Tag Archive for: ftx collapse

Federal Prosecutors Indict Sam Bankman-Fried On Eight Counts Of Fraud

Federal prosecutors in the U.S. attorney’s office for the Southern District of New York indicted disgraced former crypto billionaire Sam Bankman-Fried on eight counts of fraud Tuesday, according to a copy of the unsealed indictment.

The charges brought against Bankman-Fried include conspiracy to commit wire fraud on customers, wire fraud on lenders, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering, according to the indictment. Bankman-Fried was also charged with violating campaign finance laws by conspiring to make illegal contributions to political candidates and joint fundraising committees, among others, the indictment shows.

From at least 2019 through approximately Nov. 2022, Bankman-Fried “agreed with others to defraud customers of FTX.com by misappropriating those customers’ deposits and using those deposits to pay expenses and debts of Alameda Research, Bankman-Fried’s proprietary crypto hedge fund, and to make investments,” according to the indictment.

The indictment echoes a Nov. 2 report by crypto site CoinDesk alleging FTX and Alameda Research misused customer funds, which began the collapse of FTX and Bankman-Fried’s crypto fortune. FTX was Bankman-Fried’s cryptocurrency exchange, and Alameda Research was his crypto trading firm.

Likewise, the Securities and Exchange Commission (SEC) accused Bankman-Fried of a scheme to defraud billions from FTX investors beginning in May 2019.

According to the SEC lawsuit, “Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire.”

The Commodity Futures Trading Commission (CFTC) brought similar charges against Bankman-Fried, alleging he violated the Commodity Exchange Act and misused customer funds, CNBC reported.

Bankman-Fried and other FTX executives also took hundreds of millions of dollars in poorly-documented ‘loans’ from Alameda that they used to purchase luxury real estate and property, make political donations, and for other unauthorized uses,” the CFTC alleged in its filing. 

FTX filed for bankruptcy Nov.11 after appointing bankruptcy executive John J. Ray III as CEO following Bankman-Fried’s resignation from the company. Ray is testifying in front of the House Financial Services Committee about the collapse of FTX.

Bankman-Fried was arrested Monday in the Bahamas after prosecutors filed criminal charges against him, according to The New York Times (NYT). It is unclear when he will be extradited to the U.S., a process that can take weeks or longer, the NYT reported.

Bankman-Fried’s lawyer Mark Cohen told The Wall Street Journal the former “is reviewing the charges with his legal team and considering all of his legal options.”

His net worth peaked at $26.5 billion and was estimated to be $17.2 billion in September. Bankman-Fried told Axios on Nov.29 he had $100,000 remaining in his bank account when he last looked.

This is a developing story and will be updated as further details emerge. 




RELATED ARTICLE: ‘House Of Cards’: SEC Lawsuit Alleges Bankman-Fried’s Multibillion-Dollar Fraud On FTX Began ‘From The Start’

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