• In November 2020, the FTX exchange filed for bankruptcy, leading to the arrest of Sam Bankman-Fried in the Bahamas and the seizure of his assets.
• In January 2023, federal prosecutors seized almost $700 million in assets and cash connected to SBF, primarily Robinhood shares.
• SBF has denied any misappropriation of customer assets, though the government believes that he purchased Robinhood shares with customer funds.
In November 2020, the crypto industry was shaken up as the FTX exchange filed for bankruptcy. This led to the arrest of Sam Bankman-Fried (SBF) in the Bahamas and the seizure of his assets by the federal prosecutors. Since then, other exchanges associated with FTX and funds on the platforms have gone down, including Alameda Research and BlockFi. After his release on a $250 million bond, SBF’s assets were seized, and his property taken by the federal prosecutors. He has also lost several professional ties as no firms or individuals want to be associated with him and his ongoing saga.
In the third week of January 2023, this saga took a new turn as federal prosecutors seized almost $700 million in assets and cash connected to SBF, primarily Robinhood shares. According to the federal prosecutor, SBF purchased Robinhood shares with customer funds. SBF had previously announced in May 2022 that he had made a purchase, a 7.6% stake, in Robinhood, which he said was an attractive investment. The seized accounts were in Silvergate Bank, under FTX Digital Markets, the Bahamian subsidiary of the exchange, with over $6 million.
The move by the government was the first concrete action taken to hold SBF accountable for the billions that went down with the exchange. However, SBF has denied any misappropriation of customer assets. This is a multi-party battle between BlockFi representatives, SBF himself, Caribbean litigants, and the FTX bankruptcy leadership. It remains to be seen if the government will be able to prove beyond reasonable doubt that SBF had misused customer funds. Until then, the saga continues.