Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

San Bankman-Fried is not having a great week so far, and his worst days may be still ahead of him.

On Monday, he was arrested in the Bahamas at the request of the US government,

which had filed a sealed indictment in the Southern District of New York. On Tuesday,

the SEC charged him with defrauding the venture capitalists and other equity investors

who invested in FTX with their rather limited due diligence since 2019.

Shortly afterwards, CFTC charges followed, alleging that FTX co-mingled customer funds

and that Bankman Freed violated the Commodities Exchange Act.

There's some pretty wild stuff to read in the three complaints.

The fact that Sam Bankman Fried was the only person charged, at least so far, has led to some speculation that his business associates may be cooperating with prosecutors.

SBF's lawyer says that he is reviewing the charges with his team and considering all of his options.

There are eight criminal charges in total against Sam, which include wire fraud on both

lenders and customers, conspiracy to commit wire fraud on both

groups, conspiracy to commit both commodities and securities fraud, as well as conspiracy

to commit money laundering. He faces a maximum 115 year sentence if convicted.

The Department of Justice indictment alleges that Sam also broke campaign finance laws

by making contributions to candidates and committees that exceeded federal limits.

And we'll cover that point near the end of it. Now, while the SEC can only issue

civil charges, they are accusing Sam Bankman Fried of orchestrating a multi-billion dollar fraud

that began the day he launched his exchange and continued at his personal direction until its collapse last month.

The CFTC, which can also only issue civil charges, wrote in its complaint that when

the enterprise came crashing down last month, FTX customers and the world at large discovered

...