Sam Bankman- Fried, the company's figurehead and just-resigned CEO, may end up facing significant legal peril.
According to experts, if he does, he will use an interesting defense: that his actions weren't criminal, and instead, he was just an entitled and incompetent moron.
"Mismanaging your company and losing a bunch of other people's money is not a crime," Randall Eliason, an ex-prosecutor who now teaches law, told Fortune. All the time, it happens. There have to be deceptions for a criminal case.
Lawyers for the government or FTX's customers and investors will have to prove that Bankman-Fried intended to commit a crime in order for him to be tried in a criminal court.
A smoking gun, or an outline of past behavior that establishes a history of fraudulent intent would be what prosecutors would need to prove that SBF and FTX intended to deceive customers and the government.
Justice Department prosecutors will be able to establish a history if they bring a case under Section 1343, a federal criminal law that technically covers wire fraud but could be applied to electronically.
Section 1343 carries a maximum 20-year prison sentence, which could put the 30-year-old CEO away for a long time.
The story is continuing to unfold rapidly, but no one has been charged with a crime yet.
If they are, prosecutors will have a hard time showing that they aren't just young people who suck at money.
Tom Brady appears to be completely screwed by the FTX collapse.
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