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Comment by Animats | Hacker News Reader

This is embezzlement. Mr. Bankman-Fried should be arrested. Now.

We need some lawyer to confirm if he can be arrested or even prosecuted in the US. Since its a business based out of Bahamas.

He, not the company, his criminal actions victimized Americans.

Bahamas Securities Commission: “The commission is aware of public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research. Based on the commission’s information, any such actions would have been contrary to normal governance, without client consent and potentially unlawful.”

The Bahamas Securities Commission just froze FTX's assets in the Bahamas.[1] A provisional liquidator has been appointed. Next stop, bankruptcy.

All the jurisdictions where FTX has a presence are now after Bankman-Fried. US, Japan, Bahamas...

[1] https://fortune.com/2022/11/10/ftx-assets-frozen-bahamas-cry...

Arrested by UN? Genuinely curious

Richmond, CA police department. Alameda Research HQ is at 5327 Jacuzzi St Ste 1c, Richmond, CA 94804. Since they were apparently the recipient of the money, and he's apparently the principal beneficiary of all this, that's where to start. Mr. Bankman-Fried may not physically be there, but they have jurisdiction.

Once there's an arrest warrant, getting away becomes much more difficult.

You're conflating FTX.us (which is regulated) and operates in the USA, and FTX global (where all this chicanery happened) and is located in the Bahamas.

With that said, the SEC is already also investigating any potential links between the two entities. I don't think they'd be stupid enough to cross those wires, but you never know.

If years of following crypto has taught me anything, it's the answer to "They couldn't possibly be that stupid, could they?" is always yes.

No, see Molly White's blog and the WSJ parent article. What seems to have happened is that 1) FTX.intl loaned money to Alameda Research in the US in exchange for some token, 2) Alameda Research, which is a crypto trading firm, speculated with that money and lost, 3) the collateral from Alameda to FTX turned out to have little value, and so 4) FTX.intl goes down. Bear in mind that Mr. Bankman-Fried heads all three organizations.

Whether FTX.us is also involved is not yet clear. But it will be. The SEC and CFTC are descending, with hard questions.

Molly White: "This suggests to me that a) they are in a really bad spot, and b) they want as few people sniffing around in their books as possible." Right. That was probably the real goal of a merger with Binance. In bankruptcy, all the dirty laundry comes out. Being acquired by Binance offered hope of keeping any criminal activity hidden. That hope is now gone.

Thanks - this is the most succinct summary of the financial nexus leading to FTX's spiral into insolvency that I've seen, and squares with my own understanding. What we don't know is how the chain of cause and effect played out over a timeline. How did Alameda lose $10bn? How long has FTX been insolvent? Surely they have been staring down the end of a barrel for a good while?

I fully understand the purported chain of events. But, again: the US does not have jurisdiction over FTX. So why would he "get arrested" in California for embezzlement? He didn't break any US laws. The FTX/Alameda deal was likely done via SAFT[1], which is both legal and popular.

[1] https://www.investopedia.com/terms/s/simple-agreement-future...

Does FTX international have any US investors? This would be a theft of their funds too, right?

It does, but those investors were breaking FTX ToS by using the site (you had to use a VPN to access it).

I'm not sure if the SEC has standing for American investors that pretended to not be American.

Sorry, I mean investors in the company itself, not crypto traders.

Sequoia marked their $150M investment into FTX down to $0 in a letter to LPs[1].

[1] https://twitter.com/sequoia/status/1590522718650499073/photo...

The US has jurisdiction over Mr. Bankman-Fried, who is an American citizen born in California. The US has jurisdiction over Alameda Research, which is a US company operating in California and appears to have been the beneficiary of the scam. That's plenty of jurisdiction.

SEC often asserts jurisdiction over anything where American domiciled investors have suffered a large loss. That bar will definitely be met here.

The entire point of FTX is that Americans were barred from using it. Now Americans certainly ignored that rule by using vpn’s, but I’m not sure that gives the sec jurisdiction. The Americans using the exchange were explicitly breaking the TOS

Is it legal to defraud people in other countries from the US? I can't imagine that it is.

Well he's in the bahamas, not the US.

Most countries have their own security laws and enforcement departments, which are nominally there to protect the interests of their citizens. Examples: https://sfo.govt.nz/ https://en.m.wikipedia.org/wiki/Financial_Conduct_Authority https://www.afp.gov.au/what-we-do/crime-types/fraud/fraud-an... However the enforcement departments usually appear to me to be underfunded and quite weak, even against fraud within their own country, and it seems rare they indict overseas parties even when citizens are deeply impacted.

The SEC is unusually strong (which might surprise you), and because the American market is so wealthy and the rules are relatively clear, the SEC has a huge influence over investment structure.

SBF says US customers are not affected by this.

> This was about FTX International. FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow.

> It's 100% liquid. Every user could fully withdraw (modulo gas fees etc).

https://twitter.com/SBF_FTX/status/1590709195892195329

I wouldn't believe a word SBF says, I'm pretty sure the guy is a pathological liar:

https://twitter.com/WatcherGuru/status/1590773534615572481

1. SBF is a proven fraud and liar, I don't think anyone should be citing him at this point. :)

2. People ITT are claiming that they can't withdraw from FTX.US.

> SEC often asserts jurisdiction over anything where American domiciled investors have suffered a large loss. That bar will definitely be met here

Thankfully for Sam, US investors are banned from FTX and must use FTX.US which so far has not been linked to any of this.

So its going to be very hard to show US investor harm given that they are all banned from using it by US law.

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