Democrat mega-donor Sam Bankman-Fried, whose cryptocurrency platform FTX just collapsed in a hail of fraud allegations, pretty well walks around free to do what he pleases, out in the palmy Bahamas.

That raises questions as to what is going on here, why that guy isn't, like Bernie Madoff or the assorted Enron characters, in jail for his misappropriation of customer funds from his cryptocurrency exchange, FTX, through a secret "back-door," to his Alameda Research hedge fund, run by his kinky-weird ex-girlfriend, Caroline Ellison.

FTX did, after all, insist to its cryptocurrency platform customers that it would never use their deposits for speculative trading purposes. 

According to Coindesk, an industry publication of the cryptocurrency and related fields:

...FTX and other crypto exchanges are not banks. They do not (or should not) do bank-style lending, so even a very acute surge of withdrawals should not create a liquidity strain. FTX had specifically promised customers it would never lend out or otherwise use the crypto they entrusted to the exchange.

Well, it did.

The kinds of crimes now alleged about the now-bankrupt firm include secretly spiriting customer funds to Alameda for trading purposes, use of FTX assets as collateral so that Alameda could borrow and risk even more on its own behalf, immense personal loans to FTX executives which likely signaled criminal intent-- with Coindesk calling this one a biggie:

The FTX situation has more smoking guns than a shooting range in Texas, but you might call this one the smoking bazooka – a glaringly obvious sign of criminal intent. It’s still unclear how the bulk of those personal loans were used, but clawing the expenditures back will likely be a major task for liquidators.

...bailing out other troubled cryptocurrency exchanges with FTX exchange money, drawing praise as a sort of J.P. Morgan protector of the crypto industry, and the purchase of a tiny U.S. bank in Washington state, which Coindesk compared to the activities of the beyond-filthy Pakistani Bank of Credit & Commerce International's activities, which also attempted to buy itself a U.S. bank, in its case for money-laundering purposes. 

All this, while claiming he had no idea what was going on at his company, and drawing lots of fawning press as a result of his help to his leftist charities and Democrats. Coindesk lays out some of the grosser ones:

It is now clear that what happened at the FTX crypto exchange and the hedge fund Alameda Research involved a variety of conscious and intentional fraud intended to steal money from both users and investors. That’s why a recent New York Times interview was widely derided for seeming to frame FTX’s collapse as the result of mismanagement rather than malfeasance. A Wall Street Journal article bemoaned the loss of charitable donations from FTX, arguably propping up Bankman-Fried’s strategic philanthropic pose. Vox co-founder Matthew Yglesias, court chronicler of the neoliberal status quo, seemed to whitewash his own entanglements by crediting Bankman-Fried’s money with helping Democrats in the 2020 elections – sidestepping the likelihood that the money was effectively embezzled.  

The guy keeps getting good press despite his misuse of customer funds, which he ending up losing $10 billion of, spoonfeeding to the still-fawning media that he "made mistakes." Notice that Vox is happy to excuse him because he donated to Democrats, and the WSJ seems to be more concerned about these leftist charities, which promoted hideous ideas like "ranked choice voting," than they are about the people who lost their life savings. Some of the leftist press itelf, including vox, was funded by Bankman-Fried, and now is out of its promised grants from him and not happy about it.

That may be some kind of means of warding prosecutors off, the oodles of good press, which makes prosecutors look like bad guys if they go after him.

Prosecutors actually have bigger problems, though, in that in previous cases, such as that of Madoff, the bad guys admitted their culpability and provided their receipts. Bankman-Fried isn't doing that even as everything he says sets off bee-ess meters, as Jim Geraghty notes in his piece in National Review. Ankush Khardori, a former federal prosecutor, wrote a good, knowledgeable piece about the problems they are having on just legal issues in putting this guy away.

What does an investigation of an international financial fraud like this look like? To simplify matters greatly, the government is going to be looking for three things — documents, witnesses, and data — to determine whether SBF or those around him committed fraud. Let’s take these in turn. 

He then goes into the problems with all of those matters, in documentations, witnesses, and data, plus the fact that the FTX entity and Alameda Research, are both based in the Bahamas, meaning, outside the U.S. regulatory framework, though they can still bring prosecutions based on U.S. customer losses. Emails may be on foreign servers, Google and other U.S. big tech companies may not be involved in those emails, the emails may have been deleted, the ledgers themselves may be inaccurate, and a lot of people inside the company didn't know what was going on, which will make the investigation take a lot of time.

Other thorny investigations, such as that of Elizabeth Holmes, took years, and this one could, too.

But letting this guy walk around free is problematic, too, because he is busy getting himself good press to turn that bad narrative about himself around so that the prosecutor don't dare act against him and the length of the investigation gives him time to do it.

What we may see is him donating even harder to Democrats than he already has (to the tune of $40 million) perhaps now through shell corporations to keep the lawmen at bay while the fawning press will continue to serve as his apologists. The press, as one commentator noted, devotes more time to 'exposing' Elon Musk, who spends his own money, than it does to SBF, who spends other people's money and loses it. We saw a lot of that going on with the Jeffrey Epstein case -- the knowledge that he had stuff on many prominent Democrats and others seems to have bought some kind of political protection and kept prosecutors at bay, for a time at least, with the Caribbean ensconcement another useful layer.

It goes to show the toxic influence of these donations to Democrats, and some Republicans, too, although those seem to have been done through an ignorant, unwitting, lieutenant. Bankman-Fried was the Democrats' second-largest donor, and all that he did seems to have been done on stolen money. The Democrats who took this money should be forced to make whole the defrauded investors since misappropriated money hardly becomes the property of the person who takes it.

But that might be too much at this stage. What's important now is that Bankman-Fried not be allowed to prop up any more Democrats or their odious wokester causes.

Image: Screen shot from YouTube video posted by Cointelegraph, via Wikimedia Commons // CC BY-SA 3.0