Sam Bankman-Fried, also known as SBF, is the former CEO of the now-collapsed crypto giant FTX. He was arrested in the Bahamas and is being held there until he can be sent to the United States.
In an indictment, he was charged with eight counts of fraud, campaign finance law violations, conspiracy, and money laundering.
Even though many people wanted SBF to be locked up right away, the Department of Justice (DOJ) did not have him arrested in the Bahamas for weeks. The DOJ took its time for the following reasons:
DOJ Let SBF Talk And Implicate Himself
If you’re under investigation, the first rule is to “shut up.” Since FTX broke down, SBF has broken Rule Number One every day.
He said what he thought in tweets. The New York Times talked with him. His words made the bankruptcy lawyers for FTX say out loud that he was hurting the company’s chances of getting out of bankruptcy.
When he spoke, SBF did himself and, most of all, his credibility a lot of harm.
When Vox asked SBF about what he had said about his charity work in the past, he said, “Man, all the dumb shit I said, it’s not true, not really.”
Besides that, when asked about “shady” things he had done, he said, “Each individual decision seemed fine, and I didn’t realize how big it was until the end.”
Also, when asked about his earlier claims that he wanted “good regulations,” he said that those claims were “just PR.”
Even worse, he went on, “Fuck regulators. They make everything worse. They don’t protect customers at all.”
If SBF goes to trial, even if he doesn’t take the stand, prosecutors will be able to use all of these statements against him.
If SBF returned to the US, the DOJ would likely have an arrest warrant out for him
Even though the DOJ was happy to let SBF hurt himself while he was hiding out in the Bahamas, they were almost certainly ready to arrest him if he had been stupid enough to come back to the United States.
If SBF had landed at any US airport or port, he would have been taken into custody. Also, if SBF had been arrested on US soil, the DOJ would have known that they could arrest him right away and then file a new indictment later.
The Bahamas’ Extradition Treaty Required Careful Indictment Preparation
Arresting SBF in the Bahamas was riskier than in the US.
According to the Bahamas-US extradition treaty, “An offense… if it is punishable under the laws of both Contracting States by deprivation of liberty for a period of more than one year or by a more severe penalty,” can be arrested in the Bahamas and extradited to the US.
The DOJ had to ensure that any SBF offense was a crime under both Bahamian and US law.
The indictment used to extradite SBF from the Bahamas also limits his crimes.
“A person extradited under this Treaty may only be imprisoned, prosecuted, or punished in the requesting state for the offense for which extradition was granted.”
Thus, the DOJ cannot overrule and charge SBF with new crimes if further investigation reveals them.
Because of all of these things, the DOJ was willing to wait a few weeks after FTX collapsed to build its case before asking for extradition.
So, why arrest SBF now before he testifies in Congress?
Now we get why the DOJ waited a few weeks before arresting SBF. However, their timing is a bit off, especially when they ordered the arrest just before SBF testifies to Congress under oath.
While there is no clear explanation for why SBF was arrested before his testimony, the community has its theories. One explanation caught our eye: the DOJ doesn’t want to be embarrassed.
Having SBF remotely testify under oath as a free man in the Bahamas, where the U.S. government didn’t seem to have any control, could have embarrassed the DOJ.
People think that when the DOJ found out that SBF would go before Congress on December 13, they gave him until December 12 to give an indictment to the Bahamas’ attorney general.
They did this so that SBF wouldn’t have to talk to Congress from his house in a tropical paradise, which would have been embarrassing.
Furthermore, SBF attempted to flee once before, and we doubt the DOJ would want that to happen again this time.
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