Prosecutors in the United States have charged Sam Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a series of financial crimes and violations of political campaign finance laws, alleging that he played a central role in the collapse of the cryptocurrency exchange . The company hid its problems from investors and the public.
Eight charges have been filed against Bankman-Fried, including wire fraud, money laundering and conspiracy to defraud. He was also charged with violating political campaign finance laws, a remarkable allegation for being one of the largest political donors of the year.
On the other hand, the United States Securities and Exchange Commission (SEC) accused Bankman-Fried of defrauding its investors.
An SEC complaint filed on Tuesday alleges that Bankman-Fried raised more than $1.8 billion from equity investors since May 2019 by promoting FTX as a safe and responsible platform for buying and selling cryptocurrencies.
The civil suit states that Bankman-Fried diverted client funds to her private crypto fund, Alameda Research LLC, without warning. It said the Bankman-Fried mixed client funds in Alameda to make undisclosed venture investments, purchase luxury real estate and make large political donations.
“We allege that Sam Bankman-Fried built a house of cards on a foundation of deceit, while telling investors it was one of the safest buildings in crypto,” said SEC Chairman Gary Gensler. “The alleged fraud perpetrated by Mr. Bankman-Fried is a wake-up call for crypto platforms to comply with our laws.”
Bankman-Fried was arrested Monday in the Bahamas at the request of the US government, officials in both countries said.
A spokeswoman for Bankman-Fried declined to comment Monday afternoon. Bankman-Fried has the right to appeal his extradition, which could delay but is unlikely to prevent his transfer to the United States.