Sam Bankman-Fried’s House of Cards Is Falling Down


Sam Bankman-Fried is behind bars. The controversial founding father of bankrupt crypto exchange FTX was taken into custody within the Bahamas yesterday after prison prices have been filed in opposition to him by the USA Division of Justice. 

In a press convention as we speak, the US lawyer for the Southern District of New York mentioned that Bankman-Fried is dealing with a complete of eight prison prices, together with defrauding FTX prospects, FTX buyers, and lenders to sister firm Alameda Analysis.

The arrest has sparked jubilation in crypto circles, after some nail-biting over his ostensibly beneficiant therapy by “mainstream media” and hypothesis (by Twitter CEO Elon Musk, no less) that his political donations could earn him a free go of kinds with US legislation enforcement.

Nevertheless, the timing of the arrest—someday earlier than Bankman-Fried was because of testify earlier than Congress in regards to the collapse of FTX—has raised eyebrows.

In opposition to the recommendation of his attorneys, Bankman-Fried has given a sequence of interviews because the collapse, however none have been significantly illuminating (aside from a Vox report that caught him off-guard). He has largely evaded simple questions, given tangential responses, and been usually inattentive—he played video games during at least one interview.

However as identified by US consultant Maxine Waters, the chair of the Home Monetary Companies Committee, as we speak’s listening to would have marked the primary time Bankman-Fried had spoken below oath in regards to the FTX debacle. In a statement, Waters mentioned she was “stunned” to study of the arrest. “The general public has been ready eagerly to get these solutions below oath earlier than Congress,” she wrote, “and the timing of this arrest denies the general public this chance.”

Along with offering his personal testimony, Bankman-Fried was additionally going to have to answer testimony from John Ray III, the liquidation savant that stepped into his footwear as CEO of FTX on November 11, who was because of communicate forward of him.

written preview of Ray’s testimony, revealed prematurely of the listening to, gave the primary indication that Bankman-Fried was in for a tough journey. “By no means in my profession have I seen such an utter failure of company controls at each degree of a corporation,” wrote Ray, earlier than describing Bankman-Fried and his inside circle as “grossly inexperienced and unsophisticated.” 

Though the particulars stay unclear, Ray confirmed that FTX buyer deposits have been combined with funds held by sister firm Alameda Analysis and used to fund dangerous buying and selling exercise, exposing FTX customers to “huge losses.” He additionally defined that, opposite to Bankman-Fried’s repeated claims that FTX’s US division has at all times remained solvent, the offshoot “was not operated independently of,” denting any remaining hopes that US-based prospects will recuperate their funds in full. Bankman-Fried’s counsel didn’t reply to a request for remark.

A leaked model of Bankman-Fried’s own preparations, obtained by Forbes, suggests his personal testimony would have added loads to the spectacle too. In accordance with the doc, Bankman-Fried was getting ready to level the finger no less than partially at rival alternate Binance, which the doc claims performed a task in triggering the run on the financial institution that led to the FTX collapse. Not solely did Binance have interaction in a sustained smear marketing campaign, the doc suggests, it additionally “by no means meant” to comply with by means of on a rescue package agreed upon on November 8, which precluded Bankman-Fried from talking to different potential white knights.

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