Changpeng Zhao, the founder and chief executive of Binance, was part of a group chat on Signal with key crypto leaders as the rival exchange FTX collapsed. From Dec 9, NYT reporting, Zhao worried that SBF was conducting himself in ways endangering the entire crypto market and market players. Emails were attained by NYT about the interactions among crypto executives.
The health of Thether a key trading firm with its Tether "Stable Coin" crypto pegged to the dollar, was a worry to Zhao. Thether was and for now remains a major player in crypto redemptions, cashing in crypto in exchange for dollars. The continuance of a healthy functionary that way is of obvious importance and Zhao believed SBF was engaging in destabilizing conduct.
Days earlier, a Dec. 7 NYT item suggested SBF was under investigation for market manipulation related to the collapse of an earlier crypto currency:
In May, major cryptocurrency market makers — exchanges or individuals who arrange for buyers and sellers to be matched — noticed a flood of “sell” orders coming in for TerraUSD, said one person with knowledge of the market activity. The orders were in small denominations, but they were placed very quickly, the person said.
The sudden jump in sell orders for TerraUSD overwhelmed the system, making it hard to find matching “buy” orders for them. Under normal conditions, any sell orders that remained unfulfilled for too long would be matched with buy orders at a lower price. The longer the orders lingered without being matched, the more they forced down the price of TerraUSD and caused a corresponding drop in Luna prices because of the way the two coins were linked.
The exact causes of the collapse of the two cryptocurrencies remain unclear. However, the bulk of the sell orders for TerraUSD appeared to be coming from one place: Sam Bankman-Fried’s cryptocurrency trading firm, which also placed a big bet on the price of Luna falling, according to the person with knowledge of the market activity.
Finally, this Dec. 12 NYT item examines exposure possibilities of SBF's parents, who SBF identifies as not insiders, but useful idiots; more or less.
Should authorities vigorously pursue the parents' involvement as possibly having civil or criminal dimensions, they can be dragged over the rocks by the governmental deep pocket to where they may end up bankrupted, or nearly there. To the degree SBF cares for his parents' welfare, this may be an avenue of leverage the feds hold over SBF as events unfold.
Cooperation can vary in degree, from admitting "I fucked up" fault and having memory lapses without records to refresh memory, to something beyond that, depending on whether there is leverage.
From prior written submitted Testimony of Mr. John J. Ray III, CEO, FTX Debtors, December 13, 2022, House Financial Services Committee, there exist many loose ends and unanswered questions about extent and whereabouts of possible off-books FTX assets. Leverage over SBF beyond his personal exposure might help unravel the thicket within bankruptcy proceedings. Maximizing the return to creditors there being the goal, down to the bone pickings.
Not that use of the parents that way appeals to a sense of fairness. But the feds do as they like. As they think best.
In that sense, in closing, the feds having effectively canceled SBF testifying at the Dec. 13 FinServ hearing may have been over a possible concern of the feds to lessen tensions in the crypto market by keeping SBF off record because things he might have said might have adversely impacted the now sensitive public trust held in the entire crypto segment.
The question of why an appearance and testimony was quelled was raised in earlier Crabgrass posting. Something is going on. The range of questions at present is intriguing, and whether many get suitably answered is anybody's guess. The feds know more than the public. That is one certainty. But not too helpful a certainty, as we wonder and speculate. And wait.