When I initially posted about the collapse of FTX, I ended the post off with the following:
As the recent prison sentencing of Elizabeth Holmes reminds us all, you only get in trouble if you lose the wrong people’s money. If SBF didn’t run afoul of this then we’ll probably be hearing some new pitch from him far sooner than you would expect.
Well, it looks like he might have in fact lost the wrong people’s money, because Sam Bankman-Fried (SBF) was taken into custody on December 13th. The Securities and Exchange Commission (SEC) charged SBF with defrauding investors. Additionally, the Commodities Federal Trade Commission (CFTC) has sued SBF, FTX and Alameda Research for violations of federal commodities laws.
I had also speculated that SBF would likely avoid any serious trouble related to this matter. Instead, SBF was seemingly hellbent on getting as many self-incriminating statements in the public record as possible.
Giving numerous interviews, and even appearing as a speaker at the New York Times BookDeal conference; SBF continued digging a hole for himself. I was sure he was guilty as hell, but I didn’t expect him to “let me explain” his way into federal custody.
You know things are going to end well when, after losing billions of other people’s money, you utter a statement along the lines of “my lawyers have told me to stop talking, but that’s not who I am” (source).
So far, my favourite revelation is that FTX had a group chat literally named “wirefraud“. This just barely tops the revelation that rapper-slash-crypto-thief Razzlekhan had a bag labelled “burner phones” kept under her bed.
The FTX meltdown is still unfolding, and will be concluded no time soon. The crypto world continues to grapple with liquidity crises, as Binance — the sole survivor of the large exchanges — has “temporarily paused” withdrawals of some coins, the US Department of Justice is reportedly split on whether or not to file criminal charges against Binance, and their proof-of-reserves statement has been disavowed by the firm that produced it. (Mazars has also paused all work with crypto firms.)
There will be more hearings and legal action as the crypto bubble continues to burst. The US government seems to be finally getting around to regulating the industry. I’m looking forward to the ludicrous stories that seem virtually guaranteed when dealing with an absurd market like cryptocurrency.