On Tuesday, federal authorities revealed more details about Samuel Bankman-Fried’s case against him, the disgraced founder and CEO of cryptocurrency exchange FTX. This was just a day after he had been arrested in the Bahamas.
Officials claim that Bankman-Fried defrauded customers and investors to finance a lavish lifestyle. According to a 13-page indictment, federal prosecutors claim that he defrauded investors to fund extravagant lifestyles, including risky trades, expenses, and debts.
Damian Williams, U.S. attorney for the Southern District of New York stated that all of the dirty money was used to support Bankman-Fried’s desire to buy bipartisan influence in Washington and affect the direction of Washington’s public policy.
Eight criminal charges have been filed against him, including wire fraud, money laundering and conspiracy to commit fraud. Williams described the case as “one of America’s biggest frauds”.
Bahamian authorities arrested Bankman-Fried at the request the U.S government. This happened just a day before he was due to testify before Congress’ House Financial Services Committee along with John Ray III, FTX’s current CEO.
FTX filed for bankruptcy in November 11th after running out of cash following a cryptocurrency bank run. Because of growing doubts regarding the financial strength and Alameda Research, customers tried to withdraw all their assets at once.
In addition to the criminal charges against Bankman-Fried and other FTX employees, the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission announced civil charges Tuesday. According to the SEC, Bankman-Fried is accused of defrauding investors and using their money illegally to purchase real estate for himself and his family.
Authorities said he executed “deliberate” transactions to conceal his fraud.
Bankman-Fried was once one of the most wealthy people in the world. Forbes reports that his net worth at one time reached $26.5 billion. He was a well-known Washington personality who donated millions to Democratic causes, but also money to Republicans.
FTX grew to be the second-largest cryptocurrency trading platform in the world. According to the SEC complaint, Bankman-Fried has raised more than $1.8 Billion from investors by promoting FTX and promoting it as a safe and responsible platform for trading cryptocurrency assets.
“Bankman-Fried’s whole house of cards began to crumble when crypto asset prices plummeted May 2022, and Alameda’s lenders demanded repayments for billions of dollars of loans,” Gurbir Grewal director of the SEC Division of Enforcement.
Ray, the new CEO of FTX, rebutted that statement at Tuesday’s congressional hearing. “We will never receive all these assets back.”
The SEC filed a complaint challenging Bankman-Fried’s claim that FTX, and its customers, were victims of a sudden collapse in the market that overtook all existing safeguards.
Grewal stated that FTX had a veneer of legitimacy. “That veneer was not only thin, but it was fraudulent.”
Bankman-Friend could spend decades in prison.
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