NEW YORK \u2013 U.S. prosecutors charged Sam Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes and campaign finance violations on Tuesday, alleging he played a central role in the collapse of FTX and hid its problems from the public and investors.<\/p>\n
Bankman-Fried was charged with eight counts, ranging from wire fraud to money laundering to conspiracy to commit fraud on the United States. He was also charged with violating campaign finance laws, a notable charge as Bankman-Fried was one of the largest political donors this year.<\/p>\n
The charges are on top of charges announced earlier Tuesday by the Securities and Exchange Commission, which alleged Bankman-Fried defrauded investors and used proceeds from investors to buy real estate on behalf of himself and family.<\/p>\n
THIS IS A BREAKING NEWS UPDATE. AP\u2019s earlier story follows below.<\/p>\n
Sam Bankman-Fried, the former CEO of cryptocurrency platform FTX<\/a>, orchestrated a years-long fraud by diverting investors\u2019 funds to his private hedge fund and using them to make venture investments, lavish real estate purchases and large political donations, the U.S. Securities and Exchange Commission alleged Tuesday in a complaint.<\/p>\n Bankman-Fried was arrested Monday in the Bahamas, where he has been living, after the U.S. filed criminal charges that will be made public Tuesday, according to U.S. Attorney Damian Williams. The SEC complaint is separate.<\/p>\n A spokesman for Bankman-Fried had no comment Monday evening. He has a right to contest his extradition, which could delay but probably not stop his transfer to the U.S.<\/p>\n Bankman-Fried was under criminal investigation by U.S. and Bahamian authorities following the collapse last month of FTX, which filed for bankruptcy on Nov. 11<\/a>, when it ran out of money after the cryptocurrency equivalent of a bank run.<\/p>\n Bankman-Fried was one of the world\u2019s wealthiest people on paper; at one point his net worth reached $26.5 billion, according to Forbes. He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns, though he also gave money to Republicans. FTX grew to become the second-largest cryptocurrency exchange in the world.<\/p>\n That all unraveled quickly last month<\/a>, when reports called into question the strength of FTX\u2019s balance sheet<\/a>. Customers moved to withdraw billions of dollars, but FTX could not meet all the requests because it apparently had used its customers\u2019 deposits to fund investments at Bankman-Fried\u2019s trading arm, Alameda Research.<\/p>\n \u201cWe allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,\u201d said SEC Chair Gary Gensler.<\/p>\n The SEC complaint alleges that Bankman-Fried had raised more than $1.8 billion from equity investors since May 2019 by promoting FTX as a safe, responsible platform for trading crypto assets.<\/p>\n Instead, the complaint says, Bankman-Fried diverted customers’ funds to Alameda Research without telling them.<\/p>\n “He then used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses,” the complaint reads. “None of this was disclosed to FTX equity investors or to the platform\u2019s trading customers.\u201d<\/p>\n Alameda did not segregate FTX investor funds and Alameda investments, the SEC said, using that money to \u201cindiscriminately fund its trading operations,” as well as other ventures of Bankman-Fried.<\/p>\n Bankman-Fried\u2019s arrest came just a day before he was due to testify<\/a> in front of the House Financial Services Committee. Rep. Maxine Waters, D-Calif., chairwoman of the committee, said she was \u201cdisappointed\u201d that the American public, and FTX\u2019s customers, would not get to see Bankman-Fried testify under oath<\/a>.<\/p>\n That hearing, however, will be held Tuesday.<\/p>\n Bankman-Fried said recently that he did not \u201cknowingly\u201d misuse customers\u2019 funds, and said he believes his millions of angry customers will eventually be made whole.<\/p>\n The SEC challenged that assertion Tuesday in its complaint.<\/p>\n \u201cFTX operated behind a veneer of legitimacy Mr. Bankman-Fried created by, among other things, touting its best-in-class controls, including a proprietary \u2018risk engine,\u2019 and FTX\u2019s adherence to specific investor protection principles and detailed terms of service. But as we allege in our complaint, that veneer wasn\u2019t just thin, it was fraudulent,\u201d said Gurbir Grewal, director of the SEC\u2019s Division of Enforcement. \u201cFTX\u2019s collapse highlights the very real risks that unregistered crypto asset trading platforms can pose for investors and customers alike.”<\/p>\n<\/p><\/div>\n Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.<\/p>\n<\/div>\n (function(d, s, id) { NEW YORK \u2013 U.S. prosecutors charged Sam Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes and campaign finance violations on Tuesday, alleging he played a central role in the collapse of FTX and hid its problems from the public and investors. Bankman-Fried was charged with eight counts, […]<\/p>\n","protected":false},"author":1,"featured_media":38011,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[36],"tags":[3167,8104,52,53,441,2258,133,12820,111],"class_list":["post-38010","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-bankmanfried","tag-count","tag-cryptocurrency","tag-exchange","tag-founder","tag-ftx","tag-hit","tag-indictment","tag-news"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2022\/12\/639896c8597c3.image_.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/38010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=38010"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/38010\/revisions"}],"predecessor-version":[{"id":38012,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/38010\/revisions\/38012"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/38011"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38010"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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