There's only one solution to restore people's confidence. Put the bad guy in jail for a long, long time.
I'm not sure that's the best solution, but maybe it's one that is expected.
I don't think the FTX issue is going to make people's trust in bitcoin down, but the impact is definitely being felt as FUD over FTX has sent most people into a panic. Even if someone is jailed due to FTX case then fraud will never stop in this industry and users are obliged to have good solution. Every asset owner should store their assets in wallet, not an exchange nor should they trust centralized exchange 100% for their long term storage.
Punishment is simply a consequence for those found guilty, but I don't believe it will do much for the people who are losing to the current FTX. Lots of people have lost money and I'm not sure they will be compensated.
If in case they will be compensated especially those top 50 creditors, it will be long time as lawsuit and hearings would take a great deal of time.
However, this current crypto-exchange failure shows that it can really influence the movement in the market.
This may not be long, but right now, we are seeing its immediate effect on bitcoin's price.
For believers, this is a very nice opportunity to collect more satoshis. It is now how crypto users are reacting on this recent fallout.
But I don't think SBF will go to jail very soon, because this will be a long duration of discussion and hearings, possibly, the authorities may ask him to pay those stakeholders affected.