Aug 14, 2023

A federal judge revoked Sam Bankman-Fried's bond release, saying the FTX founder appears to have "attempted to tamper with witnesses."

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right, more legal analysis of Sam Baman Fried being jailed ahead of his trial. Joining us now is her Wang. She is the former head of policy at Coinbase and current principal at her Wong dot Xyz. Welcome to the show, Hermine. Hi, thanks for having me, Jen. It's good to meet you, Lawrence. Hi. Hello. Yeah. Wonderful to see you again. Uh Just right off the top. Got to get your reaction to what went down on Friday. We heard Nick kind of tell us what uh happened in, in the court. From your perspective. Were you expecting to see Sam Bagman free jailed 100%? Yes, I think that I think the general public thought that too. Uh I love being able to follow Nick's analysis because uh I was pouring through all the documents myself trying to find the transcript. So being able to hear it fresh from him about uh how things went down in the courtroom was super helpful. Um WW when you were uh when you were in the uh in the services of uh of coin based and you guys were kind of like looking at competitors. Did you kind of ever think you'd see a competitor not follow legal advice or sanity quite this way? I mean, like, like, what's the perspective, you know, looking out, I, I, I'm not asking you about internally at coin based but just looking out at the competitive landscape. Um, do you guys, like, go, yeah, these guys know what they're doing. These guys don't know what they're known. Yeah, when you're, when you're doing some sort of pure benchmarking and I think that this is true, regardless of which industry you're in, you, you have to assume rational actors and I don't think that we're going to pretend here that Sam Bank been freed is acting in a manner that the general public or anyone would consider to be rational, right? Like leaking, leaking the diary entries just doing something so out of ordinary to such that you would get your bail revoked and your bail was set at $250 million. That is not something that I think anyone would have predicted, including his own lawyers. I got to ask you about this gag order. Some news outlets filed letters with the court about their first amendment rights and, and SPFS gag order, tell us about what this means for all of these media outlets. Yeah. So, um this a gag, a gag order generally is meant to protect the jury proceedings, protect the trial. Ensure a fair trial. The gag order that came down from the judge was fairly broad and the news outlets, especially in New York Times was the one who filed the first letter saying, hey, this, this is a violation of our first amendment rights. Um, we've got a defendant who wants to talk to us and everything that he says is a public interest. First amendment and gag orders are really a balance, right? Where you're going to have a balance of what's in the public interest. And you've got two different public interests. You have the first amendment and you've got the jury trial and the fair trial. So in this case, I think that as we heard Nick say earlier, um, the appeal was filed, we're going to see whether or not the second circuit takes this up. Um, but it's certainly on an abuse of discretion. And I think that that's why we saw the judge run through all the elements and all the evidence that he considered in, in his order and the revoking of the bail, um, to give people notice that this is not something that he took lightly. There was a lot there to the balancing of the interest. And so I don't think that this will be a precedent setting, uh, new law being broken here. Uh This is, this is probably very much in line with what we would expect. You know, it, it, one thing that's, uh, you know, stepping back a bit to and, and we talked about the competitive landscape but when we look at how the public perceives, you know, some of the most prominent people in, in crypto, be it Sam Bank man, Freed Alex Massy Dow, et cetera. They only hear they only see the headlines, not of successful people doing good but successful people doing bad. And at what point does this hurt and has it hurt the long term prospects of adoption for crypto when uh people who haven't quite made that leap over uh to crypto yet, either trading or using it on a day to day basis, they see headline after headline of people stealing it or headline after headline of hacks. Um What is the long term effect of a trial like this going to have on crypto adoption? That's a great question. Uh And I think that it is still up in the air when it, if we think about crypto adoption as being one where we're trying to really get, leap into the utility phase and get to the web three landscape. This is a, this is going to be tough and we're not getting the right headlines right now. You want to have the combination of crypto winter where you're getting real things that are being built with an eye towards utility, breaking through some of this noise. And if possible, I think it's super important for people who are looking at this case, looking at the other cases that you've named like the Terraform case to think like this, there's a element of fraud and the fraud is unique in that it's unique to that person and not to the industry. And the more that comes out of utility and a population that is actually using crypto uh that will help to balance the fraudulent narrative. Because at the end of the day, we all know fraud exists regardless of which industry you're in. Right? We've seen headlines in accounting. We've seen headlines in oil. So that's not going to change. Uh The question is whether or not you can get to break through the noise. I had this debate with somebody who, who's in this industry. Um and he said, look, this is just like the early days of the internet. So you had these problems and, and my response is, but the difference is that people were on the internet using and they adopted it because they saw instantaneously the advantages of using the internet of buying things, talking to people sending email, et cetera. That's not the case here with crypto though because there aren't enough use cases for adoption. We haven't seen people going in. Alice has, hasn't gone to the coffee shop to buy something from Bob and that's not happening yet. And is so does this like make it all the more harder and it's actually a higher hurdle than it is elsewhere? Because we've got, we've got the fraud ahead of the, the the benefits. Uh So I think the internet uh core layer is a useful one because we might remember that back in the early days of the internet, the, the internet got governed by something called the Communications and Decency Act. Right. In the very beginning, most people were most concerned about the internet being a place for porn and a bunch of illicit activity. And Congress ended up calling an act that did govern it to be one about exactly that area. I, I have a kid that's screaming for me. So if he comes by, like, please forgive me. Um And so the, the other thing is to keep in mind is that the difference between crypto and the internet was that the internet was really going to be created by just centralized entities. And that's, that makes sense to us. Come on over Lincoln. That makes sense to us now. Uh why that's very different and why you are able to maintain kind of mission alignment. Whereas crypto is one that is going to be very different because we want some sort of decentralized way of implementing that takes a little while um to get right if it, if it makes you feel any better crying babies is a, is a, is a constant theme in, in uh crypto. So it's all right. All right. I mean, we are gonna let you tend to your son in just a moment. The last thing I want to ask you is what does this, um, what does this mean for SBF Bond? Is he losing the bond? What does it mean for his parents and those close family friends who put up, um, for this $250 million? Yeah, a great $250 million question. Right. So, uh, the answer is that he, he did go to jail. So the bond is in place to make sure that he doesn't flee. Uh And he did not flee, he gave himself up. Uh He didn't as I understood from some news reports. He barely had time to even say goodbye. So the marshals took him away. So they, they are not going to take $250 million away from the bank m free family. Now, while your son is still there, uh Tell us now if God forbid he ever did something like Sand Bank being freed, would you put up a $250 million bond? I mean, that's crushing that that is the most crushing thing about this, right? Is, is how do, how do these parents deal with it on a day to day basis? I think you even mentioned, you know, you mentioned some of the human moments of like go to jail and having to take off your belt buckle. These are like very, very difficult um circumstances for, for the individual but also everyone who's affected. Um So let's, let's just hope that this kid does not have, if he's like staring into the camera that he does not have the same kinds of instincts of defrauding um billions of dollars. Listen to Mommy there, Lincoln. Ok. Listen to Mommy. Listen to Mommy. Now take you a lot of money later. All right. Her and Lincoln, we are going to have to leave it there. Thanks so much for joining the show this morning. Thank you for having both of us. That was her Wang. Yeah, we'll have, we'll have to get a kid segment going on first mover one day. That was Hermine Wang, former head of policy at Coin Base and current principal at her Wang dot XYZ.

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