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Home BUSINESS

Former FTX CEO Sam Bankman-Fried Might Go to Prison after the $32 Billion Collapse

BlockNews Team by BlockNews Team
December 6, 2022
in BUSINESS, MEDIA, SOCIAL
Reading Time: 3 mins read
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Sam Bankman-Fried (SBF), the founder of FTX who resigned from his CEO position on November 11 of this year, may face several criminal and civil charges and creditor lawsuits after the meltdown of his crypto exchange. According to a report from CNBC, legal experts said he might potentially go to prison for years, given that the US government decides to arrest him.

Richard Levin, a partner at Nelson Mullins Riley & Scarborough that specializes in fintech and regulation practice, said that (SBF) may receive three simultaneous legal threats in the US alone. If combined with the Bahamian government’s allegations towards him, he may face a life sentence.

Possible Charges Against Bankman-Fried

According to Levin, the first step in the process is a criminal investigation by the United States Department of Justice into possible “criminal violations of securities laws, bank fraud statutes, and wire fraud laws.”

The United States Attorney’s Office for the Southern District of New York did not want to comment, according to a representative for the office. It is almost always challenging to obtain a conviction in a criminal proceeding.

Mariotti, a former federal prosecutor, added that prosecutors could argue that FTX violated this fiduciary obligation by allegedly utilizing client funds to stabilize the price of FTX’s own FTT coin artificially. This is something that FTX is accused of doing.

It is most likely that criminal charges will be pursued in the United States by the Department of Justice. According to a report in the Wall Street Journal, the Department of Justice and the Securities and Exchange Commission were investigating the collapse of FTX. They were in regular communication with one another.

This kind of collaboration makes it possible for both criminal and civil investigations to continue simultaneously, and it makes it possible for authorities and the police to collect information more efficiently.

However, whether the SEC or the CFTC will be the driving force in pursuing civil damages is still being determined.

A representative for the SEC stated that the organization does not remark on whether or if there is an inquiry into alleged wrongdoing. A request for a response was made to the CFTC, but they did not react immediately.

The Chairman of the Securities and Exchange Commission, Gary Gensler, who met with officials from Bankman-Fried and FTX in the spring of 2022, has stated publicly that “many crypto tokens are securities,” which would make his agency the primary regulator in this space.

However, several exchanges, including FTX, offer crypto futures platforms that sell financial derivatives such as futures and options. These transactions are considered to be within the purview of the CFTC.

Other countries also have authorities responsible for monitoring any of the several FTX companies.

The Bahamas Securities Commission is so confident in its ability to exercise authority that it even initiated a separate proceeding in a bankruptcy court in New York. Although that case has since been incorporated into the primary bankruptcy protection processes that FTX currently uses, Bahamian officials are still looking into the company’s operations.

Possible Penalties for Bankman-Fried

If the Department of Justice successfully obtained a conviction, the judge would consider a number of different aspects before deciding the length of the defendant’s sentence.

According to Perry, if Bankman-Fried is found guilty of fraud or any other offense, he may be imprisoned for a significant amount of time — and possibly for the remainder of his life — due to the magnitude of the damages. On the other hand, it is difficult to estimate how long a potential sentence will be.

The maximum and minimum sentences imposed under federal sentencing guidelines are determined using a numeric approach; nonetheless, this system can be somewhat complicated. The “offense level” scale has a starting point of one and a maximum possible score of 43.

Additionally, Bankman-Fried might have to pay enormous civil fines. Bankman-Fried was formerly worth multiple billions of dollars, but in a meeting with CNBC’s Sorkin first at DealBook Summit the previous week, he stated that he was now down to his final $100,000.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: BusinessFTXSam Bankman-FriedSBF
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