Sam Bankman-Fried, the founder and former CEO of the collapsed crypto exchange FTX, has been accused of fraud by US authorities. The 30-year-old man, also known as SBF, was arrested in the Bahamas on Monday.
Today, a unsealed grand jury indictment of the US Department of Justice detailed the criminal charges against Bankman-Fried. He is charged with eight counts of defrauding his clients, money laundering and violating campaign finance laws.
The indictment says Bankman-Fried and his associates “knowingly” devised a scheme to defraud clients by misappropriating funds to “pay the expenses and debts of Alameda Research,” Bankman-Fried’s private crypto fund.
Bankman-Fried was a major political donor who promised to contribute $1 billion in the 2022 US midterm elections, a commitment he reneged on. However, the DOJ said he violated campaign finance laws and intentionally misled the Federal Election Commission by funneling donations through other people.
In addition, the Securities and Exchange Commission filed this morning a civil complaint against Bankman-Fried, who accused him of orchestrating “a massive, years-long fraud, siphoning off billions of dollars of trading platform client funds for his own personal gain and to help grow his crypto empire.”
The SEC’s complaint requests that Bankman-Fried pay reparations to FTX customers and additional penalties for defrauding customers. The SEC also seeks to prevent the businessman from acting as a director or officer of any company in the future.
The SEC said Bankman-Fried diverted funds to Alameda, his private investment fund, while assuring clients that their money was safe and that “Alameda is a completely separate entity from FTX.” The SEC said that he “knew or recklessly ignored that these statements were false and misleading.”
The SEC said that once the client funds were in Alameda, Bankman-Fried would lend them to him and his executive team. These loans were “poorly documented and sometimes not documented at all,” but, according to the SEC, between March 2020 and September 2022, he lent himself more than $1.3 billion, which he spent on large political donations and property from luxury in the Bahamas. .
And even as his scheme began to spiral out of control, the SEC said, Bankman-Fried “continued to mislead investors and the public.” In early November, following public accusations that FTX would run out of money, the FTX founder said, in later-deleted tweets, “FTX is fine. Assets are OK” and “FTX has enough to cover all client properties”. The SEC said that Bankman-Fried knew at the time that FTX was at risk of bankruptcy.
The company eventually filed for bankruptcy on November 11, and Bankman-Fried resigned as FTX CEO. His wealth fell from an estimated $16 billion to practically nothing.
After his departure, Bankman-Fried continued to tweet about FTX and do interviews apologizing for the company’s collapse while denying it was a fraud. She was supposed to appear before Congress today to testify before the House Financial Services Committee.
“We allege that Sam Bankman-Fried built a house of cards on a basis of deception while telling investors it was one of the safest buildings in crypto,” SEC Chairman Gary Gensler said in a statement. declaration. He warned that “the alleged fraud committed by Mr. Bankman-Fried is a wake-up call to crypto platforms that they must comply with our laws.”
