After Sam Bankman-Fried’s arrest in the Bahamas, the charges against him were released by the Department of Justice (DoJ). The eight-count indictment shows that Bankman-Fried has committed nearly every financial crime in the book, from conspiracy to commit wire fraud to conspiracy to commit money laundering. The maximum theoretical time Bankman-Fried could be facing is 115 years in prison, with a maximum sentence of 20 years for counts 1, 3 and 7, and counts 2, 4, and 8, and a maximum sentence of five years for counts 5 and 6. The charges are deliberately vague so that prosecutors can bring more specific allegations down the line.
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The Arrest of SBF
Well, folks, the day finally came. The day we saw SBF being led out of a courtroom in handcuffs. There were many who thought his media apology tour and political antics would have afforded him special treatment. However, based on the charges that were eventually laid against him, it’s pretty clear that SBF could be looking at decades if not life in prison.
The Charges
Today, I’m going to take you through some of those charges, what it could mean for SBF, his co-conspirators, and the broader crypto space more generally. This is a video you don’t want to miss.
Firstly, it’s important to catch up with where we are right now in the whole FTX case. Things are moving so fast that you can be forgiven for missing some of the finer details. Over the past month since the bankruptcy of FTX, SBF has been doing something that any lawyer will tell any potential defendant not to do, and that is talking. A lot of talking. TV interviews, phone interviews, tweets, DMS, and Twitter spaces. The guy has been cranking out incriminating evidence so fast it’s been kind of hard to keep up.
Now, this was about to come to a head on Tuesday when he was due to testify in front of Congress. Many were wondering whether he would perjure himself in Congress and thereby add to the list of eventual charges in front of him. However, it was too late. On Monday evening, it was reported that SBF had been arrested in the Bahamas, and this was in response to a formal request from the United States that was likely to then request his extradition. It was based on a sealed indictment that the Southern District of New York (SDNY) had issued.
Now, why they decided not to wait until after the testimony isn’t quite clear. The additional perjury charges would have certainly helped a prosecutor add more to the case. However, it could also have precluded Sam from being a co-operator when it came to the broader investigation. I.E they hope that Sam will eventually rat on his co-conspirators.
Be that as it may, the actual charges were released on Tuesday, and boy are they extensive. It seems like Sam has committed nearly every financial crime in the book. And he was charged not only by the SEC and CFTC in civil suits but also by the Department of Justice (DOJ) criminally. Now, needless to say, these are the most serious of the charges.
So, let’s go through them.
The DOJ Indictment
The DOJ issued an eight-count indictment, and yes, you did hear that correctly. I’ll also note that the charges in the document are deliberately vague so that it gives prosecutors leeway to assemble a case and bring more specific allegations further down the line.
Count one is the conspiracy to commit wire fraud. Quite simply, “the defendant and others, known and unknown, did conspire, confederate, and agree together and with each other to commit wire fraud”. What this means is that SBF and others had devised a scheme to defraud investors from the start of the FTX exchange back in 2019. This wasn’t someone who started out good and then saw the markets force him into criminality. It’s someone who, from the beginning, had a plan to defraud others.
Count two is for wire fraud on FTX customers, the one that affects all of us. What this shows is that from the beginning of FTX’s existence, it has been defrauding its depositors, that is, its customers. This continued right up until it filed for bankruptcy last month.
Count three is another conspiracy charge. In this case, conspiracy against FTX’s lenders. More specifically, SBF and others conspired to defraud those crypto companies that had lent the firm funds either in crypto or fiat.
Count four is for committing wire fraud on these lenders.
Count five was a conspiracy to commit commodities fraud. This is where the CFTC’s civil case no doubt helped the DOJ. Quite simply, because cryptocurrencies like Bitcoin eth and usdt have been viewed as commodities by the CFTC, any mishandling of customer funds or manipulation of prices with these assets is thereby commodities fraud.
Count six is conspiracy to commit securities fraud.
Count seven is a conspiracy to commit money laundering.
The final count relates to campaign finance violations and fraud.
If you’ve been keeping track, the maximum theoretical time that SBF could be facing is 115 years in prison.
