FTX has crumbled in shambles following the shocking bankruptcy that took over the company. When the commotion began to settle, the crypto firm's founder Sam Bankman-Fried was the sole person accountable for the mishap.
According to some legal experts, he could face several years behind bars if he is convicted of fraud.
The investigation is expected to be long since it might take months or even years before the authorities gather all the evidence in the case.
Sam Bankman-Fried Might Face Years in Prison
WASHINGTON, DC - DECEMBER 08: CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill December 8, 2021 in Washington, DC. The committee held a hearing on "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States."
At one point, crypto exchange FTX hit $32 billion in terms of worth. Those were the good old days when the company's promotional strategies were all on point. However, it's just a matter of time until Bankman-Fried realizes that it's not just all about the happy days.
In a report by CNBC on Sunday, Dec. 5, the legal experts said that Sam might have engaged in a "bad business strategy" which resulted in his empire's meltdown.
When the bankruptcy took place, customer funds worth at least $8 billion were reportedly nowhere to find. Aside from FTX, Sam's hedge fund was bankrupt after the billion-dollar fiasco.
Despite the obvious financial problem in the company, Bankman-Fried denied that there was fraud in his firm. He only said that it was all because of his "bad month."
Many investors thought Bankman-Friend was deceiving the users into thinking their money was not used as loan collateral. Trial attorney Renato Mariotti said this is the common sentiment FTX customers share regarding this issue.
"It sure looks like there's a chargeable fraud case here. If I represented Mr. Bankman-Fried, I would tell him he should be very concerned about prison time. That it should be an overriding concern for him," Mariotti said.
Related Article: FTX ex-CEO Sam Bankman-Fried's Bank Account Now Only Has $100,000 After the Collapse
Legal Troubles Are Heading Toward Bankman-Friend
The same report from CNBC says that Bankman-Friend might potentially face several lawsuits, according to legal experts. No charges are filed against him for now.
Sam could not escape the consequences of his actions if millions of creditors proved that he had committed fraud. According to Richard Levin from Nelson Mullins Riley & Scarborough, Sam could face several legal threats in the US alone.
He added that the first one would be the "criminal action" in avoiding fraud laws from the US Department of Justice. Prosecutors need to "prove beyond a reasonable doubt" that the FTX founder is guilty of criminal fraud.
While Bankman-Fried said he did not try to commit fraud, he could also face "civil enforcement action." Levin said that the state banking regulators, the Commodity Futures Trading Commission, and the Securities Exchange Commission would handle this part.
Meanwhile, Al Jazeera reports that Bankman-Friend confirms that he will testify before the US House Committee. He said that he had already "finished learning and reviewing" all the events linked to the FTX meltdown back in November.
Read Also: Tim Draper Expects Bitcoin to Hit $250,000 in Mid-2023 Despite FTX's Fall, Declining Prices
