Sam Bankman-Fried was arrested by Bahamian authorities a couple of weeks ago in connection with the FTX crash, whereas yesterday he was extradited to the United States, the question is, did he plead guilty?
Once in the US, a judge ruled that he could be released from jail by paying a $250 million bail.Â
Despite the fact that only a few days ago SBF had claimed that he was now in possession of only more than a hundred thousand dollars, the bail was paid and he was released from jail.Â
Since this is a large sum of several hundred million dollars, the question of where he found it is a legitimate one, and some suspect that he may have once again taken it from the funds of FTX clients. Indeed, the suspicion circulating, although lacking supporting evidence, is that SBF himself or someone connected to him may have been behind the theft that occurred just days after the bankruptcy.Â
The attack appeared to be too simple not to have come from the inside, and is expected to have netted between $380 million and $600 million. Indeed, it may not even have been an actual attack, but just a withdrawal by someone who had access to those wallets for all intents and purposes.Â
The alternative seems to be that SBF somehow borrowed money from the many friends he probably still has in the US, given the huge donations made, for example, to political candidates during the 2020 and 2022 elections.Â
Summary
SBF is under house arrest after the FTX crash, did he plead guilty?
SBF is not a free man though. He is under house arrest at his parents’ home in Palo Alto, California. SBF’s parents, Joseph Bankman and Barbara Fried, are both university professors at Stanford and apparently asked to suspend teaching at this critical time.Â
SBF had been living permanently in the Bahamas for some time, which is where FTX had its operational and legal headquarters.Â
However, he is a US citizen, and most of the creditors involved in the lawsuit against him are in the US. So it is not at all strange that the Bahamian authorities accepted his extradition.Â
Moreover, the prison regime in the Bahamas was apparently terrible, not least because Bahamian prisons are known to be very harsh with living standards below the standards of industrialized countries.Â
So it also makes perfect sense that SBF chose to be extradited and tried in the US, despite knowing full well that US laws are very strict and particularly punitive against financial crimes.Â
It is enough to consider that his former colleague Caroline Ellison, to whom SBF had entrusted the direction of Alameda Research, was facing 110 years in prison, and she plead guilty by effectively spilling the beans. At this point, it seems highly unlikely that SBF will be found innocent, and perhaps that is why he preferred to be transferred to the US where he will be able to serve his sentence under much easier conditions.Â
It is worth noting that one of the restrictive measures applied to SBF in the US is the one concerning the prohibition to make transactions over $1,000 without the prior approval of the judge, except for those to pay his lawyers’ fees. He has also had his passport temporarily revoked.Â
The bail set by the judge appears to be the highest ever, and an account of the hearing was also published thanks to some journalists present in the courtroom.Â
The FTT token
It is curious how the price of FTX’s now worthless FTT token is gaining 8% today.Â
Only yesterday, after the news of SBF’s extradition, it had hit its all-time low at $0.83, or -99% from its all-time high of $84 in September 2021.Â
By now it is a purely speculative token, although there is a slight possibility that the Chapter 11 proceedings will lead to the effective restructuring of the FTX group and the reopening of the exchange.Â
From its current value, it should gain 8,700% to approach the all-time high again, and 2,200% to return to levels before the early November collapse, or about $22.Â
Moreover, the fact that SBF has been granted house arrest in no way means that his legal position is less serious than expected. To be fair, after Caroline Ellison’s confession yesterday, it seems instead to have worsened considerably.Â
The charges by the authorities for the FTX collapse
The problem for SBF is that there is a lot of evidence to support the judges’ accusations. Indeed, the accusations are also coming from several directions, because not only is the New York Attorney General prosecuting, but also government agencies such as the SEC and CFTC.Â
One thing that is quite evident is that under his direction and responsibility, the FTX exchange spent funds deposited by customers without their consent.Â
In fact, the charge brought against the team of Bahamian kids is that of fraud, because they convinced millions of people to deposit money on their platform without warning them that that money would not be kept but used by the company.Â
Since there is a lot of evidence of both the purchases made by the company and the lack of sufficient funds to cover customer withdrawal requests, it seems highly unlikely that SBF will get away with it. It is no coincidence that his accomplices decided to plead guilty by settling for a reduced sentence.Â
However, the matter may even be more complex and serious than that.Â
The reason the SEC and the CFTC have also moved is that they are also alleging other violations, particularly on the rules governing financial markets.Â
In other words, on the one hand, there is the charge of fraud, but on the other hand, there are also other charges related to possible violations of the rules that regulate the markets.Â
Moreover, apparently the Bahamas-based team of kids did not do much to hide their actions when everything was going well. The only really dark spot is precisely the nearly 600 million theft that took place after the company went bankrupt, which is when it was clear they were in trouble.Â
There is speculation of a sentence in excess of 100 years in prison, as was the case in the past for a somewhat similar affair, namely that of Bernie Madoff. Not least because the people who have lost money as a result of this collapse are really many, and therefore vocal.Â
It is hard to imagine that the US judicial system could be so soft on SBF and his associates in this operation, despite SBF’s own good relations with US politics, and in particular the Democratic Party. Indeed, it would not be surprising if even those politicians who have been helped by him in the past, now abandon him, leaving him to his fate.Â