Proactive Investors - Sam Bankman-Fried, former head of collapsed cryptocurrency exchange FTX, has been denied bail following his arrest in Nassau on fraud charges.
Citing flight risks, chief magistrate of the Bahamas JoyAnn Ferguson-Prat denied the petition for his release, although with his fortune in tatters, it was unclear how he planned to post bail.
Bankman-Fried was filmed being taken from his Nassau domicile on Monday, a day before he was scheduled to appear via video link in Tuesday’s US House Committee on Financial Services hearing titled ‘Investigating the Collapse of FTX, Part I’.
FTX UPDATE: SBF leaves Magistrate’s court. He will be remanded to The Bahamas Department of Corrections until his matter resumes on Feb 8, 2023. pic.twitter.com/dqXsHeNXSK— Eyewitness News Bahamas (@ewnewsbahamas) December 13, 2022
SBF faces life behind bars if found guilty of the litany of charges against him.
In addition to defrauding investors and stealing FTX customers’ money, New York attorney Damian Williams has accused Bankman-Fried of making “tens of millions of dollars” of illegal political donations to Democrats and Republicans alike using stolen customer funds.
In a Tuesday press conference, Williams called SBF’s former crypto empire “one of biggest financial frauds in US history”.
Suspicions mount over FTX chief engineer
Since FTX’s collapse, Bankman-Fried has been candid about the incestuous relationship between his cryptocurrency exchange and Alameda Research, the quant trading firm and venture fund he established in 2017.
SBF routinely admitted that Alameda Research was channelling FTX customers’ funds through a “backdoor” in order to make high-risk, high-leverage bets that ended up losing billions.
But he has denied direct culpability on the grounds that he was not running Alameda at the time.
However, a new Reuters report has shed light on the machinations of the so-called backdoor.
According to the report, FTX’s chief engineer Nishad Singh tweaked FTX’s software code to exempt Alameda Research from a feature that would have automatically sold off Alameda's assets if it was losing too much borrowed money.
In essence, this provided Alameda with an unlimited line of credit without the threat of liquidation.
Code reviewed by Reuters contained a note from Singh stating "be extra careful not to liquidate” in reference to Alameda’s positions.
SBF had previously assured investors that Alameda received no preferential treatment from FTX, which, if these fresh allegations are proved accurate, would bolster the Securities and Exchange Commission’s case for investor fraud charges.
No charges have been filed against Singh at the time of writing, yet his whereabouts is unknown, and his LinkedIn profile has since been deleted.