The arbitrage story definitely seems bogus. People have been aware of difference in bitcoin price across Asia since like the beginning of bitcoin - I don't think it is any huge billion $ opportunity.

Now Tether on the other hand.. I would not be surprised if that has a lot to do with it.

I was running an arbitrage bot well before he claims to have started arbitrage and even back then, it was competitive enough that there weren't tons of money to be made, especially considering all the risks and costs involved. In those days, a relatively common scam involved setting up an investment scheme that promised high returns thanks to "arbitrage trading" (but which was really just a ponzi scheme). I wouldn't be surprised if he was involved in something like that.

Maybe you did, but check the subreddit for bitcoin and cryptocurrency for posts before the FTX collapse. The prevailing sentiment, I recall, was that FTX was less scammy than competitors such as Celsius and Voyager, because the rewards for staking on FTX wasn't quite as absurd as the others. I think a lot of crypto investors thought Sam was the real deal, and that's one reason why they were able to attract so many customers.