The Associated Press reports authorities arrested the former CEO of crypto exchange FTX, Sam Bankman-Fried (SBF), on Monday, December 12. Prosecutors charged the former executive with eight criminal counts, including wire fraud and conspiring to defraud the United States. The Securities and Exchange Commission also filed civil charges against SBF. Here’s everything you need to know about the arrest and indictment of Bankman-Fried in the Bahamas.
Sam Bankman-Fried based FTX in the Bahamas.
Bahamian authorities arrested SBF at the behest of federal prosecutors in the Southern District of New York (SDNY). Additionally, Bankman-Fried lived in a $30 million penthouse in the tropical commonwealth.
Though Bankman-Fried can contest his extradition, the Bahamian Attorney General stated they intend to promptly process a formal extradition request. SDNY federal prosecutors unsealed the charges on Tuesday morning, December 13.
According to CNBC, prosecutors charged Bankman-Fried with conspiracy to commit wire and securities fraud. Additionally, authorities indicted SBF with standalone charges of securities and wire fraud, money laundering, and conspiracy to defraud the US. SBF also violated campaign finance regulations. He regularly donated to Democratic party members and a handful of Republicans.
SBF could face 115 years in prison.
FTX’s downfall began in early November when CoinDesk published a report revealing SBF’s unsavory business practices. Bankman-Fried regularly used user funds on FTX to support its sister company, crypto hedge fund Alameda Research.
When Binance CEO Changpeng Zhao caught wind of SBF’s practices, he publicly sold off Binance’s FTT (FTX’s native token) holdings. The sale created a swath of uncertainty regarding the exchange amongst the crypto community, sparking intense fears about FTX’s liquidity. Unfortunately, from there, it all went downhill, and FTX declared insolvency on November 11, just a few days later.
Bankman-Fried maintains he didn’t purposely misuse FTX user funds and will return all lost investments. However, SEC chairman Gary Gensler disagreed with SBF’s sentiment in its official civil indictment. “We allege that Sam Bankman-Fried built a house of cards on a foundation of deception […],” said Gensler. “The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms [to comply] with our laws.”