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00:00ARI REDBORD IS THE LEADER AT TRM LABS. HE HAS DENIED KNOWINGLY CONVICT -- KNOWINGLY COMMITTING FRAUD. IF HE IS CONVICTED, WHAT ARE THE STAKES? ARI: AS A PROSECUTOR WE HAD THIS MUCH ACTIVITY IN ONE CASE ON ONE DAY, WE SAW REGULATORY CHARGES AND CIVIL CHARGES FROM THE SEC. NOT ONLY DO WE SEE THE ARREST BUT A DETENTION HEARING FIRST THING TODAY IN THE BAHAMAS WHERE HE WAS HELD. WE SAW INDICTMENT FROM DOJ UNSEALED. WE HEARD AN IMPORTANT HEARING ON CAPITOL HILL WHERE THE LEGISLATIVE BRANCH IS ENGAGED. REALLY UNPRECEDENTED ACTIVITY. THAT GOES TO THE HEART OF THIS CASE. IT WILL BE INTERESTING TO SEE WHAT PLAYS OUT, WE KNOW THAT THERE IS AN EXTRADITION HEARING OF SOME KIND AND LIKELY IN FEBRUARY BUT THINGS CHANGE QUICKLY. IT IS POSSIBLE THAT A FEW DAYS OR WEEKS IN THE BAHAMAS OF BEING INCARCERATED CAUSES A DESIRE TO MOVE ON HOW GO TO THE U.S.. WE HAVE NOT RULED OUT CHALLENGING EXTRADITION OR NOT CHALLENGING EXTRADITION. ONE THING TO GET TO THE HEART OF YOUR QUESTION IS THE SENTENCING GUIDELINES WILL BE SIGNIFICANT IN THIS CASE. THEY ARE NOT MANDATORY, MOST JUDGES FOLLOW THEM. ONE OF THE MAJOR DRIVERS FOR FEDERAL SENTENCING GUIDELINES IS THE AMOUNT OF MONEY INVOLVED IN THE FRAUD COMMITTED. AS THE U.S. ATTORNEY SAID TODAY THIS IS ONE OF THE LARGEST FRAUD IN HISTORY. THE NUMBER WILL BE VERY VERY LARGE AND WE WILL SEE A SIGNIFICANT AMOUNT OF TIME THAT THE DEFENDANT HERE WILL BE LOOKING AT. THERE ARE MITIGATING FACTORS, DOES HE COOPERATE? SEE WAIVE EXTRADITION? AS YOU -- DOES HE WAIVE EXTRADITION? ANNABELLE: PICKING UP ON EXTRADITION, HE IS PLANNING TO FIGHT THAT, DOES THAT IMPACT THE CASES PENDING AGAINST HIM? > > YOU SAID VERY WELL THAT TYPICALLY CIVIL CASES DO TAKE A BACKSEAT TO CRIMINAL AND THAT IS BECAUSE WHEN YOU ARE TALKING ABOUT CRIMINAL CASES OR CHARGES, YOU ARE TALKING ABOUT POTENTIAL INCARCERATION AND IN THIS CASE YOU ARE LOOKING AT SIGNIFICANT POTENTIAL INCARCERATION. THIS FIGHTING EXTRADITION WILL ULTIMATELY END UP DELAYING THE CRIMINAL PROCESS WHICH I COULD IMAGINE A WORLD WHERE THE SEC CASE AND CIVIL PLAINTIFFS CASES WILL ULTIMATELY BE STAYED PENDING THE RESOLUTION OF THE CRIMINAL CASE AND THE MONGER EXTRADITION TAKES, THE LONGER THE PRELIMINARY STAGES TAKE PLACE ONCE HE IS ULTIMATELY EXTRADITED. IT DELAYS THINGS FURTHER AND FURTHER. SHERY: WE HAVE HEARD BANKMAN-FRIED ACKNOWLEDGED IT WAS MCMILLAN JUDGMENT -- MAKE MANAGEMENT ON HIS PART. HIS THAT A -- IS THAT A LEGAL DEFENSE? > > YOU HAVE TO HAVE INTENDED TO COMMIT FRAUD, ONE THING THAT IS OUTSTANDING IS EXCEPTIONAL IS THE SPEED OF THE INDICTMENT. HAD A TEAM OF AGENTS WORKING AROUND -- YOU HAD A TEAM OF AGENTS WORKING AROUND THE CLOCK LOOKING AT TRANSACTIONS TO UNDERSTAND WHAT THE EVIDENCE IS AND THEY PACKAGED THE EVIDENCE UP AND PRESENT IT TO A GRAND JURY. THE GRAND JURY INDICTED ON PRETTY SIGNIFICANT CHARGES. BY THAT SAYS TO ME IS THAT THE STRENGTH OF THE EVIDENCE IS VERY STRONG. THAT WAS LIKELY A FACTOR THAT THE JUDGE TOOK INTO CONSIDERATION IN THE BAHAMAS AND WILL BE A FACTOR THAT THE COURT ONCE HE ARRIVES IN THE U.S. WILL TAKE INTO CONSIDERATION. DO YOUR QUESTION, THE STRENGTH OF THE EVIDENCE IS STRONG BUT THE CASE IS MOVING QUICKLY -- TO YOUR QUESTION, THE STRENGTH OF THE EVIDENCE IS STRONG BUT THE CASE IS MOVING QUICKLY. HAIDI: GREATER REGULATION AROUND CRYPTO, THIS COULD HAVE BEEN AVOIDED, THE CORE OF THIS CASE WHICH IS LIMITED AND VESTING OF CUSTOMER FUNDS, THEY ARE ALREADY. MYRIAD PRODUCTIONS IN PLACE WHETHER YOU ARE TALKING ABOUT INVESTOR LAWS LAWS OR CONSUMER LAWS. THE INFRASTRUCTURE BEING ABLE TO PREVENT THIS FROM HAPPENING? > > WE HEARD THE TESTIMONY ON CAPITOL HILL, IT WAS ABOUT CORPORATE MALFEASANCE, A LACK OF CORPORATE GOVERNANCE AND FRAUD. CIVIL AND CRIMINAL. THIS CASE IS MORE AKIN TO THE TRADITIONAL MONEY LAUNDERING FINANCIAL CRIME OR MALFEASANCE AT A CENTRALIZED INSTITUTION. I AM NOT SURE ABOUT THE REGULATORY CLARITY THAT IS NEEDED AND IT IS NEEDED IN THE CRYPTOCURRENCY SPACE, IF THIS WOULD HAVE SOLD FOR THE ISSUE WE SEE HERE WHICH IS AKIN TO WHAT WE SAW IN THE ENRON CASE. ANOTHER IMPORTANT FLY IS THAT FTX WAS NOT AN U.S. -- ANOTHER IMPORTANT POINT IS THAT FTX WAS NOT A U.S. COMPANY. U.S. LAW DID NOT NECESSARILY APPLY. I DO NOT THINK THAT FTX IS A REASON WE NEED MORE REGULATION IN TWO CRYPTO SPACE. I THINK THE CRYPTO SPACE, CRYPTO BUSINESSES AGREE, IT NEEDS MORE REGULATORY CLARITY. WE ARE MORE LIKELY TO SEE THAT IN STABLECOINS AND ANTI-MONEY LAUNDERING AND OTHER SORTS OF AREAS. THE FRAUD HERE DID NOT OCCUR ON BLOCKCHAIN. IT OCCURRED BEHIND CLOSED DOORS AND FEELS CLOSER TO CORPORATE MALFEASANCE WE HAVE SEEN FOR GENERATIONS. ANNABELLE: PICKING ON WHAT YOU SAID IN TERMS OF REGULATION, CONGRESS COME INTO NEXT YEAR, WHAT EXACTLY DO YOU THINK WE CAN REALISTICALLY EXPECT? > > I THINK THE REALITY IS IT IS UNLIKELY WE WILL SEE A BROAD COMPREHENSIVE FRAMEWORK FOR CRYPTO ASSETS THE WAY THAT WE HAVE IN THE EU AROUND THE MARKETS IN CRYPTO ASSETS. IN THE U.S. WE ARE LIKELY TO SEE SOMETHING THAT IS MORE AKIN TO PIECEMEAL. WE WILL SEE -- I THINK THE FIRST THING WE WILL SEE IN STABLECOINS REGULATION. THEY HAVE BEEN WORKING ON IT FOR MONTHS OR LONGER AND I THINK WE ARE READY TO MOVE WITH THAT AND SEE SOME MOVEMENT. ESPECIALLY IN THE WAKE OF THE COLLAPSE OF STABLECOIN. WE WILL SEE MORE, IT WILL BE SPOTTY I DON'T AS COMPREHENSIVE BECAUSE TO YOUR POINT I AM NOT SURE THAT THE POLITICAL

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TRM Labs Redbord on Crypto Latest

Ari Redbord, Head of Legal and Government Affairs at TRM Labs, discusses the outlook for cryptocurrency regulations and the latest on FTX. He speaks with Annabelle Droulers, Shery Ahn and Haidi Stroud-Watts on "Bloomberg Daybreak: Asia". (Source: Bloomberg)

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