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The legal and regulatory establishment has allowed a pattern of fraud and misrepresentation fitted in the very business model of the crypto industry. The arrest of Sam Bankman-Fried (SBF) in the Bahamas, expecting extradition to the United States on eight charges alleging rampant fraud at his now collapsed crypto exchange FTX.
Then just after a month a damning expose from a crypto media house triggered a massive selloff at FTX, and SBF was behind the bars. As a pointed legal addendum, the financial industry’s lead regulatory agencies, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), have launched individual complaints against SBF.
A conspicuous exercise in public relations on the part of a legal and regulatory establishment permitted the flagrant pattern of fraud and misrepresentation nested in the very business model of the crypto industry to fester unattended as the FTX fraud grew into one of the largest cases of investor fraud in recent history.
Statement by a Former Justice Department Prosecutor
According to the nation, a U.S. based Magazine, Ankush Khardori, a former Justice Department prosecutor who specialized in white-collar crime, said “The coverage of these things tends to be celebratory. But this is the start of it—not anything approaching the end.”
He says, for starters demonstrating fraud in a criminal trial involves a high standard of proof. “In terms of the strength of the government case, the fundamentals are shaky here. Unless there was a concerted investigation—if this investigation was underway in early November right when the CoinDesk story broke—there’s no way they have strong cooperating witnesses, or communications proving criminal intent…. We do not see any disclosure that the representations cited in the complaint were intentionally made to mislead. The prosecutors may have all that, and we have public indications of some of the crucial elements, but we still need to determine the degree to which they were false. For a criminal case, there has to be contemporaneous intent, not just a misrepresentation by your own inadvertence, hypothetically, if you forgot to disclose something crucial. That doesn’t meet criminal standards.”
“The representations in these complaints are kind of a hodgepodge, but the rubber is really going to start to hit the road quickly,” Mr. Khardori says. “Prosecutors are going to start asking for more detail about representations SBF has made. The government’s indictment contains none, which is par for the course in a quick indictment.”
“Both the SEC and CFTC complaints contain SBF’s representations of himself as this visionary leader of crypto,” Mr. Khardori further said.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
