The U.S. attorney’s office in Manhattan declined to comment on the matter, nor did a spokesman for FTX. Sam Bankman Fried’s company did not respond to a request for comment. Prosecutors are likely to focus on Bankman-Fried’s tweets. While authorities don’t know if the tweets had a criminal or regulatory component, they are expected to be part of the litigation.
The collapse of FTX has raised questions about how the company handled customer funds. FTX was one of the world’s largest exchanges at its peak, with five million users and $700 billion in transactions. The firm had a subsidiary in the United States, FTX US, that catered to American customers. Bankman-Fried has resigned from his position as chief executive of the company. He has acknowledged that he made mistakes before the company collapsed, but he has not admitted to any wrongdoing.
The FTX and Sam Bankman Fried investigation has prompted several calls for more stringent regulation of the cryptocurrency industry. While many crypto supporters are opposed to government oversight, the case against Bankman-Fried could help make the case for stricter regulation. Prosecutors are also investigating whether FTX hid ill-gotten profits.
The prosecution is based on Section 1343, which carries a maximum 20-year prison term. This could put the 30-year-old crypto CEO in jail for a substantial amount of time. While there is no evidence that SBF violated any law or acted criminally, prosecutors must prove that he intended to commit fraud.