In the Department of Justice’s fraud case against the former head of FTX, Sam Bankman-Fried was found guilty on all counts, but his legal troubles are far from done.
The Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) have also put pressure on him, accusing him of engaging in both securities and digital commodity fraud.
Sam Bankman-Fried, the FTX CEO, faces a barrage of new legal obstacles, including a unanimous guilty verdict and a potential century-long sentence pending the Department of Justice’s fraud case, with a sentencing date set for March 28, 2024, unless there are further developments.
In addition to his recent guilty verdict, Bankman-Fried is facing other ongoing legal battles, including a class-action lawsuit in a Miami federal court. This lawsuit has been initiated by investors who believe they were deceived and extends blame to celebrities like Larry David and Tom Brady, who are accused of complicity in the alleged fraud. The lawsuit seeks restitution for the substantial $8 billion allegedly taken from FTX clients.
Furthermore, the SEC and CFTC have added to Bankman-Fried’s legal woes by filing their own complaints on December 13, 2022, accusing him of orchestrating a lengthy scam by diverting FTX client funds to his crypto hedge fund, Alameda Research.
Simultaneously, that day saw the Commodities Futures Trading Commission (CFTC) file a lawsuit against Bankman-Fried and his businesses in the U.S. District Court for the Southern District of New York. The CFTC claims that SBF’s business operations led to substantial lies and dishonest practises in the cross-state selling of digital commodities.
Following the rapid emergence of the DOJ, SEC, and CFTC legal assault, a federal judge on February 13, 2023, ruled that the SEC and CFTC actions must stop until the DOJ case is over. Thus, these cases and the class action from Miami loom large for Bankman-Fried.
Crypto legal expert David Lesperance told CCN that these complaints will be yet another factor in the sentencing decision next March.
“However considering the lengthy sentence that Bankman-Fried is already facing, the motive of the SEC and CFTC is more probably to send a signal to others in the crypto space. This brings to mind the Chinese proverb ‘Kill the chicken to scare the monkey’,” he commented.
His conviction raises the prospect of incoming additional legal action against other senior FTX officials and allies. For the lawyers entrusted with sifting through this convoluted web, the aftermath of the FTX collapse has proven profitable, with their hefty fees commensurate with the complex job required.