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Sam Bankman-Fried, the previous chief government officer of bankrupt crypto alternate FTX, has been charged with defrauding traders by the U.S. Securities and Change Fee.
“We allege that Sam Bankman-Fried constructed a home of playing cards on a basis of deception whereas telling traders that it was one of many most secure buildings in crypto,” Gary Gensler, chairman of the SEC, mentioned in an announcement.
The costs have been introduced solely a day after Bankman-Fried was arrested within the Bahamas and is prone to face extradition to the USA.
The criticism alleges that Bankman-Fried ran a years-long fraud to hide undisclosed diversion of FTX clients’ funds to Alameda Analysis LLC—a hedge fund operated by the FTX Group.
Alameda additionally obtained entry to limitless credit score, which was funded by FTX clients, and was exempted from threat mitigation guidelines on the alternate, in keeping with the criticism.
Bankman-Fried additionally directed Alameda to borrow billions of {dollars} from crypto asset lending corporations for his private use and his enterprise investments, in keeping with the criticism.
“FTX’s collapse highlights the very actual dangers that unregistered crypto asset buying and selling platforms can pose for traders and clients alike,” Gurbir S. Grewal, director of the SEC’s enforcement division, mentioned within the assertion.
The criticism additionally alleges that buyer funds have been diverted to Alameda in order that they could possibly be additional used for VC investments, actual property purchases, and political donations.
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