Sam Bankman-Fried’s Day of Reckoning Arrives

Sam Bankman-Fried, the disgraced founder and former CEO of the cryptocurrency exchange FTX, was arrested and taken into custody in the Bahamas Monday on multiple criminal counts, including wire fraud, conspiracy, and money laundering, the New York Times reported. His indictment was officially unsealed Tuesday, revealing another notable charge: campaign finance violations. Prosecutors in the Southern District of New York claim Bankman-Fried, aka “SBF,” who was known as a top Democratic donor, conspired to violate donation limits and deceive the Federal Election Commission. 

Tuesday was a day of reckoning for SBF, whose multibillion-dollar crypto empire crumbled in a matter of days last month. The Securities and Exchange Commission filed a civil complaint alleging that the 30-year-old wunderkind “engaged in a scheme to defraud equity investors in FTX…orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire.” The complaint specifically alleges that Bankman-Fried diverted customer funds to his privately-held hedge fund, Alameda Research, “from the inception of FTX…and he continued to do so until FTX’s collapse in November 2022.” Also on Tuesday, the Commodity Futures Trading Commission, another independent federal agency, filed separate fraud charges against SBF, in what the SEC called “parallel actions.” 

Bankman-Fried, who is expected to be extradited to the US, was arrested one day before he was scheduled to testify (remotely) before Congress about FTX’s collapse. Reuters obtained a draft copy of SBF’s planned remarks, which included a mea culpa—”I would like to start by formally stating, under oath: I fucked up”—and a claim that his former lawyers pressured him to step down as CEO and replace himself with John J. Ray, a corporate cleanup specialist. Ray testified before the House committee on Tuesday as scheduled, telling them that the financial trouble at FTX began “months or years” ago, not “overnight,” per the Times. Representative Maxine Waters, who oversees the committee, said she was “surprised” by SBF’s arrest on Monday and expressed her disappointment. “The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity,” said Waters.

Still, SBF has hardly been coy about his spectacular downfall. He’s given interviews to dozens of outlets—like the Times, Vox, Fortune—and even showed up (virtually) for the DealBook Summit. SBF’s openness with the press dovetails with the honest and affable image he delicately crafted over the years by working reporters to his advantage. But his media strategy already appears to be backfiring, with the SEC citing several of his tweets in its Tuesday filing. “The defense is going to be completely boxed in by the prior statements SBF has made and the very incisive questions he has answered in the press and on social media,” criminal defense attorney and former federal prosecutor Renato Mariotti told Reuters.