SEC accuses former FTX CEO Sam Bankman-Fried of defrauding crypto investors

The US Securities and Exchange Commission has charged the former CEO of failed cryptocurrency firm FTX with orchestrating a scheme to defraud investors.

An SEC complaint filed on Tuesday alleges that Sam Bankman-Fried siphoned off more than $1.8 billion from equity investors since May 2019 by using FTX as a safe, responsible platform for trading crypto assets. is promoting.

The complaint states that Bankman-Fried diverted client funds to his privately held crypto fund, Alameda Research LLC, without informing them. The complaint also states that Bankman-Fried pooled FTX clients’ funds in Alameda for undisclosed venture investments, lavish real estate purchases and large political donations.

“FTX operates behind a veneer of legitimacy,” Mr. Bankman-Fried said, leveraging, among other things, its best-in-class controls, a proprietary ‘risk engine,’ and FTX’s distinctive investor protection principles and wide range of service. including compliance with conditions. “But as we allege in our complaint, that veneer was not just thin, it was deceptive,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement.

was bankman-fried arrested on monday in the bahamas At the request of the US government, US and Bahamian officials said.

SEC Chairman Gary Gensler announced the agency’s charges, saying, “We allege that Sam Bankman-Fried built a house of cards on a foundation of deceit and telling investors it was one of the most secure buildings in crypto. “

Justice Department seeks independent probe into FTX collapse


The arrests were made after the US filed criminal charges, which are expected to conclude on Tuesday, according to US Attorney Damien Williams. Bankman-Fried was under criminal investigation by US and Bahamian authorities following the collapse of FTX last month, which filed for bankruptcy on November 11 after it ran out of money after the cryptocurrency equivalent of a bank run.

The SEC’s charges are separate from the criminal charges that are expected to be unsealed later Tuesday. In parallel actions, the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission have also announced charges against Bankman-Fried.

FTX was previously one of the largest cryptocurrency exchanges in the world fell last month, Users withdrew nearly $5 billion of crypto assets in a single day as concerns grew over the exchange’s solvency. Bankman-Fried resigned on November 11, and FTX filed for Chapter 11 bankruptcy protection.

Prior to her arrest, Bankman-Fried was scheduled to appear before a House panel on Tuesday to answer questions about the collapse of FTX. In testimony prepared for the hearing, the new FTX CEO John J. Ray III said FTX “failed to actually implement any systems or controls that are necessary for a company entrusted with other people’s money or property.”

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