Why Isn't Sam Bankman-Fried in Jail?

Why isn't SBF in jail already?

Right.

Like what's happening? Is anything happening? Is anyone doing anything about this? And I think this is um a topical issue, uh, of course, because um crypto is really having sort of some introspection in itself and and asking yourself, like, why why do scammers keep invading this space? And why do we keep falling for it? How why how does this keep happening every time? Um, David, I've been kind of a little bit relaxing over uh Thanksgiving, so not quite as tuned in, but I know you've been hard at work preparing this agenda, so it's kind of like uh I want to throw it over to you, man, and just get me up to speed. But I the basic question is the same question I think in a bot a lot of bankless listeners' mind is like, what is SBF still doing?

Is anyone going to bring some accountability to this situation? What does this look like?

Yeah, it was really the uh video that surfaced that somebody took of SBF in the Bahamas, like running around in his like backpack and uh cargo shorts. And like it was something like twelve, thirteen, fourteen days.

Boy went to the Bahamas, right? I saw I think I saw

That wasn't Bitboy that recorded that video, but Bitboy BitBoy is now in the Bahamas. Uh but like we we saw this video of SBF just like running around in the Bahamas, like, all right, like

Why? And why is he not in jail? Why? So, like, we know he did a bunch of illegal things. We're gonna go through all of the illegal things that he did. But there's this big question is like, why isn't anyone outside of crypto taking this seriously?

but people in the chat, David, right now are saying uh jail i isn't for rich people.

Right, and this is common sentiment. Is this part of the story here? It's just like have we grown that cynical? Which people just don't go to jail and he's rich, so he's not going to jail.

Uh, I think that definitely plays a very significant role in this. But it's not just like, oh, if rich, then no jail. There's more to that story, which is a part of the story that we're gonna tell here today.

Are you gonna talk a little bit about mainstream media's coverage about this too? Because uh that's been a piece on my on my mind. Um what like why mainstream media is uh is giving him so much positive coverage? Not all mainstream media, but like some outlets certainly aren't. I don't understand this.

Yeah, and there there are some outlets that are giving Sam Bankman-Fried the time of day. And also those same outlets also are running like pretty good reports, pretty good accounts. So it's very mixed. Like the New York Times and the Wall Street Journal are definitely the big like culprits here. Like these articles that ran pieces as to like, oh, like Sam Bankman Freed says he's sorry and like forgets about the whole theft of customer deposits. And then that same outlet will actually run a decently well research report on the whole thing. And so like what what the hell is going on with that? And so there's a lot to unpack there. Part of this answer, of course, goes into the hundreds and hundreds of millions of dollars that Sam Bankman-Fried has donated, uh, not just to the Democrats or other even the Republicans or to political organizations, but nonprofits as well. And so there's just going to be this massive like audit of the state of money that Sam Bankman Freed and FTX like sloshed around everywhere. And like what what do we do about that fact? Because that's a very relevant part of the story, too.

Well, we're gonna talk about all that, and I know toward the end of this episode you're gonna put on your therapist hat a little bit as well, and uh because I think there's some um psychology here that's maybe persistent psychology that we've seen a pattern emerge across many of these uh folks that have um scammed the industry really. So uh I want to get to that too. Guys, before we get in, I want to tell you about our friends and sponsors. This is uh Infura. Um, they are calling all Web3 infrastructure providers to get early access to their decentralized infrastructure network. Think Infura has been criticized as being a centralization vector uh of Ethereum in the past. And of course, they don't run your individual Ethereum node, but they run a lot of the archival nodes. So they would be like Infura would be maybe behind a MetaMask transaction or something like this. Well, they are taking steps to decentralize the Infura network, which is pretty key if we're gonna build a uh decentralized future on top of this crypto money system that we have, rather than rely on the SBFs of the world, we need to decentralize our data providers, infrastructure providers. I think there's some early access people can get here. David, what are we looking at on the link?

Yeah, there is the early access program to the decentralized version of Infura, which exists in the future if we help it come about. There's been a bunch of controversy in Infura in the news lately about just like reporting IP addresses and mapping Ethereum addresses. There was a bunch of nuanced threads that came out of Dan Finlay and Joseph Lubin. But this is actually not about that. This is about taking the Infura stack, the very important role of RPC endpoints in the way that we broadcast transactions to Ethereum and doing the thing that we love to do in this space, which is decentralizing it. So if you have skills that Infura might want or need to help uh decentralize their own stack, there is a link in the show notes where you can sign up to help that effort uh proceed into the frontier.

David, as you were uh talking about that, uh I was reading the chat window, someone said, David looking jacked. Man, you've been working out over the holidays? That that turkey treating you well?

Uh I have set a goal to climb a mountain in twenty twenty three and so yeah, I've been going to the gym.

There you go. Climb a mountain. Not metaphorically, you're talking about

Okay, a literal mountain, yeah. Uh huh.

that's cool. David in his spare time went away from crypto, goes and uh you know, does ice climbing up glacial sheets and

All the risks I don't take in crypto I take in my outside adventure.

oh that's great.

Stay healthy, my friend. That's all I gotta say. This show would be pretty boring if it was just me. No one would tune in. Alright, so um let's start at the high level.

Mm-hmm.

of this story. And he here's kind of the the question. Maybe we need a a reminder of like obviously uh people have bandied about the word f fraud and and talked about you know scammer. There are some legal definitions for what SBF actually did. Maybe we can get into the story, but I want you to kind of remind us, because this is the topic of

Right.

Why isn't SBF arrested? And the question of okay, some people are saying because rich people don't go to jail. Others are saying because he didn't do anything illegal. Can you just remind us of what SBF actually did? And we'll talk about whether it's legal or whether it's not in the nuance there.

Yeah, yeah, we got we got the receipts, of course. And as if anyone listening to this episode like needs to be reminded, but we're gonna go through all of the illegal things that SBF did. Uh some some things aren't technically illegal, but they are downstream of illegal things. And so uh we'll get into all those at those as well. But I want to start before we get to all of that with this article out of uh Fortune, uh Fortune magazine, which the title of this is just like Could SBF Go to Prison for the FTX disaster? Which, like,

the answer is yes. You don't you don't even have to ask the question.

But yes.

Oh, to be fair, this is November 13th, so it was a while ago.

Sure. And also the audience to this article are like not bankless listeners. They aren't on crypto Twitter. They aren't familiar with FTX. So like this is still coming from like going out to people that are still trying to get up to speed with the article or with with the events. And so this article gives out two reasons about like perhaps what like what it would take to get SBF arrested and two complications, if you will. First, there's jurisdiction. So since FTX is an offshore business with headquarters in the Bahamas and did not cater to Americans, defense lawyers could argue that the actions of FTX executives are beyond the reach of US law enforcement. I'm sure people listening to that are like, mm, that doesn't sound like that'll hold.

Hamas has jail.

Yeah, the promise also has a jail, yeah.

Okay.

Uh and then the second would be intent. Uh or so, like, you know, mismanaging your company and losing a bunch of other people's money is technically not criminal. Mismanagement happens all the time. For a criminal case, there has to be like deception, right? Uh and so these are the two things that we would need to get over in order to prove that SBF needs to go to jail.

Prove these in court. Right. You know, all of these things, of course.

I feel like, Ryan, that these are easy things to prove.

Surmountable out

Very surmountable obstacles. Because like reminder, SBF isn't American. FTX totally serviced American customers. It marketed to Americans. You remember the Super Bowl ad? Remember the FTX Arena?

Oh yeah, I remember that.

Yeah.

They had the best Super Bowl ad.

So it's like no

Actually, coming out of that, it was our favorite um

It was Super Bowl. Yeah, it was the it was our favorite. Larry David. Yeah, it was it was hilarious. Yeah, Larry David, who is now being sued for for doing that, which is ridiculous. But like, okay, so like jurisdiction and intent. Uh like

it it jurisdiction, I just covered that. We don't need to go over like how many Americans lost money in FT.

Some intent there. I mean the stories of him like hooking the books behind the scenes, having backdoor access from like one set of books to the other. And by the way, if he did that, I think that's maybe legally technically like

fraud.

Mm-hmm.

The bar of fraud. But what are we looking at here? Is this uh

Yeah, you've got a statement? Yeah, you've got a s uh a statement from the police, public affairs and communications department of uh the Bahamian police saying in light of the collapse of FTX globally and the provision provisional liquidation of FTX, a team of financial investigators from the again, Bahaman Financial Crimes Investigation Brands are working closely with the Bahaman Securities Commission to investigate if any criminal misconduct occurred. November 13th, 2022. Reminder, criminal misconduct definitely occurred. So uh I mean we're about to get into all of the people that SBF paid money to. Uh, and I would just like to raise the possibility that if SBF donated to both political parties, a bunch of nonprofits, the New York Times, a bunch of media institutions who are gonna, again, we're gonna go through all of these. Is it also possible that FTX also paid off Bahamian regulators? I don't have the answer to that question. I am just posing that question.

I don't know what the police are like in the Bahamas, but I don't know why I have this stereotype of them being like super chill. Um I I don't know. I don't know that that's the case though. Um, but what are we looking at here? One million creditors in their bankruptcy filing. So, you know, when this this um public affairs communication from from the Bahamian police was released, two days later we got the actual bankruptcy filing, which indicated how many creditors were were out of money here. Why why are we pulling this up?

Uh well, 'cause it it would imply that if there are over one million people or entities who are owed money by FTX that uh it's like uh, you know,

uh what's the word? Uh smoking gun that uh criminal activity definitely occurred. If like if you owe one million people money, like people can find

Do

people can find some you can we can find something illegal that you probably did. So the like the likelihood is very, very strong. Uh the vast majority of these one million uh you know creditors are again customers.

retail.

Who did not consent to their money being sent to Alameda Research, which is like the main bit of fraud that happened here. Uh, and so there's a bunch of other like things that were about to go down. SBF used Alameda Research for customer for trading of customer funds, the illegal backdoor and a but bespoke bookkeeping system. FTX buying 19 million dollars 19 properties in the Bahamas worth 121 million dollars.

That's not illegal.