Authorities arrested Sam Bankman-Fried, the co-founder and former CEO of the collapsed cryptocurrency exchange FTX, in the Bahamas on Monday, Dec. 13. The Bahamian authorities said the US is likely to formally request extradition. Bankman-Fried faces a litany of charges brought by three separate US government bodies—the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
Bankman-Fried, or SBF as he is sometimes known, reportedly funneled customer deposits to his private hedge fund, Alameda Research, to place risky bets on faltering crypto companies. FTX halted customer withdrawals last month and sought bankruptcy protection.
Here is a quick run-down of the charges and the possible penalties Bankman-Fried faces:
The SEC brought two counts of securities fraud
The SEC was the first to announce charges (pdf) against Bankman-Fried on Tuesday, Dec. 14. The SEC charged the former FTX chief with two counts of civil securities fraud. The government accused Bankman-Fried of violating the antifraud provisions of the Securities Exchange Acts of 1933 and 1934. “We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” SEC Chairman Gary Gensler wrote in a statement.
If found liable, Bankman-Fried would likely be barred from serving as an officer of a publicly traded company and banned from issuing trading securities outside of personal use. Additionally, he could be liable for civil penalties.
The CFTC brought two counts of fraud
The Commodity Futures Trading Commission, the country’s top derivates regulator, charged Bankman-Fried and FTX with two counts of violating the antifraud provisions of the Commodity Exchange Act. The Commission charged Bankman-Fried with one count of fraud and one count of “fraudulent misstatements” to customers. The CFTC has not yet released a statement on the charges.
The Justice department brought 8 criminal charges
US Attorney Damian Williams, the lead prosecutor for the Southern District of New York, brought a litany of criminal charges against Bankman-Fried, including:
- 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 the campaign finance law
If convicted, Bankman-Fried faces the possibility of decades in prison.
This article has been updated with the CFTC and Justice department charges.