The founder and former chief executive officer of a failed cryptocurrency exchange have been under fire after he was booked for a virtual conference at a book event. Sam Bankman-Fried was the CEO of the FTX, which made away with a lot of people's money, and many are asking for the jail term of the former crypto exchange CEO.
From what lawyers and legal practitioners say, the former CEO could have more than 20 years of jail term waiting for him. Many others believe he might have links with the government as the US government is very slow in arresting or prosecuting the fraudulent crypto founder.
The Department of Justice (DOJ), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission are already probing the former billionaire who made away with billions of people in his crypto exchange. FTX collapse was something that many crypto enthusiasts found hard to believe as the Bankman-Fried was one of those who claimed to be advocates of the blockchain.
Richard Levin, chair of the fintech and regulation practice of law firm Nelson Mullins Riley & Scarborough, commented on the situation, saying that FTX collapse can get Bankman-Fried about two decades in prison.
"With respect to the criminal sanctions, depending on the number of violations and the dollar value of violations, under the federal sentencing guidelines, you could be looking at potential criminal liability that could exceed 20 years of incarceration," he added.
Sam Bankman-Fried Twitter Comments Might Put Him in More Troubles
Legal practitioners have said that Sam Bankman-Fried Twitter's comments might be used as evidence against him in court when he finally receives his civil and criminal charges.
Levin of Nelson Mullins said that Bankman-Fried public comments aren't recommended for someone in his situation. "I don’t represent Mr. Bankman-Fried. However, if I did, I would be telling him not to be making statements related to the failure of FTX and his role at FTX," Levin of Nelson Mullins said.
Anthony Sabino, a professor at St. John’s University School of Law in New York, told news outlets that the new CEO of FTX said that his recent review of the company's records showed a long track of deception and lack of transparency.
"Bankman-Fried might very well be charged with violation of U.S. securities laws, especially the infamous Section 10, American law’s most powerful weapon against securities fraud, the one used to put insider traders behind bars," Anthony Sabino said.
How FTX Collapse Started
FTX is a crypto exchange founded in 2019 but quickly rose to the recognition of the international crypto community after it made headlines with some high-profile investments. They also made many promises of low trading fees and other means of making money from cryptocurrencies, which attracted many people to the exchange.
Sam Bankman-Fried became the major ambassador and CEO of the company — Major deals from sports persons and celebrities such as Stephen Curry and Shaquille O'Neal attracted more people to the crypto exchange.
Before the FTX collapse, the professional analysis showed early red flags for the company. Alameda, a company linked to the collapsed crypto exchange, owned a large chunk of a cryptocurrency FTX created called FTT. Assuming the price of FTT dipped, it would have seriously affected Alameda by putting on a risk of insolvency.
When the revelation on Alameda was made, rival crypto exchange Binance had sold off all the FTT they owned, leading the price to drop. Withdrawals at the crypto exchange were also halted due to insolvency issues. Changpeng Zhao, the CEO of Binance, had tried to bail out the rival crypto exchange but suddenly left the deal after discovering a huge crack of mismanagement in the company.
The Sam Bankman-Fried Twitter page was filled with those who had their funds stuck on the exchange — Bankman-Fried stepped down as the CEO of the company, and it filed for bankruptcy.