Working with breathtaking speed, US prosecutors and regulators on Dec. 13 unveiled criminal and civil fraud cases against Sam Bankman-Fried, the disgraced founder of bankrupt crypto exchange FTX, a day after his arrest in the Bahamas. The bombshell moves show how US authorities are combining new technological expertise to crack crypto’s complexity with old workhorse laws against money laundering, securities fraud and wire fraud to protect investors and customers.
The FTX meltdown, along with earlier failures by exchanges, hedge funds, brokers and lenders tied to the crypto industry, had given the impression that the cryptosphere was a lawless, dog-eat-dog arena. But authorities are showing they can combine warp-speed investigations with patient, multiyear searches to nab fraudsters.
Ask James Zhong. In 2012, as a 22-year-old computer science student at the University of Georgia, he accidentally figured out how to pull off one of the biggest cryptocurrency heists ever. While taking out some Bitcoin he was storing on Silk Road, the notorious online black market, he double-clicked the withdrawal button by mistake, getting back twice as much as he’d put in. He deposited more coins and quickly withdrew them, double-clicking each time, to parlay the glitch into a windfall of 50,000 Bitcoin, each worth about $12 at the time.
Turns out, that kind of cheating, even on an illicit enterprise like Silk Road, which the federal government shut down in 2013, is considered wire fraud. Many other crypto crimes can be prosecuted with some of law enforcement’s most versatile tools such as money laundering and securities fraud statutes.
Denne historien er fra December 19, 2022-utgaven av Bloomberg Businessweek US.
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Denne historien er fra December 19, 2022-utgaven av Bloomberg Businessweek US.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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