Re: So he sold shady investments to willing suckers
It is quite simple. If I open an exchange where you can buy things, you are still in control. You give me your money, and you decide what to buy. If you choose to buy 2 bitcoin at the price I offer them, then you now own 2 bitcoin and whatever money is left after you purchased them. I don't get to decide that I'm going to sell you a different cryptocurrency instead, because I'm running an exchange. My job is to buy the stuff you said to buy. If you lose money because you bought something that went down in value, that's on you. If I choose to ignore what you said and spend on something else, it's on me and it is a crime.
Your description of what happened is just wrong.
"Didn't SBF say he'd hold the funds in a mix of cash and crypto-coins, and then 'sell' billions of dollars of his own crypto-coins to the exchange in return for the real money?"
Neither. He said he would hold exactly what the customers asked him to hold, whether that's just cash, just cryptocoins, or a combination, and they get to choose the proportions and which specific cryptocoins those were. As for the coin he invented, FTT, he didn't sell those to FTX, they were already the property of FTX, and they were supposed to be just one choice of things you could buy. Of course, he used that as a method to slightly hide the fraud on the balance sheet, not that it took people very long to notice even with that fiction.