“I don’t think I will be arrested,” Sam Bankman-Fried said on Twitter Spaces yesterday, hours before he was arrested.
The attorney general for the Bahamas announced last night that the former CEO of FTX had been in the island nation, and American authorities explained that it came at their request. The US criminal charges against SBF won’t be unsealed until this morning, but, according to the NYT, they will include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering.
This alleged fraud stems from the shocking collapse of SBF’s crypto empire just over a month ago. Once worth $32 billion, FTX experienced a rapid wave of withdrawals, putting the company $8 billion short of remaining viable. The sudden implosion sparked investigations by regulators and the media, who discovered that SBF’s hedge fund, Alameda Research, had used billions in customer assets from FTX to fund high-risk bets of its own. For many, the question of SBF getting handcuffs was a matter of when, not if.
But the timing of the arrest was curious
It came just one day before SBF was set to testify virtually before the House Financial Services Committee about FTX’s collapse.
Not that he hasn’t said his piece already. Since his company filed for bankruptcy on Nov. 11, SBF had been talking to seemingly every media outlet that requested an interview, which is…highly unusual and inadvisable for someone being investigated by dozens of authorities around the globe. During these interviews, SBF acknowledged that his management of FTX was quite awful, but claimed he never intentionally committed fraud. Prosecutors obviously believe otherwise.
From hero to zero: If we told you six months ago that SBF would be arrested for alleged fraud before Christmas, you probably wouldn’t have believed us. For a time, he was the golden child of the crypto industry, bringing on the biggest superstars on the planet (including Tom Brady) to endorse his product. He had also become a force in the political world through tens of millions in campaign contributions.
Not too long ago, when he was bailing out failing blockchain companies, SBF was being hailed as crypto’s Warren Buffett. Now, he’s being compared to Bernie Madoff.
Let me know, what do you think?