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FTX Founder Faces Up To 115 Years in Prison

The co-founder of cryptocurrency exchange FTX and suspected fraudster, Sam Bankman-Fried, was taken into custody this morning in the Bahamas and later on Tuesday was charged with a myriad of crimes by authorities including the US attorney for the Southern District and the Securities and Exchange commission. The 30-year-old Democrat superstar and mega-donor has been accused of fraud on FTX customers, perpetrating wire fraud against the customers and lenders, as well as conspiring to commit money laundering and securities fraud.

One of the more prominent allegations SBF was also hit with is accusations of conspiring to violate the laws on campaign finance and defraud people in the United States. He was among the top campaign donors during the last election cycle, having deposited around $40 million into Democrat coffers. This earned him the unending respect as well as the protection from Rep. Maxine Waters (D-CA) and others. The lawsuit claims that he used “deceitful means” to get around the law on campaign finance and claims that the donor “knowingly and willfully” made contributions to candidates under the names of other people.

He could face a maximum of 115 years if found guilty. The SEC was also involved with allegations that the former star fraudulently used their funds to make extravagant real estate investments.

SBF was at the top of the news in November, when FTX was wiped out and billions of dollars of assets of customers disappeared. SBF illicitly diverted money from investors to fund his lavish lifestyle as well as make risky investments with the crypto hedge fund he managed, Alameda Research. The house of cards began to plummet last month after reports challenged FTX s balance sheets and clients tried to take out billions of assets, but the money was not there. Although cryptocurrency is a complex subject, FTX's fallout isn't an issue: it was more the typical bank run.

According to the AP:

“In a press event on Tuesday, U.S. Attorney Damian Williams said it was “one of the biggest frauds in American history,” and added that the investigation is still in progress and swiftly moving. The attorney urged anyone who suspects they were the victims of the scheme to reach out to his office.”

It is interesting that Bankman-Fried's arrest, as well as the charges he was facing, did not permit him to testify in a congressional hearing which was planned for Tuesday. Some people were not thrilled about that. 

The hearing was held without its main witness, and the replacement CEO, John Ray III, was a witness:

“This is not something that happened overnight or in the context of a week,” he stated. “This is just plain, old-fashioned embezzlement, taking money from others and using it for your own purposes.”

The curly-haired mogul who was once valued at around $32 billion, was arraigned in a Bahamian court on Tuesday in order to declare that he plans to contest extradition to America. Experts say he has a good chance of winning. While he was once thought of as a genius, today's news of Australian Financial Review puts that in question. The publication claims that SBF along with other FTX friends established a chat room on the secure platform Signal to discuss internal activities, and even the group was named “Wirefraud.” 

SBF has denied having knowledge of the organization, but any of what he claims is unreliable these days.

Demands from Democrats to pay SBF's fraudulent contributions back have mostly been ignored. The day after the announcement of his arrest and the subsequent charges, The White House avoided the question. 

The entire scandal is likely to bring fresh revelations, and you could bet on a lot of Democrats being in charge of preventing damage at the moment. Happily, Republicans have the upper hand in the House in January, and at a minimum we can be hopeful that they will investigate the matter thoroughly.

It's beginning to look as if Bernie Madoff and Enron's Kenneth Lay were amateurs when compared to this man.

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