Original title: Crypto Twitter Found SBFs Fraud》
Original author: Balaji Srinivasan
Original compilation: Qianwen, ChainCatcher
The existing system does nothing—until the Internet reveals everything.
Ever seen those superhero movies? Batman hunts down the villain, then ties him up and leaves it to the police to finish it off. Thats what happened with SBF. The Internet hunted the con man, collected indisputable evidence, and wrapped him up and handed him over to the government. Then everyone from Elon to stricken Indian users clamored online for a month before the government reluctantly took him away.
Now that he has been convicted, we are witnessing a bizarre piece of history in which the system apparently did something practical, under the weight of Twitter evidence, to pursue SBF, an obvious liar. Yes, it was Twitter that prompted the government to take action. How do we know? Because the entire case was cracked from start to finish on Twitter.
It was Allison who revealed that the SBF no longer had enough funds, while Axis reporter Dan Primack was interviewing whether the SBF could solve world hunger.
It was Coinapult founder Erik Voorhees who strongly questioned SBF on Bankless, while Bloomberg reporter Joe Weisenthal had a good chat with SBF on the podcast Odd Lots
It was crypto author David Z. Morris who called FTX a criminal, while New York Times reporter David Yaffe-Bellany praised SBF as a philanthropist.
It was Twitter that proved SBF was a scam, and the New York Times Deal Book applauded the scam.
It was people on Twitter who were posting about SBF donating money to Democratic politicians even as those same politicians were welcoming him to Congress
The New York Times, Congress, Bloomberg, Axios—all of these institutions failed, while Coindesk, Bankless, and Twitter did. No corporate journalist, politician, regulator or police thought to investigate SBF until Erik Voorhees and Ian Allison discovered the problem. In fact, even the most self-aware corporate journalist in modern history admits that citizen journalists are better at covering the FTX thunderstorm than traditional media.
The only reason SBF was exposed (let alone his conviction) was because of people tweeting about it.
Behind the SBF story
If you get the last question on the exam correct and fail everything else, you get an F, which is what happened here. The current system we are paying trillions of dollars for answered that last question right (finally catching SBF), but failed on all other fronts. Politicians failed, journalists failed, regulators failed. The criminal justice system eventually succeeded, but only after failure elsewhere—and also after the Internet built the entire case for them.
Why does the justice system fail?
When will the politicians (starting with Biden) whose elections were fueled by SBFs ill-gotten funds leave office? This is something I want to know.
When will journalists working for SBF withdraw their endorsement articles? This is something I want to know.
Regulators are attacking Bitcoin ETFs while meeting with SBF. When will they admit that they are unable to regulate? This is something I want to know.
The government only pursued the case after the Internet compiled clear evidence of his guilt, sweeping away his many deceptions. When are they going to admit any of this? This is something I want to know.
Obviously, none of this is going to happen. SBF stolen money influenced elections across the country. These actions will never be lifted, meaning the SBF essentially takes the blame for all of them - and once again the bad guys get away with it.
The whole SBF thing is not a great victory for Americas existing institutions - its as much an indictment of him as it is of them. Fortunately, we have the Internet. As we will detail, it is decentralized networks, not centralized states, that truly capture SBF.
Politicians fail in their duties
Recall that SBF is the second-largest donor to the Democratic Party after Soros himself. It is acknowledged that he was one of the key players in electing Biden, with the money now revealed to be stolen money. Even if his fraud was made public, Democrats such as Maxine Waters still praised him for his candor, welcomed his testimony at congressional hearings, and blew him a kiss at the hearing.
In fact, Waters, the current chairman of the House Financial Services Committee, was surprised that SBF was arrested before Congress could make its case. Why was she surprised? Perhaps it’s because the SBF has been working closely with her and others who are largely pushing for a bill that would criminalize decentralized finance but benefit SBF’s personal finances.
Politicians nominal legal work is supposed to achieve the best interests of the public, but they fail to do so. SBF legally bribes them to push for legislation that will benefit his business over everyone else, like what is happening now with AI. If it werent for the good guys on the Internet, SBF would be successful.
Reporters negligence
Second, remember that SBF is the darling of the mainstream media. Corporate journalists like David Yaffe-Bellany of the New York Times worked tirelessly to endorse SBF before, during, and even after his appalling scam came into public view. In fact, after millions of people learned that SBF had stolen billions of dollars, the New York Times not only gave him a platform, but even gave him a round of applause.
The contrast with other crypto coverage could not be starker. For years, the message from the media was that Bitcoin was a fraud, but SBF was a friend. He gave the stolen money to NGOs and media outlets such as Semafor and ProPublica 3, and in return they dubbed him the “JPMorgan of crypto.”
Therefore, reporters were completely derelict in their duty when they should have informed the public. SBF said things that people liked to hear, created an image for himself, and ensured that journalists believed that he was part of their ideological camp. As a result, they wrote a lot of endorsements about him, and they would continue to write them if it werent for the good guys on the Internet.
Regulators do nothing
Also remember, regulators failed. Acting SEC Chairman Gary Gensler met privately with the SBF, knowing he would only receive a small number of people, while he also publicly blasted countless other programs because they have now lost their cases. The meeting mentioned conditional no-action relief, which in regulatory terms means we will not enforce FTX.
Therefore, regulatory agencies are nominally supposed to exclude problematic bad projects and pass good projects, but they fail to do so. Instead, they spent their time meeting with SBF while attacking the Bitcoin ETF. Why? Possibly because the SBF pushed for more regulatory powers and paid bribes to right-wing politicians. So regulators gave him special perks, like private meetings, and Congress tilted cryptocurrency regulation toward the SBF’s preferences—all of which he could have gotten away with if he hadn’t been an online “meddler.”
How does the Internet do it?
And what exactly did those good guys on the Internet do? They blew this case.
First, cryptocurrency investor Nick Tomaino tweeted that FTX was under suspicion both in terms of trading activities and policy advocacy. Next up, Erik Voorhees politely confronts SBF on the Bankless Crypto Podcast. Eventually, the cryptocurrency website Coindesk published Ian Allison’s insider article on SBF, exposing the fraud.
Again, none of this is driven by traditional media, politicians, regulators, or the police — which is why even the Washington Post admitted that citizen journalists did a better job covering the FTX implosion than traditional media.
Satoshi Nakamoto and SBF
Things moved quickly after Coindesk’s revelations. Binance CEO Changpeng Zhao sold his stake, SBF claimed the assets were sound, and the community immediately put his claims to the test. And this is decentralized fact checking, which actually ended up ruining his reputation. Thanks to Satoshi Nakamoto’s invention, SBF cannot continue to commit fraud by creating fake funds on his central servers, as he did for his trading company. Once millions of people discover they cant move funds to a decentralized blockchain, the illusion collapses and so does his exchange.
This point cannot be overstated: not a single senior journalist, politician, regulator or police officer caught SBF committing fraud, only the blockchain “caught” him. Until the end, SBF was still saying that FTX is operating well and there are no problems with the assets. But because of the decentralized connotation represented by the blockchain, millions of people around the world can test their withdrawal capabilities, view the results on the chain, and independently fact-check it. SBF can deceive a country whose system fails, but it has its match in decentralized networks. He cannot make withdrawals because he cannot create money.
In short: The Internet succeeds where government fails. It was crypto-related Twitter that asked the hard questions, reported real citizen journalism, found clear smoking gun evidence in the form of insufficient on-chain balances, and posted it all over the internet. It was the network that reached a firm decentralized consensus that he had no money, even though his fans continued to portray SBF as a billionaire throughout this period. All the police have done since then is a slow and reluctant winding down.
The criminal justice system succeeds, but remember it has failed once before
As mentioned earlier, the internet had evidence that SBF was a notorious criminal by November 11, 2022, when FTX suspended withdrawals and its BTC on-chain balance dropped from 20,000 to 1. During this time, SBF and his supporters continued to lie to the public, saying that he had sufficient funds, but the reason he could not withdraw money was because he could not lie to the Bitcoin blockchain.
Millions of witnesses can independently confirm that SBF stole their money by monitoring Bitcoin and Ethereum. Like Batman, Internet volunteers bundled SBF with indisputable evidence stapled to their chests and handed them over to the police.
Then, nothing happened after that. For several weeks, SBF has been touring the show Good Morning America. Yaffe-Bellany also endorsed and reported on it in The New York Times. This shocked even other reporters at the time. He presented his case on Dealbook and received a round of applause. The House Financial Services Chairman welcomed him to testify before Congress, a privilege (a privilege, to say the least) that would not normally lead to a job-related prosecution. Over the next few weeks, he was free to wander around, tweet and otherwise contribute to the uncertainty.
Why?
We need to dig deeper into this because one of the core lies being circulated online right now is that of course the state is completely trustworthy and only a paranoid lunatic would think that there was actually an internal conflict over the arrest of the SBF during this time. To solve this problem, we need to first discuss (a) trust in the police, then (b) the timeline of arrests, and finally (c) tensions within the party.
Abolish the police first, then trust the police
The first question is: should we simply assume everything will be fine? No, remember, Democrats spent much of 2020 clamoring to abolish the police. Then, as the SBF shows up, they suddenly turn to I cant believe you dont trust the police!
But we dont trust the police. Because the SBF incident was not an accident. Faith has been rightfully missing from Americas once-admirable legal system.
After all, thanks to Attorney Soros, crime is de facto legal in major American cities. Hard drugs are sold openly.
Supermarkets and trains were robbed in broad daylight. The windows were smashed and everything was taken. At the BLM march, rioters blocked roads and besieged passers-by. And the police did nothing.
At the same time, as prosecutions of actual crimes have dwindled, prosecutions of political crimes have increased. Republican Douglas Mackey spent almost as much time in jail for tweeting a joke as Democrat Colinford Mattis did for firebombing a police car. We are in an era of public trials, where the Russia collusion charges are slowly being admitted as false, and Hunter Biden’s accusations are slowly being admitted as true — but only after the election. becomes no longer important.
None of this is justice. So, we don’t trust the police. That the criminal justice system has finally managed to get back on track after intense international public pressure on an apparent fraudster who stole $10 billion in broad daylight is nothing to brag about.
Justice delayed is justice denied
Now to the second point: Could SBF have been arrested earlier? Because in the weeks after millions of people could publicly testify that he stole their money, SBF was invited to speak at a New York Times conference and testify before the U.S. Congress, which typically raises questions about whether justice will be served.
Countless state defenders took to Twitter to claim that this was just the quickest way and that civilians just didnt understand the legal process. In response to this, we only make three points.
1. Alexey Pertsev was jailed just days later without being charged
First, real freedom fighters like Tornado Cash founder Pertsev were caught within two days of OFAC’s controversial new interpretation of existing law. He was arrested for writing code, but no charges were held. This swift action is not an isolated case. In 2020, the FBI arrived at NASCAR within 24 hours to investigate a fake noose. In 2012, Nakoula Basseley Nakoula was taken away within 48 hours after Hillary Clinton denounced him for making a movie.
So we know the state can act quickly if it wants to.
2. A prosecutor from the same office suggested filing criminal charges before prosecution in order to quickly gain support from Republicans - so why cant they do the same for SBF?
Second, is it really impossible for prosecutors to file a criminal indictment and quickly detain SBF, who would then be fully indicted by a grand jury? Thats exactly the strategy this former prosecutor from the same office that prosecuted SBF suggested when they wanted to prosecute Republicans: use criminal prosecutions to make quick arrests.
In contrast, criminal prosecutions are often used when prosecutors need to make an arrest quickly. This may occur, for example, when federal agents learn that a crime is about to occur or has just occurred and immediate action must be taken. In this case, prosecutors do not have time to go through the grand jury process. Instead, prosecutors file a written document called a criminal indictment, along with an affidavit signed by an attorney familiar with the case. A judge or magistrate will review the complaint and affidavit, and if he or she finds probable cause, a warrant will be issued. Once an arrest is made pursuant to a criminal complaint, federal law requires that the defendant be charged within 30 days (or prosecuted by criminal information, in the case of a misdemeanor or the defendant agrees to waive prosecution).
I mean, Im not a lawyer, but it makes sense. Is it conceivable that in every case like this the government deliberately tied its own hands and did nothing for weeks? Or is it that in other official cases, if they want to, such as when they catch Trump, they can act quickly?
3. The state can put millions of innocent people under house arrest indefinitely, but cannot legally arrest SBF?
Do we really believe that the government can fabricate a reason to spy on you without a warrant, or seize your assets without charges, but cannot withhold an SBF before trial? I mean, are you telling me that a country that has hundreds of millions of people under house arrest cant quickly bring SBF to justice?
The U.S. government can violate virtually any law it chooses, as it regularly does using civil forfeiture, warrantless surveillance, undeclared war, and extraordinary rendition. Likewise, it can claim to be bound by regulations when it wants to move slowly.
And it did go slowly, in fact, it took a full month from November 11, 2022 (when SBF apparently stole billions of dollars from clients) to December 12, 2022 (when SBF was finally arrested) The timing, during which so many institutions (such as Congress and the New York Times) were scrambling to support SBF, rightfully aroused public suspicion.
And to paraphrase an old proverb, Caesar is unquestionable.
Partisan disgrace
We have therefore established that (a) there are good reasons not to trust the police and (b) there are also good reasons to question the slow pace of prosecutions. Yet why did the prosecution actually proceed?
Explanation 1: Standard Operating Procedures
You can believe the people on Twitter who moved from abolishing the police to trusting the police without any memory. Their story is that the few weeks SBF free roams are just a yawn, always. After all, we didn’t know it would take months to “open a case” (even though Twitter had been “opening the case” since the Coindesk article), and the authorities were moving at “light speed” (even though Pertsev was in Sentenced to jail within days), the New York Times could certainly provide a platform for a (completely cryptographically verifiable) scammer (even though the organization has been advocating for de-platforming for years).
If you believe this, you may also believe that the Russian collusion scandal is true (until it is admitted to be false), inflation is false (until it is admitted to be true), and that Rittenhouse, the protagonist of the shooting, is is guilty (until he is found innocent).
In other words, if you think its completely normal for a freedom fighter to be immediately imprisoned without charge, while a known con man is allowed to roam free, then in a situation that even the New York Times found problematic If you are released on bail, you are a member of BlueAnon. Blue Anon is a small group of people in the world who follow the line of the Democratic Party in the United States, just as a generation ago followed the line of the Communist Party of the Soviet Union.
Nothing we say will make you listen.
Explanation 2: Civil war within democracy
But for the rest of the world—Republicans, Independents, Bitcoiners, Ethereumites, Indians, Chinese, and everyone else who was deceived by Samuel SBF—there’s a more succinct hypothesis: This is A quiet Democratic civil war.
Because on November 15, 2022, it was reported that senior members of the party were paying close attention to the case:
The fate of the SBF is being closely watched by the highest levels of the Democratic Party, including some senior elected officials who are curious about what its collapse would mean for Democrats and their funding sources. After all, the SBF is widely seen as not just a once-in-a-generation party donor, like George Soros, but a unique political force willing to push the envelope and take costly risks. Of course, this is scary for the left, as are the potential legal consequences for Democratic organizations and betrayed SBF aides if bankruptcy courts, class action lawsuits, or prosecutors try to recover the money. Anxiety is rising.
If you read all the contemporary articles in this outlet, you will see a picture of a civil war within the Democratic Party sparked by the SBF scandal, between people whose careers would be negatively affected if SBF were prosecuted (such as David Yaffe-Bellany and Maxine Waters) and those whose careers will be positively advanced, such as the prosecutors who ultimately bring him to justice. One reporter covering SBF even admitted that someone texted him saying they were sorry for his loss.
This shouldn’t be too implausible, since we’re now in the middle of another Democratic civil war, between supporters of Israel and Palestine. A few years ago, there was another civil war between Biden and Bernie supporters. The split on SBF is not exactly consistent with the other splits, but they are broadly consistent: the institutionalists want to control crypto and therefore befriend SBF, while the left wants to destroy crypto and therefore distrusts SBF.
Before the fraud was revealed, the factions were roughly in balance, but once he became toxic, the left seized the opportunity to drive out those who supported the SBF. Yes, as David Morris observed at the time, there were attempts to portray the SBF as a tragic figure, but in the end - despite all the good things he did in helping party members get elected with stolen funds - the SBF It became a very embarrassing topic, and his party could no longer protect him.
Then again, if you read all the stories about the SBF Pandemic, SBF Thunder Radius, and SBF Legal Meteor, youll notice that it seemed like it took weeks for all the people he financed with the stolen money to Synchronize each other and figure out whats going on - in large part to prevent the possibility of recovering funds. But in the end, the anti-SBF faction won out. He is an embarrassment to the Democratic Party and must go.
What did we learn?
Crypto-related content on Twitter blew the lid off the case, exposing the SBF in the first place, placing huge liability on the Democratic Party, and ultimately forcing the regime to take action against their second-largest donor.
Contemporaneous reporting acknowledged that citizen journalism outperformed traditional media in this case and that, in fact, the New York Times and Congress appeared to have been complicit in covering up the crime.
We learned that regulators were unable to distinguish between good projects and bad projects; they were not considering any action against SBF, nor were they taking any action against approving a Bitcoin ETF.
We also learn that not a single traditional journalist, politician, regulator or police officer took notice of the SBF before he used stolen money to rig national elections that would never be undone. Investors who put their money into FTX lost their money, but politicians who took money from FTX kept their jobs.
I understand why people still think the system makes a difference. After all, after years of police being abolished, years of crime rampant in Republican-run cities, and law enforcement completely politicized, its really refreshing to see a case that seems to get the right outcome. People are pleasantly surprised.
But be sure to remain vigilant. We are in this situation because the Internet can make a difference and the government cannot. Not a single traditional journalist, politician, regulator or police officer found SBF to be a criminal, but the Internet did?
