Former FTX owner and CEO Sam Bankman-Fried has been indicted with eight counts of fraud by the Justice Department following the rapid collapse of the cryptocurrency platform. In the petition, he is referred to by his frequently known moniker, “SBF.” The documents were unsealed on Tuesday, December 13, 2022, in US District Court in the Southern District of New York.
SBF was slated to testify in front of the House Financial Services Committee following the company’s bankruptcy and collapse. He was very busy, he told committee chair Senator Maxine Waters, so he would only be available to testify via Zoom. He spoke to the Wall Street Journal just a few days prior and was arrested the day he was to appear before Congress.
While committing fraud, he and his cohorts used billions of investor dollars for their own personal expenses, to make trades, and to make large political donations, occasionally in the names of other individuals to hide the source of the donations. These donations were made prior to the 2022 mid-term elections, and intentionally evaded reporting requirements and limits on contributions.
After his arrest, he initially declined to waive his right to challenge extradition back to the US to face charges. Following his short, initial stint in a Bahamian prison, he has decided not to fight extradition, at least, immediately. His legal counsel indicated that he could change his mind later. One concern was the possibility of him fleeing The Bahamas to another country that would not cooperate in an extradition, hence the urgency to arrest him quickly.
The Commodities Futures Trading Commission and the US Securities & Exchange Commission both filed their own separate and concurrent complaints in the same court with similar allegations. All three cases were filed on the same day with the US District Court.
The Eight Criminal Charges
In the sealed indictment, the Grand Jury charged SBF with:
- Conspiracy to commit wire fraud on customers
- Wire fraud on customers
- Conspiracy to commit wire fraud on lenders
- Wire fraud on lenders
- Conspiracy to commit commodities fraud
- Conspiracy to commit securities fraud
- Conspiracy to commit money laundering
- Conspiracy to defraud the United States and violate federal campaign finance laws
The charges of wire fraud, wire fraud conspiracy, and conspiracy to commit money laundering each carry a maximum sentence of twenty years. The rest of the charges each carry a maximum sentence of five years. SBF faces the potential of as much as 115 years in prison.
No Additional Indictments Yet
Currently, no other of SBF’s associates have been charged or arrested in connection with FTX. Alameda co-founders Nishad Singh and Gary Wang have also borrowed money from the subsidiary but haven’t yet been charged. SBF’s former girlfriend and former Alameda Research CEO Caroline Ellison has been spotted in New York City. She recently retained legal counsel and has not yet spoken publicly about the charges. It is not yet known how any will be involved in the bankruptcy, criminal, or other cases related to FTX.
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