Comment by grey-area

The choice is not between incompetence and fraud, much as SBF would like you to think so.

A company giving money to the parents of the owner is fraud.

A company giving money to another company owned by the owner when not in their interests to do so is fraud.

A company giving customer funds out as loans is fraud.

Incompetence is not an excuse and never has been, just as ignorance of the law is not an excuse.