FTX founder Sam Bankman-Fried is expected to be in custody now, in regards to Brian Armstrong. The Coinbase CEO said this week that it was “baffling to me that he’s not already in custody.”
“The DOJ or someone should be able to do this – based on their public statements, I think there is a very open and closed case of fraud,” Armstrong said at the a16z crypto founders summit. tuesday. He added: “I’m no expert on this, but the people I talk to seem to agree on that.”
Armstrong also questioned why the media refrained from calling Bankman-Fried a criminal.
“I think we were all pretty shocked at the extent of the fraud that happened at FTX. And let’s call it a fraud. We have to call it what it really is. It’s kind of weird that the mainstream media hasn’t really come out and said, ‘This guy is a criminal.’ Maybe they want to wait until he’s actually charged or something, and in custody. But it seems very clear at this point that this is the case.
FTX imploded dramatically last month, surprising many inside and outside the crypto industry. The $32 billion exchange had established itself as a leader in the field, having enlisted star athletes like Tom Brady and other celebrities to boost its image. Its collapse has shaken confidence in the crypto industry and sparked calls for tougher regulation.
Bankman-Fried resigned as CEO of FTX on Nov. 11, the same day the company, along with affiliate trading arm Alameda Research, filed for bankruptcy. A key accusation leveled against Bankman-Fried is that he used client funds from his crypto exchange to fund risky bets at Alameda Research.
Armstrong’s Coinbase, like FTX, is a cryptocurrency exchange. But while Bankman-Fried based FTX in the Bahamas – where he reportedly enjoyed an extravagant penthouse lifestyle – Coinbase is a public company in the United States.
“You can read our financials,” Armstrong said. “They are audited by a third party, you don’t have to trust us. All client funds are segregated. We do not invest client funds without their explicit direction. »
“People will go to jail”
Armstrong wasn’t the only crypto luminary to share harsh views on Bankman-Fried this week. Mike Novogratz, CEO of crypto firm Galaxy Digital Holdings, told Bloomberg TV on Thursday, “Sam and his cronies perpetuated a fraud. They used customers’ money to make bets that he “mismanaged in terms of risk” after making them. »
“The problem is that he took our money,” Novogratz added. “And so he must be prosecuted. People will go to jail and should go to jail.
Shares of Coinbase and Canadian-listed Galaxy Digital both plunged more than 25% in the past month, worsening an already brutal “crypto winter.” Coinbase shares have fallen around 80% this year, wiping out around $44 billion in value. BlackRock CEO Larry Fink said this week, “I actually think most companies won’t be there,” referring to the beleaguered crypto sector.
Last week, Mark Cuban, billionaire owner of the Dallas Mavericks and prominent crypto investor, told TMZ that Bankman-Fried should be worried about the jail term.
“I don’t know all the details, but if I was him, I would be scared of going to jail for a long time,” he said. “That sounds really bad. I actually talked to the guy, and I thought he was smart, but damn it, I had no idea he was gonna, you know, take other people’s money and put it to his own use. . Yeah, sure…that sounds like it happened.
Armstrong lamented that the crypto industry attracts an inordinate number of bad actors.
“We kind of have to come to terms with the fact that, I think our industry attracts a disproportionate share of fraudsters and scammers. industry. “
This story was originally featured on Fortune.com
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