Former FTX CEO Sam Bankman-Fried is still in the spotlight, but not for the right reasons.
Research on Sam Bankman-Fried
The SEC and the Justice Department are investigating the founder and former boss of the collapsed crypto exchange FTX. Sam Bankman-Fried has been called to testify before the US House of Representatives overseeing Financial Services.
After billions of dollars in money went up in smoke in one of the most abrupt collapses in US corporate history, the exchange owes $3.1 billion to its top 50 creditors. According to some, the stock market collapse was a result of outright fraud. So it’s no surprise that people are wondering why Sam Bankman-Fried isn’t behind bars yet?
While it seems like Bankman-Fried definitely did a lot wrong, it’s not yet known if he did anything criminal.
In any case, Bankman-Fried’s successor, John Jay Ray III, said that the company’s accounting was one big chaos. In a bankruptcy filing, Ray said he had never seen such a complete failure of corporate controls and such a profound absence of reliable financial information. Multiple investigations are underway, and until these are completed, SBF won’t be behind bars any time soon.
A complicated matter
Although FTX was seen by many as an American company, it was headquartered in the Bahamas. That makes it all even more complicated.
First, the fact that FTX operates in the Bahamas adds another layer of complexity to the US investigation. Second, the prosecutors are not that skilled in large-scale crypto fraud. Gathering the right information to file charges is therefore more complex and opaque. Therefore, while an indictment is only a matter of time, investigations for prosecution often take a long time.
— Attorney Charles Slamowitz
A thing that will take some time
Thomas Gorman, a partner at Dorsey & Whitney LLP, who specializes in defending SEC investigations and criminal white collar cases, agreed that FTX’s headquarters in the Bahamas complicates things. The good news is that the Bahamas has an extradition treaty with the US, should it come to that.
Gorman said that despite SBF being investigated by everyone in Washington DC, no one has yet decided whether criminal charges are necessary. If there is criminal prosecution, it will be some time before someone is behind bars.
In the meantime, while SBF has the right to remain silent, he has remained anything but silent. He has given several high-profile interviews.
One possibility is that Bankman-Fried is now engaged in a “charm campaign” to minimize his guilt and cover himself. He claims, among other things, that he had no knowledge of what was happening.
Public opinion remains an essential part of the crypto ecosystem in determining whether to pursue prosecutions.
– Slamowitz.