Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

FTX founder Sam Bankman-Fried charged with defrauding investors

SEC says investigation into other alleged misconduct by former CEO of cryptocurrency exchange is ongoing
Sam Bankman-Fried, the founder and former chief executive of the cryptocurrency exchange FTX, has been charged with fraud, conspiracy to commit money laundering and conspiracy to defraud the US and violate campaign finance laws.

The eight criminal charges filed by the US attorney’s office for the southern district of New York on Tuesday follow civil charges brought by the US Securities and Exchange Commission (SEC) accusing the 30-year-old former billionaire of defrauding investors by building a company that was a “house of cards”.

“This is one of the biggest financial frauds in American history,” said Damian Williams, US attorney for the southern district of New York. He said that while only Bankman-Fried had been charged so far, “we are not done”.

On Monday, police in the Bahamas arrested Bankman-Fried after receiving formal notification from the US of criminal charges against him. Bankman-Fried was denied bail Tuesday by a judge in the Bahamas, after a prosecutor said he was a flight risk, the New York Times reported.

Among other charges, Bankman-Fried is accused of using FTX customers’ deposits to pay debts and expenses to Alameda Research, his hedge fund. The indictment also alleges that Bankman-Fried and others conspired to violate federal rules on political donations.

Bankman-Fried was one of the Democrats’ largest donors, but he has said he also gave to Republicans, hiding the donations as “dark money”. Other FTX entities gave cash to both parties as they lobbied politicians for favourable cryptocurrency regulation.

Bankman-Fried’s fortune was valued at $26bn (£21bn) before his company’s collapse. He and FTX were generous donors to media groups, charities and politicians, giving at least $95,000 to politicians now investigating FTX, according to a Wall Street Journal analysis.

Politicians expressed dismay and anger at the scale of the mess at a hearing of the House financial services committee on Tuesday. FTX’s new chief executive, John Ray III, said he had “never seen such an utter lack of record keeping” at a company.

There were “absolutely no internal controls whatsoever”, said Ray, who has 40 years of experience overseeing some of the world’s biggest bankruptcies, including the collapse of the energy firm Enron. Asked to compare the cases, Ray said Enron’s criminals were “highly sophisticated” whereas FTX executives had engaged in “old-fashioned embezzlement”.


The Democratic representative Brad Sherman told the hearing: “My fear is that people will look at Sam Bankman-Fried as one snake in a garden of Eden. But the fact is, crypto is a garden of snakes.”

Bankman-Fried had been scheduled to appear before the committee but was unable to do so because of his arrest. In his testimony, Bankman-Fried planned to open by telling Congress: “I fucked up.”
The Democratic representative Emanuel Cleaver called the testimony “absolutely insulting. I mean, there’s not a person up here would like to show this to their children.”

The SEC charged Bankman-Fried with “orchestrating a scheme to defraud equity investors in FTX”. It said: “Investigations as to other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.”

The SEC said Bankman-Fried concealed his diversion of FTX customers’ funds to Alameda Research while raising more than $1.8bn from investors, including about $1.1bn from about 90 US-based investors.

“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,” the SEC chair, Gary Gensler, said on Tuesday. “The alleged fraud committed by Mr Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws.”

The SEC further alleges that Bankman-Fried used FTX customer funds, commingled with Alameda’s own capital, “to make undisclosed venture investments, lavish real estate purchases, and large political donations”.

Unusually, Bankman-Fried has been discussing the collapse of FTX publicly even while investigations are ongoing. In a conversation with Bloomberg’s Zeke Faux in late November, he listed $6.5bn of losses from FTX and Alameda, resulting in the insolvency of both companies, including “$250m for real estate, $1.5bn for expenses, $4bn for venture capital investments, $1.5bn for acquisitions and $1bn labelled ‘fuck-ups’”.

This month he told a conference in New York: “Look, I screwed up.” But he maintained he “didn’t ever try to commit fraud” and said he was “shocked” by the collapse of his businesses.

Mark Cohen, a lawyer for Bankman-Fried, said in a statement that his client “is reviewing the charges with his legal team and considering all of his legal options”.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
×