Confidence Man Sam Bankman-Fried Ends Media Tour Due To Arrest

Photo by Cointelegraph, CC BY 3.0 <https://creativecommons.org/licenses/by/3.0>, via Wikimedia Commons

Welp, that should be the end of the “ah shucks, can’t believe that happened to me, sorry ’bout that” media tour Sam Bankman-Fried has been on.

The arrest came at the request of the U.S. government, U.S. Attorney Damian Williams said in a statement. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”

On Tuesday, the Securities and Exchange Commission is set to charge Bankman-Fried with violating securities law, Gurbir Grewal, the agency’s enforcement chief, said in a tweet.

Bankman-Fried was slated to testify in front of the House Financial Services Committee on Tuesday. Rep. Maxine Waters (D-Calif.), who heads the committee, said in a statement the arrest will stop that from happening.

“The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity,” Waters said. “Although Mr. Bankman-Fried must be held accountable, the American public deserves to hear directly from Mr. Bankman-Fried about the actions that’ve harmed over one million people, and wiped out the hard-earned life savings of so many.”

Rep. Lee Zeldin (R-N.Y.), a member of the House panel, tweeted Monday night that his committee was “ready to grill” Bankman-Fried “six ways to Sunday.” Zeldin still wanted that opportunity: “Why not allow him to 1st testify tomorrow and answer our many questions?” he wrote on Twitter.

The Bahamas and the United States have an extradition treaty agreeing to hand over people who have been charged with crimes that are illegal in both countries, but it’s unclear how long it might be before Bankman-Fried is turned over to U.S. authorities.

A spokesperson for Bankman-Fried declined to comment. Spokespeople for the prime minister of the Bahamas, the attorney general of the Bahamas and the House Financial Services Committee did not respond to requests for comment.

Bankman-Fried has spent the past few weeks in his Bahamas estate, giving numerous interviews to reporters and making dozens of social media posts trying to explain how his company went from being one of the biggest and most-respected crypto exchanges to filing for bankruptcy.

Bankman-Fried has said he made grave mistakes but has denied any malicious wrongdoing.

In the indictment, the charges include wire fraud and conspiracy, securities fraud & conspiracy, and money laundering.

Bankman-Fried has been on something of a media tour lately, playing like a babe in the woods who just happened to be over his head, and he graciously admits that errors were made, and gosh darn it we didn’t mean for any of this to happen, and he just didn’t realize the size and amount of money moving around, and no he doesn’t know where billions of dollars went and…

What a craven liar. Everything about him is malicious.

In the SEC complaint press release, Director of SEC Division of Enforcement Gurbir S. Grewal said “FTX operated behind a veneer of legitimacy Mr. Bankman-Fried created by, among other things, touting its best-in-class controls, including a proprietary ‘risk engine,’ and FTX’s adherence to specific investor protection principles and detailed terms of service. But as we allege in our complaint, that veneer wasn’t just thin, it was fraudulent.”

The criminal complaints are expected to focus on the funneling of FTX investor’s money through Alameda Research, Bankman-Fried’s hedge fund and “piggy bank” from which everything from celebrity endorsements to political donations, venture investments, and real-estate purchases were made. The form head of Alameda Research that oversaw those outlays of FTX money into Alameda projects was Caroline Ellison, who depending on which version you believe may have been in an on-and-off relationship with Bankman-Fried and has been busy scrubbing her online profile from existence. The criminal and SEC investigations allege the movement of money from FTX investors to Alameda was from the beginning, undisclosed, illegal, and very much on purpose.

Sam Bankman-Fried’s ludicrous media routine of the last few weeks, and what now looks like one of the biggest frauds and scams in recent history, is a teachable moment. Folks get conned only when they want to be conned, and the tentacles of FTX/Alameda money that reach deep into politics, entertainment, and other areas show you just how uncritical too many powerful people can be about splashy money and a figurehead who knows how to slow roll and manipulate them. Sam Bankman-Fried joins a beginning-to-get-long list of tech “saviors” and “wunderkinds” who turned out to be just a new age versions of the oldest con in the book: the con shepherd finds a herd by leveraging need and greed of the marks to enrich themselves with something too good to be true. And as always, if it seems too good to be true, it probably is, no matter how many celebrity endorsements, sports arenas, politicians, and online fans something might have.

Now, in the case of Sam Bankman-Fried, the only game in town is trying to defeat the justice that is coming now that the house of cards has collapsed and becoming this generation’s Bernie Madoff and Charles Ponzi. May he fail as spectacularly as the FTX scam did.