Bahamas Attorney General Sen. Ryan Pinder confirmed that Sam Bankman-Fried was extradited to the United States Wednesday night. According to CNN, lawyers for SBF were negotiating with federal prosecutors in New York on a bail arrangement that would enable him to avoid detention. SBF is going to trial, and unless there’s a remarkable surprise ending, he’s likely to end up in jail.
Some people are using SBF’s alleged crimes to indict the crypto industry writ large. It’s easy to understand why. FTX was unregulated (because the government hadn’t yet figured out how to regulate it), and this lack of regulation allowed SBF to do pretty much whatever he wanted. Apparently, he had some very creative ideas about how to use other people’s money.
Here’s the thing: unlike regulated centralized exchanges and banks – where there are constant checks and balances and clear enforcement mechanisms – FTX was centralized and unregulated. In other words, FTX was a central authority that abused its power. Importantly, other than the fact that it empowered the trading of cryptocurrency, there was never anything remotely decentralized or Web3 or crypto-like about FTX. It was simply an unregulated exchange/bank.
You don’t hear stories like this about decentralized exchanges (DEXs) like Uniswap or PancakeSwap. (You hear other stories, but nothing like this.) Crypto was conceived to work in decentralized, trustless environments. The moment you introduce a central authority, the system is compromised – as evidenced by SBFs alleged behaviors.
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