Securities and exchange commission (sec) and the department of justice (doj) are both investigating sam bankman-fried, the former ceo of the now-collapsed crypto exchange ftx. the house financial services committee has called bankman-fried to testify, and john jay ray iii, the man who succeeded bankman-fried, believes that the ftx leadership was either grossly incompetent or criminally so. multiple investigations are underway, with ftx owing $3.1 billion to its top 50 creditors.
Investigations began in the spring of 2020, when ftx began to collapse. the complexities of the crypto world and the fact that ftx was a large company with over one hundred related entities based in the bahamas adds a further layer of complexity to the u.s. investigation. prosecutors are not as adept to large-scale cryptocurrency fraud, making it difficult to gather the right information to file charges.
Bankman-fried has the right to remain silent, however he has been anything but, granting interviews and continuing to post to twitter. it is yet to be determined whether criminal activity was involved, and thomas gorman, a partner at dorsey & whitney llp, noted the potential complexities of ftx’s bahamas headquarters. charles slamowitz, a web3 lawyer, stated that an sbf charge is just a matter of time. gorman believes that “it’s a big story that will be around for a long time”. sam bankman-fried has stated that he “didn’t knowingly commingle funds”. optics and public opinion are integral in determining whether to prosecute, and the bahamas does have an extradition treaty with the u.s., should it come to that.