This Tuesday prosecutors in the Southern District of New York filed criminal charges against Samuel Bankman-Fried, founder and former CEO of the cryptocurrency exchange platform FTX.
At the moment, what is known is that Bankman-Fried will face eight charges: conspiracy to commit wire fraud on customers, wire fraud on customers, conspiracy to commit wire fraud on lenders, wire fraud on lenders, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering and conspiracy to defraud the United States and violate the campaign finance laws.
United States Attorney announces charges against FTX founder Samuel Bankman-Friedhttps://t.co/gBSA4mBmzD
— US Attorney SDNY (@SDNYnews) December 13, 2022
However, U.S. Attorney Damian Williams announced that the investigation is still ongoing and that, although this is the first public announcement, "it will not be our last."
Prosecutors allege that the former billionaire created a scheme to defraud FTX users by misusing customer deposits to pay expenses and debts of Alameda Research, a proprietary crypto-based hedge fund.
Bankman-Fried also allegedly defrauded Alameda Research's lenders by giving them false information about the hedge fund's financial condition.
The indictment points to alleged campaign finance violations by candidates and political committees due to donating in excess of federal limits, disguising the contributions to make them appear to have come from "wealthy co-conspirators."
"The rippling consequences of defendant’s fraud are vast and have done significant damage to the integrity of the evolving digital asset market," Williams said.
More allegations against Bankman Fried
Shortly before the Southern District of New York indictments, the U.S. Securities and Exchange Commission (SEC) also charged the former billionaire with violating federal securities law by diverting client funds to finance personal affairs.
According to an SEC press release, Bankman Fried would have raised more than $1.8 billion from investors since 2019, when he founded FTX.
Today we charged FTX Trading Ltd CEO and co-founder Samuel Bankman-Fried with orchestrating a scheme to defraud equity investors. Investigations as to other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
— U.S. Securities and Exchange Commission (@SECGov) December 13, 2022
"We 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," said Gary Gensler, chairman of the SEC.
It should be recalled that these accusations against the founder of the cryptocurrency company were published just hours after Bahamian authorities arrested Bankman-Fried and announced that they are awaiting a formal request for extradition.