FTX’s Sam Bankman-Fried Pleads Not Guilty. Now What?

and November he was arrested in the Bahamas. In December, Bankman Freed faces multiple criminal charges, and at least two of his closest colleagues and confidence are providing evidence against him. SBF, as he's commonly known, flew back to New York this week after spending the holidays in California on bail. At that hearing in New York on Tuesday, he pleaded not guilty, as was widely expected to those charges wild times indeed.

Here to help me break down the top crypto developments of the week and the year so far is Bloomberg Senior Editor Philip Logger Coranzo. Everything from when f TX started unraveling in that first week of November, it felt like it went on hyper drive speed. Philip, I feel like I ask you this question every single time, but like, what is going on just in general? What is going on in general? Yeah, I mean we have to talk

about SPF, don't we. It's coming to a head now, dam Bankman Free's trial on those fraud charges in the New York City Court room are set to begin in October two quite sometimes not unexpectedly, we had the not guilty ply trial set for early October, and as we point out in our story, it is looking like one of the most high profile white collar trials in recent memory. It's exciting, it is exciting, but I'm I'm just wondering

about this October twenty three dates. It fields both very far away in that we're recording this episode, it's the first week of January, and like what, who knows what's going to happen between now in October, like ten more people can file for bankruptcy. But also, as my colleagues on legal, our colleagues on legal have been reporting, this is moving at a pretty fast clip by the standards

of you know, criminal prosecutions. Have you noticed this sort of tension in Krypto where we spent a good chunk of the end of last year hearing people say over and over, oh, nobody's ever going to be prosecuted for anything. Investigators are slow rolling, we don't understand why anything is not why nothing is happening, and then bam, you know

bank when free, it's arrested. Multiple of his colleagues are facing similar charges, some of them have agreed to cooperate with investigators, and now we're staring down and October date. Just as an editor, like, how do you sort of balance these competing timelines. Everything from when f t X started unraveling in that first week of November, it felt

like it went on hyperdrive speed. And I mean the the sort of the sense you got working on these stories and watching these developments when it comes to the speed at which the prosecution and the s s SEC and the c s C, c FTC moved um, was that A they felt obviously that there was a lot

of evidence here. B that after the year that we've had and so much going wrong, and as you said, the growing spare or questions about whether or not somebody would end up paying the price for everything, all the billions of dollars lost hundreds of billions of dollars lost. I don't I don't know what the final tally is.

You get the sense that there was really a sense of pressure to to move quickly and make sure that there was no doubt left that you know, we are taking this extraordinarily seriously and you know this will not stand. And then yeah, I mean, as it comes to the actual trial date ten months out from now almost nine

and change, I don't know. That is a little bit more outside my my regular purview, but based on his not guilty plea, um, it looks like the trial will also take a little bit longer than it otherwise had, even though we have some legal experts seemed to leave room for the fact that he might change course during

this process. I have felt for the past year and a bits of this as the class in this podcast, that it's like running a marathon at sprint pace, which people who run marathons are like, yeah, that's how fast people run marathons, like they're very very fast. Actually, you're

just a normal person and not an Olympic athlete. Um. Yeah, so as a normal person and not an Olympic athletes, it's definitely been fairly brutal, just in terms of the perception that things are taking very long, but the reality that actually things are moving quite quickly, because even October would still be less than a year from when all of those FTX companies were placed into bankruptcy protection. So that's,

you know, that is a pretty accelerated timeline. I want to also just mention one of the to me weirder slash more interesting elements of how this trial has been playing out so far, and that has to do with the desire for secrecy. Our colleague Jeremy Hill on the Credits and Distress team has talked a lot about how one of the things that bankruptcy is supposed to do is provide clarity and transparency, including for things like the

lists of creditors. And you know, f t X has taken the position that publishing the names of it's a top fifty creditors could expose those folks to some kind of of risk. And now bank Man Freed's lawyers, and again in bank Win Freed no longer represents or speaks for f t X in any capacity, but bank Win Freed's own personal lawyers have sought to hide or redact to use the formal phrase the names of two people

who have to co sign his very large bond package. Right, He's he was able to be out on bail with his parents in California because he has agreed to a two hundred and fifty million dollar bail package, which does not mean that he personally has to put up two million dollars. And you know, there's we we have some stories on this that we can we linked to in the show notes that folks can find out how that works. But it does mean that as part of it, he's got to find two people who are not his family

who will sign on as guaranteurs. Which is that like if for some reason he like tries to top on a private jet to Dubai, say, then those two people are actually going to be on the hook for a large chunk of that change. And under ordinary circumstances, the names of those two people would be public, but his lawyers want the judge to hide that information from everybody else, saying that they're worried that those folks might also face some kind of threat or potential harm. How does this

square with cryptos wanted transparency. There's a lot, there's a lot lately that hasn't really squared with transparency. Um. Transparency was a bye word, a keyword, a buzzword for for a while, until you know that the winds kind of turned. Huh.

I do think that. I mean it does look from reading our own coverage, like and the case of his Lane Maxwell there there seems to have been president for keeping the identities of people back in bail bonds secret in the sense where you can expect that they would be subject to harassment, to threats or otherwise. And I think that that was the argument that SPF lawyer made as well. I don't know if they referred explicitly to that case, but I do know that we have mentioned

it in our coverage. And you know, to be fair, we've seen other fallen crypto figures like the three A C founders um. We also the terror USD do Quan have made references to their own personal safety and and threat to it um um. So it's a it's a delicate balancing act, certainly, you have and in industry that has always built itself as big on transparency and information for all, and now you're seeing things play out very differently.

One of the things that happened this week was a pretty robust statement from various major regulators around the risks that crypto might pose two banks. And we've said on the show a couple of times that robust regulatory speak sounds like very mild to to normal people. It's things like we have concerns, and you're like, WHOA, that's that's huge.

They're practically shouting um. But certainly one of the things that we heard that was practically shouting this week is this idea of you know, two really demonstrated the risks of crypto andree you know, folks are not just going

to sit back and watch while other things collapse. And it made me think of what you said about this idea of people wanting to be seen as taken this taking this very seriously, because perhaps the most vocal and not unjustified criticism of policymakers last year is they didn't

really protect people from being burned by crypto. And it's this statement, which came out from a combination of the US Federal Reserve, the Office of the Control of the Currency, and the Federal Deposit Insurance Corps or fd I c essentially said we know we are watching and we are going to be paying a lot of attention to this, but it didn't come with any action, right, It just said we're paying attention, here are expectations, but there isn't

necessarily any action attached to this specific thing. Where there was action was as often happens in New York, where the big finale so regulator there, which has not proven to be a fan of crypto in any way, came

after coin base. And so for me, one of the themes that's already shaping up in three is this idea of what's sometimes called jaw boning, which is like a bunch of people saying a bunch of stuff but not necessarily doing anything, coupled with pretty strident action from states regulators in the US, right, Like, this is not the first time that New York has said, you know what, Feds, you are taking too long, or you're not you're not doing the things that we needed to do. We're gonna

go after this ourselves. Is there any kind of equivalent tension in Europe where you're based, where like either countries or certain individual regulators in certain countries are looking at the relative and action of the EU and saying, actually,

we're going to take this into our own hands. I think the main discrepancy we've seen here is between the EU appears to be standing fairly firm behind MICA right now, which is the market thing Crypto Assets Act, which will take effect well a year from now actually, and so we haven't seen to the same extent certain countries regulators

springing ahead. What we do see is the UK, obviously post Brexit, charting its own path here, and we had, for instance, members of Parliament putting some questions to finance in the aftermath of the FTX fall, but it's not been accentuated. I guess you call it as in the States where New York regulators have you know, we're making targeted moves like this one with coin base. It could still happen during this year in the run up to MICA taking effect, and that's actually something that I think

will be paying a lot of attention to. As the final print gets written on MICA ahead of its launch, you might see regulators. It wouldn't be completely wild for some regulators to take matters into their own hands. I guess it all depends on what what what happens now, what happens with firms that are for instance based here. But the main thing that I've seen so far is the UK kind of trying to chat its own path on crypto right well, now that they have a government,

we'll see how that goes for them exactly. We'll be right back with more of the week's top stories with Philip Lagerkranza. There are certainly a lot of folks who are hoping that bitcoin isn't going to be down another six But at least so far this week in January, we're not seeing a lot of trading volumes were nowhere near, you know, like the highs of liquidity that we were

seeing around this time last year. And that's certainly an indicator that a lot of folks are going to be paying attention to in terms of his sentiment coming back for crypto. And there's this interesting problem and it's a little bit chicken and egg e here for you know, folks who are enthusiasts of this asset class, which is because liquidity is so thin, any price declines tend to be fairly dramatic, and so you actually need a lot more people coming back into the market and being willing

to trade to you know, get some momentum back. That will mean one there's more potential for sustained upside and to you, you limit your downside risk a little bit,

and we're not seeing that yet. But the other thing is one of the reasons people aren't necessarily coming back into the markets is because they spent a lot of time being like there's nothing interesting to do right now, that there's nothing, I can't take any interesting speculative positions, like I don't know, I'm not super optimistic about what might happen with with regulation, or you know, there's not enough going on for me to take a position in this.

And you're hearing that from institutional investors certainly who love an arbitrage opportunity, but also retail ones and so I guess you know. One thing we're gonna be looking at in our coverage is where is their activity? And certainly a theme that we're starting to see isn't what's sometimes known as old coins, right like the Solanas of the world, or in the case of the inevitable meme coins, there's something called bunk, which we will talk about on a

future episode. Are there any unusual coins, Philip that you're paying attention to? Three you mentioned Solana already, it's up, it's a thirty. I believe UM this year alone, it's it's by far the biggest gainer, and it was also the one that got the most pummeled by all the top old coins in December, So in a sense that's kind of you can you can assign that to being

a bounce back from extreme pessimism embarrassness. But you do also have other coins like um light coin um that I've done well and we we we are actually seeing now and it's interesting to see what can we make

of this? What can we make of is it is it just a function of when the market moves up, al coin moves up, move up more or is there more risk willingness creeping back into the markets, And you know that al coins would be the first barometer or the first sign that we are seeing more risk appetite creeping back. From that perspective, it's quite interesting too to follow um Salona does. As you say, it is it is a little bit of a special case at this point.

But I think if if other alt coins start catching up to Salona's performance UM so far this year, then you know that that is something to really pay attention to. And as you mentioned, you know you you don't want to be making too much of price advances and ald coins without the benefit of also having ideally volumes picking up.

For Salona, volumes are definitely picking up a litt little bit, but I think we'll want to see whether or not that remains in the next few few days a few weeks um, and it could be quite an important interesting at least it may be storyline. You've given me the opportunity to wheel out one of my favorite journalistic cliches. Too early to tell. Thank you, Philip, Talk to you again soon. Thank you. You can find more of phillips work on the Bloomberg terminal and on Bloomberg dot com.

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