How the market reacted: the former head of the crypto exchange FTX arrested in the Bahamas

On December 13, Bahamian authorities arrested the former CEO of FTX crypto exchange Sam Bankman-Fried (SBF) at the request of the U.S. government. This was reported by the U.S. Attorney’s Office for the Southern District of New York. The arrest comes a month after the platform collapsed. What this could lead to and what it means for defrauded investors – let’s discuss further.

What is known 

The arrest was confirmed by the Royal Bahamas Police Force, among others. In a statement, Sam Bankman-Fried’s actions involving electronic funds and securities, conspiracy to commit electronic funds and securities fraud, and money laundering are also illegal in the Bahamas. The document is available below.

That SFB is hiding in the Bahamas may not be coincidental. It was previously alleged that the former FTX CEO was allegedly transferring laundered money there. However, such actions were condemned in the Bahamas, and now the authorities will make every effort to bring the guilty to justice. 

Civil and criminal authorities of two countries are now involved in the investigation, including the Securities Commission, the Financial Intelligence unit, and the Bahamas Financial Crimes unit. For his part, the Prime Minister said that Sam Bankman-Fried and FTX betrayed the public trust and broke the law. 

It is also interesting that the Bahamas authorities arrested SBF the day before the hearing in the Committee on Banking, Housing, and Urban Affairs in Washington. The chairman of the committee sent it in a letter to the head of the exchange that if he did not appear at the hearing, he would be forcibly summoned to court. 

Recall, the FTX collapse led to losses of users around the world. In total, the company owes customers about $8.4B. To enrich itself, FTX is alleged to have illegally misappropriated or commingled funds of exchange users to trade Alameda. You can read more about it here. 

Who’s next? 

Exactly one month has passed since the collapse of FTX. The company has since filed for bankruptcy, and John Jay Ray III has been named the new CEO. He is certainly not facing anything, but the former heads of Alameda, Caroline Ellison, and Sam Trabucco, could also face trial. That development is most likely if it is proven that there was collusion. 

Former senior futures trading commission attorney Braden Perry noted that the fact that SBF was indicted very quickly shows the urgency with which US authorities want to take him into custody. 

However, Sam Bankman-Fried hired some of the best lawyers, so it is not excluded that he will resist. Obviously, the U.S. government will demand his extradition, but given the very good defense, this process could take weeks or months. At least it is unlikely that SBF will now be able to go to another country that is not subject to extradition, although there have been rumors of such a possibility before. 

If SBF is found guilty, he could be jailed for ten years or more. It all depends on the number of violations and how much property damage they caused. In the worst case, according to Braden Perry, we could even be talking about life in federal prison without the possibility of supervised release. 

What is the internet saying? 

The news about the arrest of the former head of FTX has been greeted by internet users and media with much excitement, but with some misunderstanding. Many don’t understand why the U.S. government didn’t wait until SBF testified under oath before Congress on December 14 before charging him with a crime. According to renowned economist and cryptocurrency opponent Peter Schiff, this way the authorities did the businessman a favor. 

From a tactical perspective, I don’t understand why the U.S. government didn’t wait until after @SBF_FTX testified under oath before Congress tomorrow before charging him with a crime. Prosectors actually did #SBF a favor by saving him from himself.

— Peter Schiff (@PeterSchiff) December 13, 2022

  

The opinion of others is not clear at all. Thus, crypto influencer Ben Armstrong, better known as Bitboy Crypto, is ready to bail out SBF when he returns to the States, and also to shelter him in his home. 

Alright guys @SBF_FTX has officially been arrested and will get extradited. I personally will be putting up bail money when he gets back to the states.

Sam can come stay with me. I promise a couple vegetables a day and a hair trim every week.

— Ben Armstrong (@Bitboy_Crypto) December 13, 2022

  

Crypto trader Ran Neuner believes SBF was arrested just now because someone didn’t want him to testify. 

Someone really doesn’t want @SBF_FTX to testify.

— Ran Neuner (@cryptomanran) December 13, 2022

  

Popular investor Carl From the Moon asked his audience how many years in prison they thought Sam Bankman-Fried deserved for his atrocities. The answers varied: some thought at least life, some, given the amount of money stolen and people defrauded, hoped for 15-25 years, or 50+ years with lots of manual labor, but there were also those who thought SBF would be out of jail in three months, because “money talks.”

SBF is finally arrested.

How many years in prison does he deserve?

— Carl From The Moon (@TheMoonCarl) December 13, 2022

How much does SBF deserve to be in jail in your opinion?

How can I make money on this?

It all depends on how the news of SBF’s arrest affects the cryptocurrency market. Knowing its volatility, asset prices may go down or may, on the contrary, go up. So far, the situation is stable and most of the token does not show sharp growth, which cannot be said about the native token FTX, which fell by 7.4% in the last 24 hours, and probably will continue to fall.

However, according to CEO & founder of Eight Michaël van de Poppe, after the arrest of the former head of FTX, the markets will skyrocket. How high is unclear, but it’s better than a fall, isn’t it?

SBF arrested in the Bahamas.

Now, as a response, skyrocket the markets.

— Michaël van de Poppe (@CryptoMichNL) December 13, 2022