Sam Bankman-Fried has been arrested following FTX collapse. Here’s what happens next
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Sam Bankman-Fried’s arrest in the Bahamas on Monday marks the beginning of a new chapter in the FTX saga, one that will pit the former crypto billionaire against the Southern District of New York.
The indictment is expected to remain sealed until Tuesday morning. U.S. prosecutors haven’t commented, and neither the Attorney General of the Bahamas nor the Royal Bahamas Police Force would confirm the nature of the charges against Bankman-Fried.
The New York Times reported that the charges against Bankman-Fried included conspiracy to commit wire fraud and securities fraud, as well as standalone charges of securities fraud, wire fraud and money laundering.
The SEC has initiated a separate set of charges against Bankman-Fried, relating to “violations of our securities laws, which will be filed publicly tomorrow in the Southern District of New York,” enforcement director Gurbir Grewal said in a statement on Monday.
A spokesperson for the SEC declined further comment.
The charges could land Bankman-Fried in prison for decades, legal experts told CNBC. But before he ever serves time, U.S. prosecutors have to secure an extradition from the Bahamas back to New York.
An effort to extradite
“It is inconceivable to me that the Justice Department would have charged this case unless they were confident that they could extradite him,” Renato Mariotti, a former federal prosecutor, told CNBC.
Mariotti anticipates an extradition will take weeks to complete.
“The statement by the Bahamian government suggests that they’re going to cooperate,” Mariotti said.
The U.S. and the Bahamas have had an extradition treaty in place since 1931, with the most recent iteration codified in 1990. Because Bankman-Fried hasn’t been convicted in the Bahamas yet, U.S. prosecutors had to secure an arrest warrant and provide sufficient evidence to the Bahamians that he had committed a crime.
Extradition is the first step in a process that could take years to finish. Given the magnitude of Bankman-Fried’s alleged crimes, prosecutors and regulators will be pursuing concurrent cases around the world.
A trial in the U.S. “may not occur for years,” Mariotti said.
“The more that they charge, the bigger that the case is, the more time they’re going to need to get in motion,” he said. “I would say late 2023 is the earliest a trial would occur.”
Prosecutors could argue that FTX breached its fiduciary duty by allegedly using customer funds to artificially stabilize the price of the company’s self-issued FTT coin, Mariotti said.
Intent is also a factor in fraud cases, and Bankman-Fried insists he didn’t know about potentially fraudulent activity. He told CNBC’s Andrew Ross Sorkin at the New York Times DealBook conference that he “didn’t knowingly commingle funds.”
“I didn’t ever try to commit fraud,” Bankman-Fried said.
In prepared testimony for the House Financial Services committee, new FTX CEO John Ray confirmed that commingling of funds had occurred between FTX and Alameda Research, Bankman-Fried’s hedge fund.
Other legal trouble
Beyond the criminal charges set to be unveiled Tuesday morning, Bankman-Fried is also facing civil action, which could be brought by the SEC, the Commodity Futures Trading Commission and state banking and securities regulators, said Richard Levin, who chairs the fintech and regulation practice at Nelson Mullins Riley & Scarborough.
The CFTC and lawmakers have begun their probes into FTX and Bankman-Fried, who told Sorkin he was down to his last $100,000.
Shortly after Bankman-Fried’s arrest, the SEC appeared to confirm that the agency would pursue a separate set of charges from the criminal indictment.
Lawmakers also expressed their satisfaction at Bankman-Fried’s arrest. Senator Sherrod Brown (D-Ohio), who chairs the Senate Committee on Banking, Housing, and Urban Affairs, applauded both the Justice Department and Bahamian law enforcement “for holding Sam Bankman-Fried accountable.”
Rep. Maxine Waters (D-Calif.), the chairwoman of the House Financial Services Committee, echoed that sentiment, but expressed disappointment that Bankman-Fried was arrested before his House testimony, which was scheduled for Tuesday.
“I am surprised to hear that Sam Bankman-Fried was arrested in the Bahamas at the direction of the United States Attorney,” Waters said in a statement.
“[The] American public deserves to hear directly from Mr. Bankman-Fried about the actions that’ve harmed over one million people,” Waters continued.
Bankman-Fried had also been invited to appear before the Senate prior to his arrest. That hearing will occur on Wednesday.
It’s unclear whether the SEC or the CFTC will take the lead in securing civil damages.
“The question of who would be taking the lead there, whether it be the SEC or CFTC, depends on whether or not there were securities involved,” Mariotti told CNBC.
SEC Chairman Gary Gensler, who met with Bankman-Fried and FTX executives earlier this year, has said publicly that “many crypto tokens are securities,” which would make his agency the primary regulator.
But many exchanges, including FTX, have crypto derivatives platforms that sell financial products like futures and options, which fall under the CFTC’s jurisdiction.
“For selling unregistered securities without a registration or an exemption, you could be looking at the Securities Exchange Commission suing for disgorgement — monetary penalties,” said Levin, who’s represented clients before both agencies.
Investors who have lost their savings aren’t waiting. Class-action suits have already been filed against FTX endorsers, like comedian Larry David and football superstar Tom Brady. One suit excoriated the celebrities for allegedly failing to do their “due diligence prior to marketing [FTX] to the public.”
FTX’s industry peers are also filing suit against Bankman-Fried. Failed lender BlockFi sued Bankman-Fried in November, seeking unnamed collateral that the FTX founder provided for the crypto lending firm.
FTX and Bankman-Fried had previously rescued BlockFi from insolvency in June, but when FTX failed, BlockFi was left with a similar liquidity problem and filed for bankruptcy protection in New Jersey.
Bankman-Fried has also been sued in Florida and California federal courts. He faces class-action suits in both states over “one of the great frauds in history,” a California court filing said.
The largest securities class-action settlement was for $7.2 billion in the Enron accounting fraud case, according to Stanford research. The possibility of a multibillion-dollar settlement would come on top of civil and criminal fines that Bankman-Fried faces.
A life behind bars
If the DOJ were able to secure a conviction, a judge would look to several factors to determine how long to sentence him.
Based on the size of the losses, if Bankman-Fried is convicted on any of the fraud charges, he could be behind bars for years — potentially for the rest of his life, said Braden Perry, a partner at Kennyhertz Perry who advises clients on anti-money laundering, compliance and enforcement issues.
But the length of any potential sentence is hard to predict, said Perry, who was previously a senior trial lawyer for the CFTC, FTX’s only official U.S. regulator.
Federal sentencing guidelines follow a numeric system to determine the maximum and minimum allowable sentence, but the system can be esoteric. The scale, or “offense level,” starts at one, and maxes out at 43.
A wire fraud conviction rates as a seven on the scale, with a minimum sentence ranging from zero to six months.
But mitigating factors and enhancements can alter that rating, Perry told CNBC.
“The dollar value of loss plays a significant role. Under the guidelines, any loss above $550 million adds 30 points to the base level offense,” Perry said. FTX customers have lost billions of dollars.
“Having 25 or more victims adds 6 points, [and] use of certain regulated markets adds 4,” Perry said.
That means Bankman-Fried could be facing life in federal prison, without the possibility of supervised release, if he’s convicted on just one of the offenses that prosecutors will reportedly pursue.
If convicted, his sentence could be reduced by mitigating factors.
“In practice, many white-collar defendants are sentenced to lesser sentences than what the guidelines dictate,” Perry said. Even in large fraud cases, that 30-point enhancement previously mentioned can be considered punitive.
By way of comparison, Stefan Qin, the Australian founder of a $90 million cryptocurrency hedge fund, was sentenced to more than seven years in prison after he pleaded guilty to one count of securities fraud.
Roger Nils-Jonas Karlsson, a Swedish national accused by the United States of defrauding over 3,500 victims of more than $16 million, was sentenced to 15 years in prison for securities fraud, wire fraud and money laundering.
Hyundai has unveiled the design refresh of its Ioniq 6 sedan, and announced that it will become a family of cars rather than a single model, with an N Line trim and upcoming N performance model, much like its sister car the Ioniq 5.
Hyundai has been doing great with its EVs lately, hitting sales records and getting great reviews.
Much of that focus has been on the Ioniq 5, an attractive crossover SUV with lots of capability at a good price – and a bonkers N performance version which has been breaking different kinds of records.
The Ioniq 6, conversely, hasn’t attracted quite as much attention, even though it has some records of its own (it’s the most efficient vehicle in the US… for under $70k).
Between its admittedly odd looks – much more aerodynamic and rounded than the comparatively blocky 5 – and it fitting into the less-popular (but better) sedan form factor, it just hasn’t captured as much imagination as the 5.
It has also fallen somewhat behind. The Ioniq 5 got a big update this year, including a native NACS port, the first non-Tesla mass market vehicle to hit the road with one of these included (and it even charges faster than a Tesla does on home turf). The 6, however, is still sitting on its original design from when it first started production/shipping in 2022/23.
But that’s about to change, as Hyundai is giving the model some love with a design update and some hints at new things to come.
We’ve seen spy shots of these design updates before, but now Hyundai is showing them to everyone at the Seoul Mobility Show.
Hyundai showed two models today, the standard Ioniq 6 and the “N Line,” an upgraded trim level with some interior and exterior changes to look a little more sporty. Hyundai has used similar nomenclature for its other models, and that carries over here.
Both have a redesigned front end, making it look more aggressive than the prior bulbous and aerodynamic shape, and narrower headlights.
The N Line looks even more aggressive than the standard model, though, with an even more aggressive front and rear end.
Hyundai says that the redesign will also include interior enhancements for “a more comfortable, intuitive experience,” with a redesigned steering wheel, larger climate control display, upgraded materials and redesigned center console with more physical controls.
Beyond this, the refresh was light on details – intentionally, with a full unveil of specs and changes coming later. We can imagine a lot of the improvements on the 2025 Ioniq 5 will be carried over, such as a native NACS port for example, and potentially a slightly larger or faster-charging battery.
We had also previously heard hints that an N version (yes, “N” and “N Line” are different, no, we don’t know why they used these confusing names) of the Ioniq 6 is coming, and Hyundai reiterated those hints today – even giving us a glimpse of the car in the background of one of its shots.
Now THIS one looks quite aggressive, with a bigger double wing and potentially some changes to the diffuser (it’s hard to tell from the shot, as the N Line also has a modified diffuser).
The ioniq 5N has earned rave reviews from enthusiasts for its bonkers driving dynamics and comparatively reasonable price for a true performance vehicle. But it’s still an SUV format, and frankly, an SUV will never be a sportscar no matter how many horsepower you put into it (I will die on this hill).
The 6, however, with its sedan shape and footprint, could make for a much more compelling sports package once it’s all put together. So we’re very excited to see what Hyundai can do if they apply the same magic they put into the 5 into a new 6N. Looking forward to July.
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Over the next two years, homebuilder Lennar is outfitting more than 1,500 new Colorado homes with Dandelion Energy’s geothermal systems in one of the largest residential geothermal rollouts in the US.
The big draw for homeowners is lower energy bills and cleaner heating and cooling. Dandelion claims Lennar homeowners with geothermal systems will collectively save around $30 million over the next 20 years compared to using air-source heat pumps. Geothermal heat pumps don’t need outdoor AC units or conventional heating systems, either.
Geothermal systems use the sustained temperature of the ground to heat or cool a home. A ground loop system absorbs heat energy (BTUs) from the earth so that it can be transferred to a heat pump and efficiently converted into warmth for a home. Dandelion says its ground loop systems are built to last for over 50 years and should require no maintenance.
Dandelion’s geothermal system uses a vertical ground closed-loop system that is installed using well-boring equipment and trenched back into the house to connect to a heat pump. The pipes circulate a mixture of water and propylene glycol, a food-grade antifreeze, that absorbs the ground’s temperature. A ground source heat pump circulates the liquid through the ground loops and it exchanges its heat energy in the heat pump with liquid refrigerant. The refrigerant is converted to vapor, compressed to increase its temperature, then passed through a heat exchanger to transfer heat to the air, which is circulated through a home’s HVAC ductwork.
Daniel Yates, Dandelion Energy’s CEO, called the partnership with Lennar a “new benchmark for affordable, energy-efficient, and high-quality home heating and cooling.” By streamlining its installation process, Dandelion is making geothermal systems simpler and cheaper for homebuilders and homeowners to adopt.
This collaboration is happening at a time when Colorado is pushing hard to meet its clean energy targets. Governor Jared Polis is excited about the move, calling it a win for Coloradans’ wallets, air quality, and the state’s leadership on geothermal energy. Will Toor, executive director of the Colorado Energy Office, said that “ensuring affordable access to geothermal heating and cooling is essential to achieve net-zero emissions by 2050, and we’re excited to be part of such a huge effort to bring this technology to so many new Colorado homes.”
And it’s not just about cutting emissions – geothermal heat pumps help reduce peak electric demand. Analysis from the Department of Energy found that widespread adoption of these systems could save the US from needing 24,500 miles of new transmission lines. That’s like crossing the continental US eight times.
Colorado is making this transition a lot more attractive through state tax credits and Xcel Energy’s rebate programs. These incentives slash upfront costs for builders like Lennar, making geothermal installations more financially viable. The utility’s Clean Heat Plan and electrification strategy are working to keep energy bills low while meeting climate goals.
Read more: This will be the first geothermal energy storage system on the Texas grid
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Polestar has removed the Polestar 2 from its US website header in an early sign of how new tariffs will restrict choice and competition for American consumers, thus increasing prices.
The Polestar 2 is Polestar’s first full EV – the original Polestar 1 was a limited-edition plug-in hybrid.
It started production in 2020 in Luqiao, Zhejiang, China, where Polestar and Volvo’s parent corporation, Geely, was founded.
And there’s the rub: while Polestar’s newer EV, the 3 (which we just drove the new single motor version of last week), is built in South Carolina, the 2 is not.
Unfortunately, that interacts with some news that has been getting a lot of play lately: tariffs.
The US has been gradually getting stupider and stupider on the issue of tariffs, apparently determined to increase prices for Americans and decrease the competitiveness of American manufacturing in a time of change for the auto industry.
It is widely acknowledged (by anyone who has given it a few seconds of thought) that tariffs increase prices and that trade barriers tend to reduce competition, leading to less innovation.
It started with 25% tariffs on various products from China, implemented in the 2018-2020 timeframe. Then, in 2024, President Biden implemented a 100% tariff on Chinese EVs, effectively stopping their sale in the US. These tariffs included some exceptions and credits based on Volvo’s other US manufacturing, which Polestar had used to keep the most expensive versions of the 2 on sale in the US, while restricting the lower-priced versions from sale. Nevertheless, they were a bad idea.
Now, in yet another step to make America less competitive and inflate the prices of goods more for Americans, we got more tariff announcements today from a senile ex-reality TV host who wandered into the White House rose garden (which he does not belong in). These tariffs do not include the same exceptions as the previously-announced Biden tariffs.
Apparently this has all been enough for Polestar, as even in advance of today’s tariff announcements, the company suddenly removed its Polestar 2 from its website header today.
The change can be seen at polestar.com/us, where only the Polestar 3 and 4 are listed in the header area. On other sites, like the company’s Norwegian website or British website, the car is still there. The Polestar 2 page is still up on the US website, but it isn’t linked to elsewhere on the site (we’ll see how long it stays up).
We reached out to Polestar for comment, but didn’t hear anything back before publication. We’ll update if we do.
It makes sense that the Polestar 2 would still be for sale elsewhere, as it only started production in 2020. Most car models are available for at least 7 years, so this is an earlier exit than expected.
So it’s likely that all of the tariff news is what had an effect in killing the Polestar 2.
Then again, this is also just the second day of a new fiscal quarter. Perhaps the timing offers Polestar an opportunity to make a clean break – especially now that the lower-priced version of its Polestar 3 is available.
Despite the lower $67.5k base price of the new Polestar 3 variant, that represents a big increase in price for the brand, which had sold the base model Polestar 2 for around $50k originally, before all of these tariffs.
Update: Polestar got back to us with comment, but understandably, it doesn’t say much:
Polestar is a three-car company and Polestar 2 is available for customers now. There are a select number of Polestar 2s in stock at retailers that can be found on Polestar.com, but Polestar 3 and Polestar 4 will be the priority in the North American market.
Electrek’s Take
This isn’t the first car that America has been deprived of due to tariffs. The Volvo EX30, one of our most anticipated vehicles, and Electrek’s Vehicle of the Year for 2024, had its American availability pushed back due to tariffs.
Volvo decided to build the car in Belgium and export it to the US, but now that new tariffs apply to the EU as well, maybe that low-priced, awesome, fast, small EV will instead stay in Europe instead of being shipped overseas.
This shows how mercurial tariff fiats from an ignoramus are bad for manufacturing, as they mean that companies can’t make plans – and if they can’t make plans, eventually, they’ll probably just write the country making the random decisions out of their plans so they don’t have to deal with the nonsense.
And we’ve heard this from every businessperson or manufacturer representative we’ve talked to at any level of the automotive industry. Nobody thinks any of this is a good idea, because it objectively is not. All it does is make business harder, make the US less trustworthy, make things more expensive, and overall just harm America.
Yet another way that Americans are getting screwed by this stupid nonsense. 49% of you voted for inflation, and 100% of Americans are now getting it. Happy Inflation Day, everyone.
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