FTX bust Sam Bankman-Fried arrested in Bahamas

Now things are happening in quick succession: FTX bankrupt Sam Bankman-Fried is on Monday after a criminal complaint by American prosecutors in the Bahamas been arrested. Both states want to announce more details on Tuesday, which will probably include extradition to the land of opportunity.

This development is the latest bang in a case that has kept the crypto scene around the world, Wall Street and not least Washington in suspense since FTX filed for bankruptcy just over a month ago. Back then, the Bahamas-based firm, one of the largest self-proclaimed crypto exchanges in the world, headed by Sam Bankman-Fried (SBF), suddenly ran out of money after fundamental doubts about its financial soundness arose and those involved tried to withdraw their funds withdraw and save.

Many have not been able to do this. They have to reckon with billions in losses overall, because SBF and a small group of inexperienced, clueless and potentially compromised people apparently let the company run wild in the apparently innovative frenzy of growth in an unregulated market with strange “assets” so uncontrolled that sooner or later it practically had to come to this .

Until recently, the young man, as the founder of the former 30 billion company trading in so-called cryptocurrencies, wanted to be extremely rich within a very short time. SBF was considered a visionary spokesman for the crypto scene and, as an important donor to the Democratic Party, was even praised in the media as JP Morgan of the modern age. Today, on the other hand, he is more compared to Bernie Madoff, who staged the greatest Ponzi scheme in history.

Lately, SBF has been at the center of investigations into, among other things, the question of whether FTX had lent customer money to the speculative trading company Alameda Research, in which the young man was also significantly involved and which had contributed to his apparent wealth. Impudence does not protect against a lawsuit. In fact, in interviews following the collapse of FTX, SBF had claimed that it had never sought to cheat or break any laws. Many business models in the crypto scene are just bursting with fundamental conflicts of interest, for example when they are structured like free options for the clear financial advantage of the management.

Even before the arrest and long before the collapse of the sham empire, FTX and other “exchanges” had been targeted by federal prosecutors in Manhattan, who were investigating possible violations of the Bank Secrecy Act’s money laundering provisions. The Complex Fraud and Cybercrime Unit’s investigations took a new direction after the catastrophic FTX implosion. For example, there is also the question of whether hundreds of millions of dollars were illegally transferred to the Bahamas after FTX filed for bankruptcy in Delaware on November 11th.

Observers of the scene believe it is only a matter of time before Binance, today’s largest “crypto exchange”, is officially sucked into similar investigations. Some American federal prosecutors have long been convinced that they have collected enough evidence to take aggressive action and even file criminal charges against individual executives such as Binance founder Changpeng Zhao. This involves unauthorized money transfers, money laundering and criminal violations of sanctions.