FTX customer funds were commingled with assets from Alameda Research. Alameda used client funds to do margin trading, which exposed them to massive losses, Ray said.
Legal experts told CNBC that if the federal government pursues wire or bank fraud charges, Bankman-Fried could face life in prison without the possibility of supervised release. Such a severe punishment would be unusual but not extraordinary. Ponzi scheme mastermind Bernie Madoff was sentenced to 150 years in prison, an effective life sentence, for his massive ponzi scheme.
Sam Bankman-Fried's arrest is the first concrete move by regulators to hold individuals accountable for the multibillion-dollar implosion of FTX last month.
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