The FBI is in talks with Bahamian authorities to extradite the 30-year-old crypto founder.
According to a report by Daily Mail, the Federal Bureau of Investigation is planning to bring Sam Bankman-Fried to the US for questioning and is speaking with Bahamian authorities to this effect.
Notably, the Daily Mail report cites a Bloomberg story that claims three sources close to the matter verified the information.
It comes as SBF’s crypto firms collapsed spectacularly following a bank run. Notably, in the days leading up to the collapse of his empire, SBF had assured users in now-deleted tweets that the platform and user assets were fine, saying FTX remained capable of handling all client withdrawals.
Furthermore, days after halting withdrawals, the firm appeared to be processing withdrawals again, which it claimed were to Bahamian residents under the instruction of Bahamian regulators. Bahamian regulators have since denied this claim.
However, in the aftermath of the collapse, reports of shady financial practices at the crypto exchange appear all but confirmed. For example, Reuters reports that the now-former FTX CEO covertly diverted $10 million in client funds to support his trading firm Alameda Research which had been failing. Notably, at least $1 billion of those deposits is unaccounted for.
In addition, reports have also alleged that the crypto founder had a backdoor in FTX’s accounting software so he could make these transactions without setting off any alarms. Consequently, it led employees to believe everything was fine with the books.
A new Reuters report hours ago revealed that the once-celebrated “whiz kid” during presentations fooled investors by sharing balance sheets that showed the missing assets on both FTX and Alameda Research balance sheets, hiding the hole. Furthermore, it alleges about $400 million in “software royalty” payments made from FTX to Alameda were used to inflate the price of FTT.
These findings paint the picture of a gambler who had his bluff called. Unsurprisingly, many in the crypto community are pushing for criminal prosecution and jail time for the crypto founder.
While all agree that there are bound to be colossal fallouts and contagion effects from the collapse of the once-second-largest crypto exchange in the world, it remains unclear exactly how many others will fall as a result.
The Daily Mail, in its report, asserts that BlockFi is likely to be the first as it is already considering filing for bankruptcy. BlockFi halted withdrawals over the weekend in response to the news of FTX’s bankruptcy. BlockFi obtained a $250 million bailout from SBF in July with a buyout clause, as reports indicated it was on the brink of insolvency.
It does not appear to be getting any better, as FTX Digital, the Bahamas-based entity, has filed for chapter 15 bankruptcy protection in the US, according to a Bloomberg report today.
SBF and his various crypto startups are under investigation by the Securities and Exchange Commission, Commodities Futures Trading Commission, and Department of Justice.