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Ripple CTO Shares His Thoughts on Upcoming Criminal Prosecution of Former FTX CEO

Ripple’s Chief Cryptographer and CTO, David Schwartz, discussed the upcoming criminal prosecution of Sam Bankman-Fried (“SBF”), the disgraced Co-Founder and former CEO of crypto exchange FTX, on Thursday (15 December 2022).

The New York Times held its annual DealBook Summit in New York City on Wednesday, November 30, 2022, hosted by Times columnist and DealBook founder and editor at large Andrew Ross Sorkin.

SBF was the most anticipated interviewee.

 

“Clearly, I made a lot of mistakes or things I would give anything to be able to do over again,” SBF said in this interview’s full transcript. I never cheated anyone. I never mixed money. Again, margin trading—customers borrowing from each other—is part of this. Alameda is one. I was surprised by Alameda’s size, indicating another oversight error. Failure to appoint a leader. I wasn’t mixing funds. I first noticed a problem on November 6. FTT was tweeted on Nov. 6. By late Nov. 6, we were assembling all the data and information that should have been assembled earlier and included in the dashboards I was always looking at.”

Compliance drained us. Licensure regulation consumes a lot of energy. We’re licensing in dozens of jurisdictions. I’m giving up everything. One credit card works. That bank account may hold $100,000. I reinvested everything—even my loans—in the businesses. I invested everything in FTX.

On December 15, 2022, the Ripple CTO tweeted his thoughts on how prosecutors will view SBF’s criticism of him since the FTX empire’s collapse on Twitter and in interviews.

Schwartz told his 408K followers: “Sam made a serious miscalculation in his public communications after FTX collapsed. Nearly everyone saw that nothing he said would help. Prosecutors will ignore his helpful statements. Harmful things will be evidence in future cases. Sam probably thought his biggest criminal risk was knowingly loaning, investing, or risking FTX customer funds. He created a narrative that he failed to provide adequate controls against doing so accidentally to lower that risk. As Law and Order viewers know, the prosecution can change their charges to fit your narrative. Charges based on a false narrative are morally wrong. But charging people with crimes they committed in a way that perfectly uses their narrative against them is fine. Prosecutors did that well.

I don’t think SBF FTX is considered a criminal liability for these misrepresentations. Thus, his public narrative walked into them. Prosecutors are not cornered. He can steal from customers and deceive investors about risk control.

CZ, Co-Founder, and CEO of Binance, the largest crypto exchange by trading volume, addressed some “wrong narratives” on Twitter on 6 December 2022:

Crypto is safe. Cryptoworks. Decentralization’s beauty. We contribute. We want to help good projects in financial trouble due to recent events. It benefits us all… FTX killed themselves and their users by stealing billions of user funds. Period… Lying never has good intentions. Tweets cannot destroy healthy businesses. Caroline’s Nov. 6 tweet 16 minutes after mine may have. It caused FTT abandonment, according to data. She gave her floor price…

“SBF painted me and others as the ‘bad guys’. It helped maintain his “hero” image. SBF is one of the greatest fraudsters and master manipulators of media and key opinion leaders.

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