Crypto Empire to Cuffs, What Is Next for Sam Bankman-Fried?

By Spencer Hulse Spencer Hulse has been verified by Muck Rack's editorial team
Published on December 13, 2022

What comes after rock bottom? Sam Bankman-Fried appeared to hit rock bottom when the collapse of FTX saw his empire come to an end and left the crypto industry in shambles. But with yesterday’s arrest and what is likely to come next, it appears there is still a way to fall for the former CEO and ex-billionaire.

What happened? After the collapse of FTX, there were a lot of questions left unanswered and plenty of suspicion to go around, with much of it focused on Bankman-Fried. There were reports of missing money and a backdoor that supposedly allowed the alteration of company financial records without alerting anyone.

  • Around $10 billion was moved from FTX to Alameda Research, Bankman-Fried’s trading house. Over one billion then vanished.
  • Bankman-Fried denied that it was a secret transfer and did not admit to any wrongdoing.

He was arrested in the Bahamas Monday and faces extradition. The Bahamas government reported that Bankman-Fried was arrested on a warrant obtained by the US Department of Justice. Criminal charges have been filed in the US, and extradition is likely.

Charges reported by The New York Times include conspiracy to commit wire fraud and securities fraud. There are also standalone charges of securities fraud, wire fraud, and money laundering.

The charges might see him in prison for decades. The exact sentence would depend on factors including which charges he is convicted on and any mitigating factors. However, while white-collar crimes tend to carry a lesser sentence, he could end up behind bars for his entire life.

  • Regardless of a conviction, Sam Bankman-Fried is going to see further damage to his reputation.
  • The crypto world is also likely to see backlash as the charges and trial make it harder for many to trust industry players.

It might take a long time for anything to happen. Even though an indictment is set to unseal today, extradition could take weeks, and a trial could take years to begin. Part of that is due to the magnitude of the alleged crimes, which will see cases taking place around the world by a number of prosecutors and regulators.

  • Renato Mariotti, a former federal prosecutor, told CNBC, “The more that they charge, the bigger that the case is, the more time they’re going to need to get in motion.”
  • Mariotti said he expects the trial to occur by 2023 at the earliest.

Sam Bankman-Fried faces other legal action. While the extradition and trial might take some time to occur, the wheels are still spinning. Many are looking to open up cases against him, and some already have. That includes the SEC, the Commodity Futures Trading Commission (CFTC), and state banking and securities regulators.

  • It is unknown who will take the lead in the civil action between the SEC and CFTC, but it depends on whether securities were involved, according to what Mariotti said to CNBC.
  • Investors and peers, among others, are also taking legal action against FTX and Bankman-Fried, so he is likely to be tied up in numerous cases in the years to come.

Starting a new business? Another potential avenue for Sam Bankman-Fried is starting a new business, something he spoke about prior to his arrest. He claimed he wanted to use the new business to recoup his investors’ losses, saying, “I’m going to be thinking about how we can help the world and if users haven’t gotten much back, I’m going to be thinking about what I can do for them.”

Starting a new business seems like a long shot for the FTX founder since a conviction would see him spending years in prison. Even if he is declared innocent, it would still be his negligence that led to the collapse, making him a hard person to trust either way.

By Spencer Hulse Spencer Hulse has been verified by Muck Rack's editorial team

Spencer Hulse is the Editorial Director at Grit Daily. He is responsible for overseeing other editors and writers, day-to-day operations, and covering breaking news.

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