He lied, wheedled, and conned right till the bitter end. Hours before Bahamian police slapped cuffs on Sam Bankman-Fried, the FTX founder was on Twitter making excuses and even proposing plans for a new business that would make his clients whole and redeem his disgrace. Sociopaths are like that.
But now the whole miserable charade has come to an end. We will get the bigger picture on Tuesday when the U.S. Attorney for the Southern District unseals its indictment, but for now, we know the authorities in the Bahamas arrested Bankman-Fried for the purpose of extraditing him. And if the New York Times’s sources are correct, the Justice Department will throw the book at him with a litany of charges ranging from conspiracy to securities fraud to money laundering to wire fraud. A conviction will mean that, like Bernie Madoff before him, Bankman-Fried could receive a prison term of well over a lifetime.
This is as it should be. The FTX founder operated one of the largest swindles in history, all the while painting himself as a simple-living do-gooder—even as he enjoyed a plush life of penthouses, drugs, and screwing around over endless League of Legends games. His arrest will once and for all end the news reports that Bankman-Fried was just a nerdy kid who got in over his head or that FTX’s collapse came about due to some sort of unlucky bank run. Meanwhile, his Stanford law professor parents—who have been in the Bahamas for weeks offering their son legal advice he wouldn’t take—are reportedly under investigation too.
This leaves the question of what comes next. For now, the answer is likely to be “not much” as the legal process grinds forward with the technical elements of extradition, arranging a trial, and imposing a sentence. All of this will take years. In the meantime, U.S. citizens can be assured that their justice system is mostly working, and that, contrary to the wilder speculations on social media, Bankman-Fried’s political connections will not allow him to skate.
And for the crypto community, it will mean a time for them to get on with things and to heal. Sure, there is not a lot of sympathy for the crypto crowd among the general public—many of whom are gleeful with schadenfreude right now—but the reality is a lot of good people were hurt and traumatized by Bankman-Fried. These include small-time investors who lost their money after being lured by FTX’s celebrity ads, but also hard-working entrepreneurs building legitimate companies around the marvelous technology called blockchain. But they will recover and turn the page. As one entrepreneur wrote on Twitter, “The justice department will do its work. The rest of us can move on. I’ve got no interest in the circus. Good riddance and onward.”
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
DECENTRALIZED NEWS
A new transparency report by Coinbase shows a 66% percent jump in law enforcement requests, a result of both the company's rapid expansion and more aggressive government policies. (Coindesk)
Congress is convening its first hearing on the FTX mess that is suddenly without its star witness but that is expected to produce a few new twists. (Fortune)
Hedge fund maven Cathie Wood doubled down on her controversial strategy, including additional large positions in Coinbase, even as some investors have bolted. (WSJ)
U.S. prosecutors are reportedly split over how aggressively to pursue charges against Binance, while there is also talk of a possible plea deal. (Reuters)
Government officials in the Bahamas not only told FTX to transfer funds to local accounts during its collapse but also reportedly instructed SBF to mint new crypto coins. (Bloomberg)
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