FTX: These are the criminal charges Sam Bankman-Fried could face

Yahoo Finance's Alexis Keenan explains FTX founder Sam Bankman-Fried's legal liability as he agrees to interviews with the media.

Video Transcript

- We've also been speaking about Sam Bankman-Fried all day here and the statements that he's made so far. Will his actions lead to any kind of legal consequences? And what might those be? Let's get to Yahoo Finance's Alexis Keenan. Alexis, I mean, when we think about the exploration of any type of remedies or even the defense that SBF is trying to put forward, what really sticks out to you?

ALEXIS KEENAN: Yeah, Brad. So a lot was said. A lot to parse through for US law enforcement and law enforcement around the globe perhaps. But the Department of Justice and the SEC, they're the ones that will be closely examining the statements that Sam Bankman-Fried has been making, both yesterday as well as today, and even before that. And what they're going to do is they're going to test those statements against the laws that protect against fraud.

Now, Sam Bankman-Fried was careful to tell the New York Times that he didn't try to commit fraud and he didn't knowingly co-mingle funds, he said, belonging to either FTX customers or to Alameda investors. And then in an interview with ABC, he added that he didn't fully understand fiat transfer mechanisms that allowed funds to flow between his entities. Now, fraud, it can be prosecuted in a bunch of different forms. You have wire fraud. You have mail fraud, bank fraud, securities and commodities fraud.

But, basically, what they all require are similar elements. And those are these. What has to happen is a false statement must be made to get a person's money. And it has to be done knowingly with the intent to defraud. So that's why Sam Bankman-Fried perhaps was so careful to continue saying that he didn't knowingly commit any of these acts where the funds were flowing freely between these companies.

But one place investigators will be looking to really test this are to those FTX customer agreements as well as the Alameda investor agreements. And what matters there is what FTX promised them about their deposits and about their investments. Now, we know that certain FTX agreements said that FTX didn't have any right at all to use customer funds, to borrow them, to use them as loans in any way. So it seems at a minimum that at least false statements do exist here as to those customer agreements.

We know much less about the agreements with Alameda's investors. Bankman-Fried also made the point that FTX's US entity is solvent and that he can expect that customers can be made fully whole on that end. But, look, fraud doesn't turn on whether customers can be made whole. It turns on whether the statements that were made by Sam Bankman-Fried or by FTX were made with an intent to defraud. So certainly US investigators will be looking at this. Very little is required in terms of US being able to get jurisdiction over him, over his companies. If you're defrauding US investors, they certainly will be interested and certainly would try to exert their jurisdiction there. Guys.

- Yeah. They definitely will. I just want to pick up on one other thing, which is that Bankman-Fried very clearly said, my lawyers don't want me to be doing this. And it is sort of unprecedented that someone who has been accused of so much wrongdoing is going out and talking to the press in so many instances. What specifically does he open himself up to by making all of these very public statements?

ALEXIS KEENAN: Yeah, Julie. All of his statements that he has been making, they're absolutely statements that can be used against him. And if they can be, they will be used against him. So certainly ignoring the advice of his lawyers. He made that very clear. He said he wanted to do right by customers in these interviews. He said that he's putting himself or de-prioritizing his own needs to the needs of customers. At least that's what he said.

- I suspect the customers will not be very satisfied by what he has been saying. And, again, we're going to talk to one of them in the next hour. Thanks so much, Alexis, for helping us parse through all the legal back pinnings of what's going on with this story. Appreciate it.