As you already know FTX founder Sam Bankman-Fried (SBF), a 30-year-old Californian, was arrested a few days ago in the Bahamas, where he resided. But what was he arrested for, and what are the charges? We break it down here in this blog.
The first count of the formerly sealed indictment alleges that “from at least in or about 2019, up to and including in or about November 2022, . . . [SBF] … willfully and knowingly [] combine, conspire, confederate, and agree . . . to commit wire fraud, in violation of Title 18, United States Code, Section 1343.”
Section 1343 of the US Code states that
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.
18 USC § 1343.
SBF violated section 1343, alleges the indictment, by “misappropriating [] customers’ deposits and using those deposits to pay expenses and debts of Alameda Research, [SBF]’s proprietary crypto hedge fund…”
This commingling FTX/Alameda of customer funds is really the core of the indictment. Based on that he’s charged with actual fraud on Count II, Conspiracy to Commit Wire Fraud on Lenders on Count III, Wire Fraud on Lenders on Count IV, Conspiracy and Securities Fraud on Count V and VI.
As it is not unusual in our system, when a defendant is charged with wire fraud, he’s also charged with money laundering violations (in this case Count VII).
Finally, in Count VIII, he’s charged with violating Campaign Finances Laws for contributions exceeding $25,000 to candidates for federal offices.
As seen above, the violation of Section 1343 alone can carry a penalty of more than 20-years in prison. SBF is clearly in serious trouble.
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You can find the indictment here: [Indictment]. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.justice.gov/usao-sdny/press-release/file/1557571/download
For more information about cases involving fraud, email experienced litigation attorney Eduardo A. Maura at eduardo@ayalalawpa.com or call 305-570-2208.
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