A miserable day for SBF
He's in jail for Christmas, charged with fraud over the FTX crypto collapse
It was a miserable day for Sam Bankman-Fried.
He woke up in a Bahamas jail.
Then the US government unsealed an indictment against him for money laundering, wire fraud, commodities fraud and securities fraud.
Then the SEC filed a complaint against him for securities fraud.
Then the CFTC filed a complaint against him for fraud and material misrepresentations.
Then the US House of Representatives held a three hour hearing with the new CEO of FTX, who verbally crucified Sam Bankman-Fried, calling him a liar and an embezzler.
Then he had a court hearing in the Bahamas and applied to be released on bail pending an extradition hearing, which was denied.
As the day wound to a close, he was escorted away in handcuffs, ordered to be remanded until February 8, 2023.
He’ll be spending Christmas in jail.
FTX not in the Bahamas by accident
SBF was not accidentally in the Bahamas, and didn’t run FTX accidentally from the Bahamas.
Crypto companies go to the Bahamas, with offshore illegal online gambling entities, for one reason only - lax financial crime.
They want the least transparency, the least visibility, the least government oversight with no anti-money laundering reporting by financial institutions. The Bahamas is one of the leaders in all those areas.
A country with a trifecta of risks
I spoke at an ACAMS conference a few years ago on the financial crime risks of financial services in the Caribbean. Below are two pages from my slides. It’s worth noting:
The US government repeatedly asks the Bahamas to investigate and prosecute crypto crimes;
Bahamian financial institutions file almost no suspicious transaction reports related to financial crimes;
There are major transparency issues with respect to financial crimes; and
Politically exposed persons (like SBF), pose a high risk for financial crimes in banking in the Bahamas and yet there is no capability for oversight or financial crime investigations capacity.
The Bahamas is one of a few countries, as noted in the pages above, which poses a trifecta of risks by being a major money laundering country, a major drug producing and transit country, and being on the US President’s list of countries of major concern for financial crime.
With the eyes of the world on the Bahamas’ financial services sector for the next several months, one wonders if it will finally prompt the Bahamas to quit being an irresponsible safe haven for crypto.