Yesterday we saw FTX's new CEO John Ray III accuse Sam Bankman-Fried of "old school" embezzlement during four hours of scorching congressional testimony, just one day after Bankman-Fried was arrested in the Bahamas and accused of misusing billions of dollars in customer money to prop up his trading arm, Alameda Research.
"This is really just old-fashioned embezzlement," said Ray. "This is just taking money from customers and using it for your own purpose. Not sophisticated at all."
"Sophisticated, perhaps, in the way they were able to hide it from people, frankly, right in front of their eyes. This is just plain old embezzlement. Old school, old school."
If convicted on all eight charges filed by the US DOJ on Thursday, Bankman-Fried could face up to 115 years in prison, though he's unlikely to be sentenced to such a lengthy term. He faces two counts of wire fraud, two of wire fraud conspiracy and one of money-laundering charges, along with conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to defraud the US and commit campaign finance violations.
According to Manhattan US Attorney Damian Williams, the FBI, SEC and CFTC have been working "around the clock" to unravel what happened in "one of the biggest financial frauds in American history."
Both the SEC and CFTC sued SBF separately on Tuesday over his role in the collapse of the cryptocurrency exchange.
"Fraud is fraud," said FBI New York Assistant Director, Michael Driscoll during the press conference.
"It does not matter the complexity of the investment scheme, it does not matter the amount of money involved."
Today, the Senate Committee on Banking, Housing and Urban Affairs will hear from several witnesses who will discuss "Why the FTX Bubble Burst and the Harm to Consumers," including former FTX spokesman Kevin O'Leary - who will argue against banning crypto software technologies, and for greater regulation in the crypto space.
I understand why many leaders in the banking industry are open skeptics, calling for the banning of these new crypto software technologies. Disruption is always uncomfortable at first, and entrenched businesses abhor new competition, but it has been proven time and time again that disruption is absolutely necessary in advancing the economy...
...we need to get to the bottom of what happened at FTX, but we can’t let its collapse cause us to abandon the great promise and potential of crypto.