Source: the US DOJ is preparing a possible fraud case against Sam Bankman-Fried and others, examining cash flows to the Bahamas around FTX's bankruptcy filing

US prosecutors, laying the groundwork for a potential fraud case against Sam Bankman-Fried and others involved in the collapse …

Bloomberg 2022-12-10

Context & Ripple Effects

The DOJ’s examination of transfers to the Bahamas marks the move from FTX’s bankruptcy fallout toward a potential criminal fraud case centered on Sam Bankman-Fried and other executives. Related coverage shows that inquiry rapidly progressed to Bankman-Fried’s arrest and indictment.

The ensuing case expanded beyond the initial cash-flow review: prosecutors later alleged crypto transfers intended as bribes and customer funds used for political donations. That widening set of allegations makes the early focus on bankruptcy-period transfers consequential.

First-order effects

Sam Bankman-Fried and other FTX executives face immediate federal investigative exposure as the DOJ traces transfers connected to the bankruptcy filing.
FTX’s Bahamas-linked cash movements become potential evidence in a fraud case, increasing scrutiny of the company’s records and the people involved in authorizing transfers.

Second-order effects

The prospective prosecution puts Bankman-Fried’s communications and witness contact under added pressure; the DOJ later sought limits after alleging he contacted FTX US’ general counsel, a potential witness.
A case built around customer funds and cross-border transfers raises the legal stakes for FTX’s remaining participants, while allegations later broadened the government’s theory beyond the initial transfers.

Third-order effects

If prosecutors continue to build cases from exchange insolvencies through transaction trails and customer-fund flows, crypto platforms face a more enforcement-led test of whether their governance and asset controls are credible.
The FTX proceedings illustrate a wider legitimacy gap in crypto: failures of custody and internal controls can shift quickly from commercial collapse to criminal exposure for executives.

The trend: Crypto’s legitimacy gap is increasingly being tested through criminal investigations that connect platform failures, customer assets, and executive conduct.

Discussion

@sbf_ftx @sbf_ftx on x
@cz_binance You won, @cz_binance. There's no need to lie, now, about the buyout. We initiated conversations around buying you out, and we decided to do it because it was important for our business. And while I was frustrated with your ‘negotiation’ tactics, I chose to still do it…
@sbf_ftx @sbf_ftx on x
@cz_binance You threatened to walk at the last minute if we didn't kick in an extra ~$75m. We did it anyway because this just made us feel more confident we didn't want Binance on our cap table. But again, none of this is necessary. You won. Why are you lying about this now?
@cz_binance @cz_binance on x
@SBF_FTX Sam, not that it matters now. You also can't force us to sell if we don't want to. Also, we have the veto right to block any further fundraising you were doing. Never used or mentioned it. It was never a competition or fight. No one won. 1/2
@joetidy Joe Tidy on x
Sam Bankman-Fried: I hope to make money to pay people back. I spoke to the 30 year old disgraced FTX boss in an interview from his luxury Bahamian complex. He admits he thinks about his possible arrest while “ruminating at night”. https://www.bbc.com/...
@sbf_ftx @sbf_ftx on x
@cz_binance Among other things, as you know, you didn't even have the rights to pull out as an investor unless we chose to buy you out—much of the tokens/equity were still locked.
@matthewliu Matthew Liu on x
The irony of this sociopath calling out others for “lying” is unreal. https://twitter.com/...
@tree_of_alpha @tree_of_alpha on x
When you spend thousands of games stuck in League of Legends's bronze ranking, You don't see stealing $10b in user funds as “ruining millions of people's lives”, You see it as “losing”. https://twitter.com/...
@adamscochran Adam Cochran on x
This is some cringe bs. Like shut the hell up Sam. This wasn't a game. You didn't lose. You stole user assets, lost $10B+ of consumer assets and ruined the lives of thousands of people. The fact you still see this as some game you lost shows your utter lack of remorse. https://tw…
@trengriffin Tren Griffin on x
Any use of a wire (phone, fax, internet) involving transiting the US = US jurisdiction for wire fraud charges. “Prosecutors are closely examining whether hundreds of millions of dollars were wrongfully transferred to the Bahamas at the time of FTX's Nov. 11 bankruptcy filing” htt…
@hype_eth @hype_eth on x
Is he saying this is all CZ's fault because CZ played hardball during a multibillion dollar deal between two multibillion dollar exchanges? I guess when your ego gets too inflated you can't understand that people would negotiate with you instead of doing what you say! https://twi…
@functi0nzer0 Laurence on x
It's astounding that he remembers every detail of a deal from a year and a half ago but is basically Charlie Gordon when it comes to anything regarding operations of his own exchange that are barely a month old https://twitter.com/...
@ericbalchunas Eric Balchunas on x
I would assume this means an end to SBF's “I'm so sorry, now let's find out who did this so I can make it right' media tour, but who knows w him. https://twitter.com/...
@vikingxbt @vikingxbt on x
It's not a fucking game you fucking retard. Peoples money is on the line, and you're still going “you won”. Fuck of you fucking retard. https://twitter.com/...
@intocryptoverse Benjamin Cowen on x
Watching these debates unfold publicly on twitter makes crypto look like a joke. Let's hope that 2023 sorts out all the nonsense so that the asset class can move on stronger than before. https://twitter.com/...
@ericbalchunas Eric Balchunas on x
Hell Yes: US lawmakers are laying the groundwork for a potential case of fraud against FTX Founder, Examines Cash Flows to Bahamas - Bloomberg https://www.bloomberg.com/...
@sbf_ftx @sbf_ftx on x
1) I still do not have access to much of my data — professional or personal. So there is a limit to what I will be able to say, and I won't be as helpful as I'd like. But as the committee still thinks it would be useful, I am willing to testify on the 13th. https://twitter.com/..…
@sbf_ftx @sbf_ftx on x
2) I will try to be helpful during the hearing, and to shed what light I can on: —FTX US's solvency and American customers —Pathways that could return value to users internationally —What I think led to the crash —My own failings
@gabby_hoffman Gabriella Hoffman on x
If I, as a freelancer, perpetrated the fraud scheme this guy did I'd already be arraigned, jailed, and awaiting trial. This guy pleading ignorance when he was directly involved in his business dealings is pure gaslighting. But he's a Democrat, so he'll treated with kid gloves htt…
@richsignorelli Richard Signorelli on x
He could easily be arrested after his testimony. DOJ does not have complete its investigation before effectuating an arrest. Garland forgot this principle w/ Trump who will delay a case by any means possible & who has not even been arrested yet. https://www.wsj.com/... via @WSJ
@claritytoast Nate Anderson on x
Noticeably absent from this list is FTX international, where SBF commingled, stole, then gambled away all the funds. Seems his plan is to claim ignorance to any subject matter area that could be remotely legally dangerous to him. https://twitter.com/...
@jgreco Jim Greco on x
One of the greatest lies Sam has told throughout this is FTX US's solvency. Nothing in the bankruptcy docs support this assertion. In fact, quite the opposite. https://twitter.com/...
@lumberlaw @lumberlaw on x
You see, it's the “My own failings” part that's both deceptive in its premise & will get you in trouble. You literally just hired counsel, who's role is to insulate you. Appearing absent a subpoena & previewing your testimony is unwise, but that's been your approach so far, so 🤷‍…
@cz_binance @cz_binance on x
It seems $15m not only changed @kevinolearytv's mind about crypto, it also made him align with a fraudster. Is he seriously defending SBF? https://www.youtube.com/... (baseless attacks start around 4:20). A thread. 1/11
@sbf_ftx @sbf_ftx on x
I made a lot of big mistakes this year. But this wasn't one of them. There's no evidence, because it didn't happen. Please, please, focus on your own house. https://twitter.com/...
@zhusu @zhusu on x
Had a call yesterday w someone who asked “how come you and Do Kwon came back right after FTX went down, is it just to deflect from your own issues?” I replied Do Kwon has been building on Luna classic + luna2 literally continuously and hasn't taken more than a week Twitter break
@sbf_ftx @sbf_ftx on x
3) I had thought of myself as a model CEO, who wouldn't become lazy or disconnected. Which made it that much more destructive when I did. I'm sorry. Hopefully people can learn from the difference between who I was and who I could have been.
@hsakatrades @hsakatrades on x
Welcome to hell https://twitter.com/...
@brucefenton Bruce Fenton on x
Now we will see what $70 million in political donations of stolen funds buys: a huge media platform rolled out by the very politicians he donated stolen funds to. They won't ask about the stolen money or the fraud— this will be yet another media show to benefit SBF. Crime pays. h…
@bigcheds @bigcheds on x
The golly gee sheepish act is so offensive - “But as the committee still thinks it would be useful, I am willing to testify on the 13th.” Pretending like he was the janitor or something and is surprised anyone would want to talk to him. https://twitter.com/...
@lawmaster @lawmaster on x
@tier10k The DC tweet LOL “My honest advice: stop doing everything,” Mr. Zhao said. “Put on a suit, and go back to DC, and start to answer questions.”
@zhusu Zhu Su on x
How would you know? Thought you claimed you arent aware of what happens at Alameda? Its OK we can let DoJ decide https://twitter.com/...
@hsakatrades @hsakatrades on x
@tier10k “My honest advice: stop doing everything,” Mr. Zhao said. “Put on a suit, and go back to DC, and start to answer questions.” The tweet that started it all. https://twitter.com/...
@annairrera Anna Irrera on x
The downfall of crypto maven Sam Bankman-Fried is prompting a re-examination of the implosion of the Terra stablecoin ecosystem that erased $40 billion in market value https://www.bloomberg.com/... via @business
@emilyjnicolle Emily Nicolle on x
these are the trades that made UST and Luna collapse in May. after FTX's bankruptcy, people are again asking the question: who was behind them? https://www.bloomberg.com/...
@fullbeerbottle @fullbeerbottle on x
Sam out here like “I made a lot of big mistakes this year. 1. The shoelace thing. Sorry about that 2. I didn't fix the browser issues quickly enough 3. Accidentally ate 3000 shrimp, sorry. 4. Some other minor stuff.” https://twitter.com/...
@rewkang Andrew Kang on x
Many ex FTX/Alameda employees have mentioned that FTX employees would inappropriately snoop into large accounts and check their positions We were being counter-traded by both Alameda and FTX employees Lying about it = more prison time https://twitter.com/...
@cryptocred @cryptocred on x
@HsakaTrades @CryptoDonAlt Schrödinger's Alameda Research - SBF Edition I know no details about the activities of Alameda Research except the details that preclude any illegal activities at Alameda Research
@cz_binance @cz_binance on x
5/ Unlike @kevinolearytv we continue to do due diligence even after we make an investment. As an early investor in FTX, we became increasingly uncomfortable with Alameda/SBF and initiated the exit process more than 1.5 years ago.
@hsakatrades @hsakatrades on x
@CryptoDonAlt Agreed. Should have lead their public reemergence with some acknowledgement of their wrongdoing and showing a shred of remorse (however fake). Then lead into talking about all the shit Alameda/FTX allegedly pulled. Failing to do the former just undermines the latter…
@cryptodonalt DonAlt on x
@HsakaTrades Honestly think Su and Kyle had a way to redeem themselves but this absolute garbage really isn't it Take responsibility and show humility instead of crying “it was the exchanges fault” like every 10yo trading on 100x leverage
@zhusu @zhusu on x
It is sad given how long cryptosociety and media let his charade go on that many ppl's suffering coincides with our catalyst for vindication Yet life is as winding as it is windy, beauty is truth and truth is beauty - - that is all ye know on earth and all ye need to know
@tree_of_alpha @tree_of_alpha on x
Having those two crypto cancers throw shade at each other on a public social network instead of being on the run from authorities is max pain scenario. https://twitter.com/...

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