The nation has learned a whole lot
more about cryptocurrency with the
arrest of Sam Bankman freed, the former
CEO of cryptocurrency exchange FTX,
and it also came up in Congress as
they've held a meeting discussing
whether crypto needs to be regulated.
For more on that and all
the legal challenges had,
we bring in our Nine News
legal expert Whitney Trailer,
so they they arrested him
this week in the Bahamas.
We can talk all about the money
and who gets their money back,
which is probably no one but what charges.
When does he face?
Right. So he's facing a
number of criminal charges.
This was from the Department of Justice and
so it was a conspiracy to commit fraud,
wire fraud, mail fraud, things like that.
And so that's just the DOJ
which is the criminal action.
There's also the CFTC and the SEC
that are initiating civil TC is yeah,
with the Federal Trade Commission, right.
And so they're, they're initiating
civil claims but theirs will sort of.
Take a back seat while the DOJ's
criminal charges go forward.
And as you said,
they just arrested him in the Bahamas.
You know, it's funny,
we were just talking about marijuana
a couple of minutes ago in the state.
And of course, one of marijuana's biggest
problems are federal banking laws.
The federal banking laws apply
in any way to to cryptocurrency.
Is that part of what we're trying to
figure out a mesh here that doesn't
exist or does exist or should?
Well, that's part of the bigger
picture in terms of the regulation.
But in terms of what SPF did here,
no, this was sort of.
As I was saying earlier,
I think similar to Bernie Madoff,
he had his hedge fund and what he was
doing was taking investments from the
crypto exchange FTX and putting it in
and commingling it with the hedge fund.
And the hedge was actually losing money
and the people on the FTX didn't know.
And so not only was he doing that,
he was taking these massive loans and
on one side he was the lender from
the company and the CEO role and on
the other side he took an individual.
Wrong.
So it was the allegations are
serious fraud and corruption.
So, so is cryptocurrency the Wild West?
Like was he theoretically allowed to
do this because there are no laws,
no regulations about crypto,
or are there that he was violated?
No. There are some regulations which he was
violating in which he's being charged with.
But this is raises the bigger issue about
crypto in general because of the effect
that it had on the consumers because a
bunch of people lost money and then there
were other exchanges that were also.
Impacted. And so I think it was
Elizabeth Warren who said we need
she's calling on the SEC to do more.
And so there will be more regulation.
And you've heard some of the the
folks in the industry saying,
yes we do need some more
regulation because you know,
but here this situation was simple.
You know, he was wiring money to himself,
loaning it to himself,
buying this property in the Bahamas for
his family and and other executives.
So according to the allegations,
this was just pure greed.
And I know they're looking into his
parents and other people but then it's
all these big names that were the people
that were pitching it if you will.
They could run into some big trouble as well.
Well it's a question Brady's of the world.
Yeah. What they knew because of
course if you endorse something
you can't necessarily say yes
I'll be liable for what happens.
But I guess it depends on I
guess the type of endorsement.
But I don't think Tom Brady and
and and his wife or soon to be
ex-wife will have exposure unless
they actually knew something.
And I don't.
I would be surprised that they did. So
the whole you wonder if you ever
sign up for something again,
though, without knowing about it.
Well, and you wonder if you're
gonna endorse something,
maybe you actually should know
something about what you're endorsing.
But when you know, right?
But the whole idea of cryptocurrency in
many ways is to work outside of what people
consider a restrictive banking system.
These, these, the the currencies
that are currently in the world.
So then you say we want out of this.
Oh, wait, wait, wait.
We want regulation, right?
So now are you basically just
becoming an extra currency?
The new currency right
in and that may be the case and you
know crypto is now being accepted.
I mean it's being traded
in and used by states.
I mean yeah, Governor Polis will
accept crypto for for tax payments.
So I think it is part of the mainstream in,
in many ways, but it is going to need
more regulation and this highlights
the issue when people say government,
you know, I'm a free market capitalist,
let the market take care of itself.
But it's when individuals look out for me,
right when they do this.
Corruption. And you know,
that's when the government
or laws are created.
Well,
there's gonna be a lot about it now.
They said this is just starting this case.
Yeah, SBF as we call them
now and he's only been charged.
He's the only one who's been charged,
even though there's
allegations of conspiracy.
So there will be obviously people
were working with them and have
have obviously worked with the DOJ
and and there'll be other charges.
I'll talk with you more about it when
we see you next. Thanks, Whitney.