Media reports on prospects of criminal charges against the FTX chief

The US Department of Justice has all it needs to bring criminal charges against former FTX CEO Sam Bankman-Fried and other executives of the bankrupt exchange. Such a view was voiced by a lawyer Fortune.

The veteran crypto-lawyer cited a federal statute covering fraud involving electronic means, with a maximum penalty of up to 20 years in prison.

He added that, as evidence of intent, investigators could rely on platform terms of service, investor presentations and Bankman-Fried’s public statements. He has no doubt that the exchange’s business practices and the head’s conduct demonstrated fraud.

Legal experts told the publication that jurisdictional questions could arise in such a case. For the United States, FTX is a foreign-based business with its headquarters on the Bahamas.

Randall Eliason, a former prosecutor and law professor at George Washington University, said that the Department of Justice, as a rule, “often finds a link” between the accused and American realities.

Two other lawyers backed his view. They noted that prosecutors would turn to FTX’s ties with US banks, electronic correspondence, state-level meetings and other forms of interaction.

Experts also noted that extradition questions would be inevitable in the event of an investigation. Bankman-Fried is in the Bahamas, while several top executives have flown to Hong Kong, according to the media.

In an interview with the New York Times, the head of FTX refused to disclose his location. He said he sleeps well and plays video games.

Regarding the liquidity crisis at the company, he stated that he did not know how ‘significant’ its margin positions were. Bankman-Fried admitted that perhaps he should have taken more control of the exchange and paid less attention to its venture business.   

According to Reuters, the Manhattan U.S. Attorney’s Office has opened an investigation into FTX. Law enforcement is interested in how the company handled client funds, the agency source said. It had previously been disclosed that the exchange used these assets to provide multibillion-dollar aid to its affiliated Alameda Research.

As Bloomberg reports, SEC and CFTC also began examining the interconnections between FTX and its US unit and Alameda, according to Bloomberg.

The agency deemed the return of funds to clients of the bankrupt exchange unlikely, with the balance-sheet hole amounting to about $8 billion.

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