12/12/2022: SBF is Finally Arrested
He is charged with wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering
It’s over! SBF is finally arrested. The above was his last tweet before the Bahamian government took him into custody. I don’t think I trust anything he said at this point. But hopefully we will examine all the evidence presented in the court and the truth can be revealed.
According to NYT, prosecutors for the Southern District of New York confirmed that SBF had been charged and said an indictment would be unsealed on Tuesday. The charges included wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, said a person with knowledge of the matter.
SBF is supposed to testify in congress tomorrow about the FTX collapse. I wonder if he will show up from jail. I seriously think the public gives him too much attention and we should really be patient and let the new management team, forensic accountants, public and private investigators, etc do their jobs and tell us the true story. His accomplice Caroline Ellison has been spotted in New York as shown above. She has been silent but is lawyering up. It will be interesting to hear her story.
The whole fiasco will make a great movie but given it actually hurt people, SBF’s behavior is unacceptable and he deserves many years in prison if convicted. He still acts like he deserved a second chance and he will make $10B to compensate for the lost user funds. It’s disgusting and I am glad we don’t have to hear from him for a little while.
I am also not optimistic that Binance is much better than FTX. The offshore unregulated exchanges just have too many temptations to misappropriate user funds. With the 2022 crypto market downtick, I imagine a lot of these exchanges lost a lot of money, especially platforms that allowed derivative trading and took on a lot of counterparty risks. If they are insolvent, they are not going to voluntarily file for bankruptcy. They either raise more money or they dip into the user funds. The former is unlikely given the current environment. The latter is basically a crime unless noted in the user agreement. Letting these unregulated CEX die is probably a good thing for the long run. My belief is you either be a regulated exchange like Coinbase or you be a completely transparent DeFi application like Uniswap. I don’t see how something in between can work without causing the same blowup in the long run.