Jeff Roberts, Crypto Editor at Fortune Magazine and author of 'Kings of Crypto', joined Closing Bell's Kristen Scholer to break down the charges filed against FTX founder Sam Bankman-Fried, and recap some of the bombshells about the collapse laid out by current FTX CEO John J. Ray III in his congressional testimony.

'The Bernie Madoff of Crypto': Sam Bankman-Fried Arrested & Charged With Fraud, Conspiracy

and disgraced F. T. X. Founder Sam Beckman freed arrested in the Bahamas on monday just hours before a congressional hearing about the collapse of the once prominent crypto exchange. Well as per the indictment unsealed by the U. S. Attorney's Office for the southern district of new york. SBF has been charged with eight counts including wire fraud, securities fraud and a range of conspiracy charges. In addition, the sec has filed civil charges against Blankman free and joining me now is Jeff roberts, crypto editor at Fortune magazine, author of Kings of Crypto Jeff. Really good to have you on the show here and lend your expertise about these charges against SPF Yeah, this was the big day. I mean the scandal has obviously been going on for a while but you know, until a couple of days ago he was sort of chilling in the Bahamas were waiting for the legal shoes to drop and then a lot did um last time he was arrested in the Bahamas where they say they're going to extradite him to the US wasn't clear that's gonna happen but now that's on and uh in the last 24 hours three agencies, the FTC, the sec and the Justice Department have unveiled charges against him. Um and uh and then meanwhile in Congress he's supposed to testify today but since he's in jail he can't do that anymore. So you know a lot has happened quickly and it looks like the end of the road, what does this mean for crypto as a whole? I mean I think for anyone who you know might have had confidence, I don't know, has this shattered it completely, It's not been good, that's for sure because you know, I think probably a lot of viewers are aware, you know, F. T. X. Was like the golden boy, you know company for the longest time till it blew out. So you know, but you know, underlying crypto is still crypto. I mean you know this does not affect Bitcoin, it does not affect ethereum and there's a lot of other reputable companies but the reputational harms events that could cause political problems and you know strike the market down. But I think a lot of that's baked in by now and more on to like what's what's the justices are going to be and how do we pick up? So let's talk about this extradition to the US, his attorneys earlier saying that he's considering all of his legal options, what might those legal options be and what is in store for possible extradition? Well, it's interesting because his parents are both stanford law professors, so it's not like he's lacking legal advice, but um you know, but he doesn't seem to be listening to him, His lawyers last two weeks, he's been like you know giving media interviews to anyone who will listen and just incriminating himself more and more. And it was unclear how or you know how long the extradition process would take or if it would work now, it seems to be in high gear um and I think, you know, it's a pretty good chance we're going to see him in a jumpsuit in the southern district of new york, you know, pretty soon at this rate. You know, I'm not sure on the specifics of it, but certainly the wheels are in motion and moving fast. And there's a lot of people who really want answers and there's he's being charged with, you know, a whole lot of things, you know, wire fraud, securities fraud, you know, illegal political contributions. It's basically Bernie Madoff of crypto and he's gonna be standing trial pretty soon. A lot of people want a lot of answers and um I do think that, you know what this means for the crypto space is something that we're still uncovering. But I know the House Financial Services Committee holding a hearing today about FT. X's collapsed with testimony from the new F. T. X. Ceo, john jay ray the third pulling no punches. In fact, in his opening statement, let's take a look. The F. D. X. Group's collapse appears to stem from absolute concentration of control in the hands of a small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems are controlled that are necessary for a company entrusted with other people's money or assets? What are some of these practices that he's detailing here, I think my favorite one is there one in the whole thing on quickbooks, which is the sort of thing like you know the kid who cuts your lawn might use you know for a $30 billion company. They don't run their books on quickbooks and you know there's simply no controls over where the money was going. He was giving big money to his personal friends, he was buying stuff, he was just treating us his personal piggy bank and he was raising customer money to do this, which is obviously really really illegal. It's sort of like if you're, you know, put your money with you know, Charles Schwab or fidelity or wherever you trade your stocks or Robin Hood and you find out the ceo is using it to like you know make his own investments and to buy nice things in the Bahamas. I mean it's it's a serious crime. What does this mean for some of the celebrities that backed him? I know some of them tom brady, Gisele. I think Steph curry uh Sam Beckman freed F. T. X. In particular. They were facing lawsuits of their own basically for tying their name to F. T. X. And Sam Beckman freed. But we know investors according to these charges are the ones allegedly who were defrauded. What might it mean for big names like tom brady and Gisele Bundchen? Well I don't think they would go near crypto companies for a while. Yeah this is kind of a good one. I mean unless you've invested there. But yeah, I mean who else was there? Um Yeah Steph curry was involved and um brady of course. But also um Larry, David, the comedian, made a super bowl ad Miami heat. All sorts of people are being dragged into this and often these lawsuits are thrown around. But the guy following this lawsuit's a guy named David Boies who is one of the best lawyers in the US. So it suggests there's something there. I mean you know what's likely going to happen is it's embarrassing as hell and they're going to quietly pay a settlement at some points. But yeah and then probably not going near crypto for a long time Jeff roberts. We gotta leave it there are really good to get your take. I hope you come back on the show. Jeff is a crypto editor of Fortune magazine and author of Kings of Crypto.