Before issuing a criminal indictment, US prosecutors often spend months or years in obscurity. In a matter of weeks, they were able to put together their case against FTX founder Sam Bankman-Fried. Manhattan US Attorney Damien Williams unveiled criminal charges against the disgraced entrepreneur just over a month after FTX filed for bankruptcy. Because of concerns that he is a flight risk, Bankman-Fried is currently in jail in the Bahamas, where a judge declined his bail.
His quick arrest demonstrates the significance of a high-profile matter involving a founder who has challenged the media and defied conventional wisdom in his handling of corporate demise. Many variables likely pushed prosecutors into action. These include public and political demand for an indictment. Adding up were the worries that Bankman-Fried might flee to a country where it would be more difficult to extradite him to the US.
After three years of rapid expansion, FTX and dozens of related corporations declared bankruptcy last month. The exchange was valued at $32 billion at one point. Bankman-Fried was hailed as the crypto savant who would take the business to boundless riches. Many expected him to testify before the House Financial Services Committee the following day in hearings on FTX’s demise. His arrest late Monday came as a surprise.
SBF’s media sprees might have given prosecutors faster ammunition
Williams spoke at a news conference on Tuesday. He insisted Sam Bankman-Fried allegedly scammed FTX clients and venture-capital investors out of billions of dollars in “one of the biggest financial crimes in American history.” Last month, a Georgia man named James Zhong pleaded guilty to wire fraud charges connected to the heist.
Regulators at the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have also sued Bankman-Fried. However, he said he would challenge efforts to send him to the United States for prosecution. Extradition proceedings are scheduled for February 8th.
Prosecutors might have had enough ammunition to move as quickly as they did with Bankman-Fried’s recent words and actions taken into account. The 30-year-old attempted to justify his responsibility and fret about losing $8 billion in client money in a public apology.
