According to various sources, including CNBC, Federal Law Enforcement agencies are currently building a case to level charges of fraud against him.
However, currently, SBF has claimed that he was not doing fraud but just poorly running his business. In interviews, including with Andrew Ross Sorkin, he has even seemed to blame Caroline Ellison, his colleague (and ex-girlfriend) at Alameda.
He claims he was unaware of activities going down at Alameda.
Currently, at least $8 billion of money from former customers that were supposed to be used to cover massive losses at the hedge fund he used to run called Alameda Research is missing.
The chosen replacement CEO, John Ray III, said that in the 40 years he has worked in law and restructuring, he has never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
Renato Mariotti, a former federal prosecutor and trial lawyer stated: “It sure looks like there’s a chargeable fraud case here.” If I represented Mr. Bankman-Fried, I would tell him he should be very concerned about prison time. That it should be an overriding concern for him,” he added.
According to CNBC, Bankman-Fried could potentially face both criminal and civil prosecution.
According to Richard Levin, a partner at Nelson Mullins Riley & Scarborough, where he chairs the fintech and regulation practice, he could face criminal action by the U.S. Department of Justice for “criminal violations of securities laws, bank fraud laws, and wire fraud laws.”
Under such a case, prosecutors could go after him for allegedly using customer funds to stabilize the price of FTX’s own FTT coin forcibly; the prosecution could claim that FTX violated that fiduciary duty.
Bankman-Fried can also be subject to civil enforcement actions and criminal prosecution. Levin also told CNBC that the Securities Exchange Commission, Commodity Futures Trading Commission, and state banking and securities agencies “could bring that.”
“On a third level, there’s also plenty of class actions that can be brought, so there are multiple levels of potential exposure for […] the executives involved with FTX,” Levin said.
If the claims are proved, SBF could see to pay heavy fines or even prison time!