Sam Bankman-Fried In Trouble: Why The FTX Founder’s Woes Are Far From Over

Despite being recently convicted, the former CEO of the defunct crypto exchange FTX, Sam Bankman-Fried (SBF), still faces the possibility of further hearings in the court as his legal woes are far from over. 

Sam Bankman-Fried Still Faces Actions From Regulators

Back in December 2022, the Prosecutors for the US Southern District of New York announced that they were going to charge SBF with crimes relating to securities fraud, wire fraud, wire fraud conspiracy, money laundering, and securities fraud conspiracy.

However, the Department of Justice (DOJ) wasn’t the only government agency after Bankman-Fried’s head, as during that same period, the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) had also filed separate actions against the FTX founder. 

The SEC had charged Bankman-Fried with defrauding investors on the FTX exchange. The Commission further highlighted how these investors’ funds, totaling over $1.8 billion, were diverted to the crypto trading firm Alameda Research. 

On the other hand, the CFTC had also charged SBF with fraud but with a focus more on customers’ deposits rather than just equity investors, which the SEC’s charge focused more on. 

It is uncertain when the SEC and CFTC will commence their cases against the former FTX CEO. Prosecutors in the Bankman-Fried’s case had earlier filed a motion to stay the proceedings against the defendant until his criminal trial was over. With a conviction secured now, it is expected that both regulators will swoop in to continue their respective actions. 

It is worth mentioning that the cases instituted by both agencies are civil actions. They are, however, projected to succeed in their actions, considering that Bankman-Fried’s guilt was already proven in the criminal cases against him. The burden of proof in criminal cases is usually much higher in criminal cases, unlike civil cases, which are on the preponderance of the evidence.

Founder Also Faces The Wrath Of FTX Customers

Following the period in which FTX filed for bankruptcy, its customers, led by Edwin Garrison, filed a class action against its Founder, Bankman-Fried, and several celebrities who had promoted the crypto exchange. The group members alleged that FTX was designed to take advantage of “unsophisticated investors” from across the country. 

The applicants are also seeking damages for the loss they suffered as a result of SBF’s actions and that of the celebrities who promoted and assisted FTX in its illegal activities. 

It remains to be seen how the class action against Bankman-Fried will proceed, as some of the celebrities in the suit have already agreed to a settlement.