FTX founder accused of defrauding crypto investors Metro Philadelphia

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By KEN SWEET and FATIMA HUSSEIN AP Business Writer

The US government on Tuesday charged Samuel Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes, alleging he intentionally deceived customers and investors to enrich himself. and enrich others, while playing a central role in the company’s multi-billion dollar. -collapse of the dollar.

Federal prosecutors said Bankman-Fried devised “a scheme and artifice to defraud” FTX clients and investors beginning in 2019, the year it was founded. He illegally embezzled their money to cover expenses, debts and risky trades within the crypto hedge fund he started in 2017, Alameda Research, and to make lavish real estate purchases and large political donations, said prosecutors in a 13-page indictment.

Bankman-Fried, 30, was arrested in the Bahamas on Monday at the request of the US government, and remains in custody after being denied bail.

He was charged with eight criminal offences, ranging from wire fraud to money laundering to conspiracy to commit fraud. If found guilty on all charges, Bankman-Fried, who crypto enthusiasts call “SBF,” could face decades in prison.

At a news conference on Tuesday, U.S. Attorney Damian Williams in New York called it “one of the biggest frauds in American history,” and said the investigation was continuing and moving quickly.

Bankman-Fried fell from the top of the cryptocurrency industry which he helped evangelize. FTX filed for bankruptcy on November 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

Prior to the bankruptcy, he was seen by many in Washington and on Wall Street as a digital currency whiz, someone who could help bring them to the mainstream, in part by working with policymakers to bring more oversight and trust to the world. ‘industry.

Bankman-Fried was worth tens of billions of dollars – at least on paper – and was able to lure celebrities like Tom Brady or former politicians like Tony Blair and Bill Clinton to his lectures at luxury hotels in the Bahamas. A major Silicon Valley company, Sequoia Capital, has invested hundreds of millions of dollars in FTX.

Wearing athletic shorts and t-shirts to contrast with the buttoned-up world of Wall Street, he was the subject of flattering media profiles, a vocal advocate of a type of charitable giving known as “effective altruism and garnered millions of Twitter followers. .

But since the FTX implosion, Bankman-Fried and company have been compared to other disgraced financiers and corporations, such as Bernie Madoff and Enron.

The indictment against Bankman-Fried and “others” at FTX is in addition to civil charges announced Tuesday by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC alleges that Bankman-Fried defrauded FTX clients by making loans to himself and other FTX executives, and illegally using investors’ money to buy real estate for himself and his company. family.

No other FTX executives were named in the indictment, nor was Alameda Research CEO Caroline Ellison. Also not named in the indictment: Bankman-Fried’s father, Joseph Bankman, a Stanford University law professor who was considered an adviser to his son.

US authorities have said they will try to recoup all of Bankman-Fried’s financial gains from the alleged scheme.

A Bankman-Fried attorney, Mark S. Cohen, said Tuesday that he was “reviewing the charges with his legal team and considering all of his legal options.”

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