moneyball has in his time given odd pop-cultural cachet to a variety of arcane debates: about high speed trading, Michael Oher's home life, financial derivatives, the quantitative study of baseball, and more. The bit about Michael Oher has come back and bit him of late, but he has great success and carved out a distinct pop-cultural space. 

Now he is on the case of cryptocurrencies with the brief history of FTX and Alameda. 

I will find out what he is saying about it and report back. The book is called Going Infinite: The Rise and Fall of a New Tycoon.    




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