With US authorities asking crypto investors and trading firms that worked closely with FTX to hand over information on the company and its key figures, Bracewell’s Seth DuCharme cautioned Bloomberg that the investigation will likely be a slow burn despite all the public revelations about FTX’s chaotic recordkeeping and allegations about the misuse of customer funds.
“While the crypto industry is evolving, the statutory enforcement tools really aren’t,” said DuCharme.
Investigators will use blunt, well-established powers to determine the extent of any criminal wrongdoing, such as statutes dealing with wire fraud, money laundering and conspiracy, added DuCharme.
“You can lose a lot of money and no one may have done anything intentionally wrong,” he said. “Mistake is a defense to a crime.”
The fact FTX was run out of the Bahamas and its founder still lives there adds a layer of complexity to the investigation.
If they need to act fast, prosecutors can seek a provisional warrant and request that Bahamian authorities arrest Bankman-Fried. The US then has 60 days, according to an agreement between the two countries, to file a formal extradition request through diplomatic channels. Anyone arrested could waive their right to an extradition hearing in the Bahamas, in turn speeding up their arrival on US soil. The entire process can be avoided if there is an agreement with US prosecutors to surrender.