Sam Bankman-Fried was arrested in the Bahamas yesterday, one day before he was scheduled to appear before the House Financial Services Committee this morning.
The arrest follows charges from the Southern District of New York against the disgraced crypto executive with eight criminal counts: conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, money laundering and conspiracy to avoid campaign finance regulations.
This last minute turn of events sparked outrage from Republican lawmakers intent on questioning Bankman-Fried and pundits who wanted to watch:
NY Representative Lee Zeldin @RepLeeZeldin tweeted, “Tomorrow, Sam Bankman-Fried was scheduled to testify in front of the House Financial Services Committee. @HouseGOP was ready to grill him six ways to Sunday. Now breaking tonight, SBF was just arrested!🧐 Why not allow him to 1st testify tomorrow and answer our many questions?”
Wall Street Silver (@wallstreetsilv) tweeted, “People thinking SBF will get off, his political donations will save him, etc. There is a point where he is too toxic to even consider helping. Politicians have no loyalty. They know there are no future donations from SBF coming. The goal is to keep previous donations.”
The hearing commenced with FTX’s new CEO John J. Ray III, who was tapped in part for his role in the aftermath of the Enron scandal that shook the public audit profession and took down Arthur Anderson.
The tone of the hearing is best described as faux outrage given last month’s revelations about FTX and Bankman-Fried’s massive, bipartisan campaign donations. You can watch the full hearing here.
Following the hearing, prosecutors for the SDNY and federal investigation held a press conference.
During the briefing, prosecutors outlined the charges, summarizing that Bankman-Fried:
- Defrauded customers
- Defrauded Investors of Alameda
- Defrauded Investors of FTX
- Violated Campaign Finance Laws
On that last point, they allege that Bankman-Fried made, “Tens of millions in illegal campaign contributions associated with both Republicans and Democrats.”
During his testimony, Ray blasted the FTX team saying, “This is really just old fashioned embezzlement. This is just taking money from customers and using it for your own purpose. Not sophisticated at all…This is just plain old embezzlement. Old school, old school.”
This afternoon, White House Press Secretary Karine Jean-Pierre was asked about national calls for politicians, including Biden, to return the donations. Her response was predictable. WATCH:
REPORTER: “Will the President return that donation [from FTX/SBF]?”
KJP: “I am covered here by the Hatch Act.”
Despite this expected response from the White House, this story is bipartisanly damaging. We will bring you updates as they happen.