Sam Bankman Fried was denied bail- The Cryptonomist

Following his high-profile arrest yesterday, FTX founder Sam Bankman-Fried was denied bail. The former CEO of the now-bankrupt crypto exchange company will continue to be held in custody by the country.

The judge presiding over the case, Joyann Ferguson-Pratt, ordered an extradition hearing for 8 February. The scheduled hearing followed the decision to deny Bankman-Fried bail.

At the time of the hearing held yesterday, SBF lawyers requested of Judge Ferguson-Pratt that the former FTX CEO be released under a $250.00 bail. As a legal reason given by the lawyers, there is Bankman-Fried’s need for regular medication, so his release was requested.  

Bahamian prosecutors opposed the request, saying it was in violation of a treaty with the United States. Lawyers noted that the treaty required the defendants to be held in custody while extradition hearings were underway.

Former CEO of FTX, Sam Bankman Fried, wants to fight against extradition

Subsequently, Sam Bankman Fried reported to the judge his willingness to fight against extradition as his right. The 30-year-old former billionaire, who has fallen from grace and is now charged with various misdemeanors, fervently hopes to remain in the Bahamas, although that seems almost impossible at the moment.

Monday’s arrest caught many by surprise; both Bankman-Fried’s crimes and information obtained by US prosecutors were highlighted. The arrest was triggered by the indictment of US prosecutors, with the unsealed documents revealing eight charges against Bankman-Fried.

The charges against the FTX founder are varied, with US prosecutors accusing SBF of making decisions of millions of dollars in illegal political donations. The US prosecutors’ idea is that Sam Bankman Fried hatched a scheme from 2019 to defraud clients of FTX, his exchange company, by protecting himself through the illegal donations he made. But, the allegations still continue to mount and the situation for SBF is not good at all.

CFTC and SEC vs Sam Bankman Fried

According to a statement released on 13 December 2022, the US Securities and Exchange Commission (SEC) has accused FTX co-founder Sam Bankman-Fried (SBF) of defrauding investors. 

The SEC Chairman Gary Gensler explained that the US financial regulator alleges that SBF built a house of cards on a foundation of deception. Following the SEC’s lead, the US Commodity Futures Trading Commission (CFTC) has also filed a lawsuit against Sam Bankman-Fried (SBF), FTX Trading LTD. and Alameda Research. 

The accusation alleges misuse of FTX client funds appropriated by Alameda Research for its own use.

In the press release issued by the SEC, Chairman Gary Gensler explained that the US regulator believes SBF is responsible for the investor fraud:

“We claim that Sam Bankman-Fried built a house of cards on a foundation of deception, telling investors that it was one of the most secure buildings in crypto. The alleged fraud committed by Mr. Bankman-Fried is a stark reminder that crypto platforms need to comply with our laws. Compliance protects both those who invest and those who invest in crypto platforms with time-tested safeguards, such as properly protecting client funds and separating conflicting lines of business. It also sheds light on trading platform conduct for both investors through disclosure and regulators through examination authority. For those platforms that fail to comply with our securities laws, the SEC’s Enforcement Division stands ready to act.”

The SEC and the CFTC, both of which have indicted FTX and its founder, believe the fraud began from day one of FTX’s creation. Sam Bankman Fried’s purpose was to implement a scam toward his customers from the very beginning of his venture with the exchange platform. 

The government of the Bahamas asked Sam Bankman Fried to mint FTX tokens for them

The bankruptcy case for the exchange company FTX continues: the Chapter 11 bankruptcy case also alleges that the Bahamian government, in particular its officials, requested Sam Bankman Fried to mint crypto tokens for them.

From this, one can infer special treatment given to the Bahamian government by the now remanded FTX co-founder.

Thus the lawyers also accused the Bahamian government of asking SBF to mint new digital tokens worth millions of dollars. The tokens were allegedly given to Bahamian officials, FTX’s legal team said. 

The new FTX CEO John J. Ray III and his team noticed that new tokens were being issued and suspected that SBF and FTX co-founder Gary Wang were the executives working on orders stemming from Bahamian officials. The news follows the strange relationship FTX officials such as exchange chief Ryan Salame had with vertical farming companies.

After the allegations, the Bahamas Securities Commission issued a statement and wholeheartedly denied the allegations by FTX CEO John Ray published in court documents. The Bahamas regulator said the allegations are intended to create a false impression of communications between Bankman-Fried and the Commission.