The only crime more stupid than money laundering is fraud. Here we have Wells Fargo “erroneously” repossessing people’s cars and homes, making “incorrect” charges to checking and savings accounts. Wells Fargo screwed their customers for over $2 billion, but it was an accident so the shareholders pay a penalty and no one goes to jail.

The difference between an innocent mistake and criminal fraud is a matter of mindset, which is why SBF is now pretending to be an imbecile.

SBF didn’t do it on purpose! He doesn’t even know how to code!

Traditionally, fraud was a civil matter where a victim could recover damages in court, outside of federal jurisdiction. During the 19th century, the US Mail service was struggling to compete with private express companies, so Congress offered discounted rates for large-volume ads to drum up business. Direct mail marketing was a novel idea, with obvious potential for abuse, so in 1872 Congress added a provision that it would be a federal offense to mail any material in a scheme to defraud.

Fraud had to be criminalized, because Congress wanted people to feel like they could trust the junk mail circulars that were subsidizing the mail service. But prosecutors found the Mail Fraud statute useful for so much more:

When a “new” fraud develops – as constantly happens – the mail fraud statute becomes a stopgap device to deal on a temporary basis with the new phenomenon, until particularized legislation can be developed and passed to deal directly with the evil. Prior to the passage of the 1933 [Securities] Act, most criminal prosecutions for fraudulent securities transactions were brought under the Federal Mail Fraud Statute. —Chief Justice Warren Burger, 1974

There was really no need for the 1933 Securities Act, nor the creation of the Securities and Exchange Commission — the Federal Mail Fraud Statute was broad enough to prosecute securities fraud. But it was the Great Depression, and FDR promised lots of makework. Basically the function of the SEC is to go after businesses that have failed to provide ex-SEC commissioners with sinecures.

You know who didn’t get prosecuted for securities fraud? Pump-and-dumper Joseph P. Kennedy. As a major donor to Franklin D Roosevelt and the Democratic party, Kennedy was appointed chairman of the SEC.

That’s the great thing about broad, ambiguous laws. Prosecutors have full discretion to go after their political enemies while excusing their friends. Same approach with Twitter content moderation. What are Twitter’s content moderation rules? Nobody knows; that what makes them useful!

34. “Found no links to Russia,” says one analyst, but suggests he could “brainstorm” to “find a stronger connection.” pic.twitter.com/adrWBV1OgD

— Matt Taibbi (@mtaibbi) December 24, 2022

Government agencies select accounts they want to vaporize, then Twitter’s Trust and Safety team invents a violation. Show me the man and I’ll find you the crime.

The Mail Fraud statute was followed by the Wire Fraud statute and Computer Fraud Act, each more versatile than the last. Sharing a Netflix password? That’s Computer Fraud. Downloading JSTOR journal articles at MIT? Also Computer Fraud.

There’s gonna be new crypto regulation. The Digital Commodities Consumer Protection Act, or something like it. It’ll boil down to crypto-fraud, where it becomes a federal offense to use crypto in furtherance of a scheme to defraud. And it’ll be broad and ambiguous, enforced by an agency full of grifters, weaponized against dissidents. Maybe they’ll put SBF in charge.