Could the DOJ Prosecute FTX’s Sam Bankman-Fried?
Posted on 11/10/2022
FTX gained widespread fame being a cryptocurrency exchange that has support from the venture capital community and to an extent public fund capital. FTX was supposed to protect their users’ funds, and only collect fees from trades. FTX is now the subject of U.S. state and federal investigations and has halted withdrawals.
The U.S. Securities and Exchange Commission is examining FTX and its executives, while there is a level of speculation is that the U.S. Department of Justice (DOJ) is probing the issue as well. Binance, which had an interest in buying FTX, sees that FTX mishandled the funds customers entrusted to them.
Bernard Madoff was an American fraudster and financier who ran the largest Ponzi scheme in U.S. history, worth about US$ 64.8 billion. He was at one time chairman of the NASDAQ stock exchange. However, the matter of cryptocurrency exchanges losing depositors’ money can be seen as worse, as investors allocating to hedge funds typically understand there is some level of investment risk.
Sixth Largest Political Contributor – Democrat Heavyweight Donor
Open Secrets is a platform following the money in politics. According to Open Secrets data, Sam Bankman-Fried is the sixth largest political contributor. The platform reports that he has made a total contribution of US$ 39.8 million for the 2021 to 2022 cycle. Of that total, 92% of the funds went to the Democrat party, with the remainder going to Republican candidates and campaigns.
Meme image: RIP FTX (2019-2022)
Later on – on November 10, 2022, the Securities Commission of the Bahamas suspended FTX’s registration and appointed an attorney named Brian Sims, a senior partner at Lennox Paton. Brian Sims will be the provisional liquidator of the assets. Bahamian regulators have frozen the assets of FTX Digital Markets and related parties, calling it a “prudent course of action” to “preserve assets and stabilize the company,” according to a press release.
BlockFi, a cryptocurrency lender, in a tweet said they could not conduct business as normal and would be limiting activity with regard to news of FTX’s insolvency. “We will share more specifics as soon as possible,” the company said. “… we intend to communicate as frequently as possible but anticipate that this will be less frequent than what our clients and other shareholders are used to.”
BlockFi told clients not to deposit to its wallet or interest accounts. In July 2022, BlockFi and FTX US announced that the companies had agreed to a deal wherein FTX US would provide BlockFi a US$ 400 million credit facility, which would also allow the crypto exchange the right to acquire BlockFi. BlockFi was under financial stress at that time.
