The New York prosecutor’s office charged Sam Bankman-Fried, director of cryptocurrency platform FTX, with multiple crimes. code list

US prosecutors accused this tuesday to Sam Bankman-friedfounder and former CEO of cryptocurrency exchange FTXof a series of financial crimes and campaign finance violationsalleging that he played a central role in the collapse of FTX and concealed its problems from the public and investors.

Bankman-Fried was charged with eight countsWhat’s happening from wire fraud to money laundering and conspiracy to commit fraud against the United States. He was also accused of violate campaign finance lawsa notable indictment since Bankman-Fried was one of the biggest political donors this year.

the the charges are in addition to those previously announced Tuesday by the Securities and Exchange Commissionalleging that Bankman-Fried defrauded investors and used their proceeds to buy real estate in her name and that of her family, according to an indictment made public by the US Attorney General’s Office in New York.

Bankman-Fried was arrested Monday in Bahamas, where he has been living, after the United States filed criminal charges due to be made public Tuesday, according to US Attorney Damian Williams. The complaint to the SEC is independent.

A Bankman-Fried spokesman had no comment Monday night. Bankman-Fried has the right to challenge his extradition, which could delay, but probably not prevent, his transfer to the United States.

Bankman-Fried was under criminal investigation by US and Bahamian authorities after the last month collapse of FTXwhich filed for bankruptcy on November 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

Bankman-Fried was one of the richest people in the world on paper; at one point, her net worth reached $26.5 billion, according to Forbes. She was a leading figure in Washington, donating millions of dollars to mostly left-wing Democratic causes and political campaigns, though she also gave money to Republicans. FTX grew to become the second largest cryptocurrency exchange in the world.

This all came crashing down quickly last month when reports cast doubt on the strength of FTX’s balance sheet. Clients moved to withdraw billions of dollars, but FTX was unable to meet all the requests because it had apparently used client deposits to fund investments in Bankman-Fried’s trading arm, Alameda Research.

“We allege that Sam Bankman-Fried built a house of cards based on deception while telling investors it was one of the safest buildings in crypto.said SEC Chairman Gary Gensler.

The SEC complaint alleges that Bankman-Fried had raised more than $1.8 billion from investors since May 2019 by promoting FTX as a secure and responsible platform for trading crypto assets.

Instead, the complaint says, Bankman-Fried diverted client funds to Alameda Research without informing them.

“Then he used the Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns and make private investments, among other uses,” the complaint says. “None of this was disclosed to FTX equity investors or trading clients on the platform.”

Alameda failed to segregate funds from FTX investors and Alameda’s investments, according to the SEC, and used that money to “indiscriminately finance its business operations” as well as other Bankman-Fried ventures.

Bankman-Fried’s arrest came just a day before she was scheduled to testify before the House Financial Services Committee. Democratic Rep. Maxine Waters, chair of the committee, was “disappointed” that the American public and FTX clients could not see Bankman-Fried testify under oath. However, the hearing will take place on Tuesday.

Bankman-Fried recently stated that it did not “knowingly” misuse customer funds and that it believes its millions of angry customers will eventually get their money back. The SEC disputed this claim Tuesday in its lawsuit.

FTX operated behind a veneer of legitimacy that Mr. Bankman-Fried created, among other things, by promoting best-in-class controls, including a proprietary “risk engine” and FTX’s adherence to specific protection principles. of investors. and detailed conditions of service. But, as we allege in our complaint, that facade was not only thin, but fraudulent,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “FTX’s collapse highlights the very real risks that unregistered crypto asset trading platforms can pose to investors and clients alike.”

(With information from AP)

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