FTX’s Bankman-Fried charged with fraud

Bankman-Fried was arrested Monday by Bahamian authorities at the request of the US government, which charged him with eight criminal violations, ranging from wire fraud to money laundering to conspiracy to commit fraud.
Sam Bankman-Fried
Sam Bankman-Fried

NEW YORK: US prosecutors charged Sam Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes and campaign finance violations on Tuesday, alleging he played a central role in the rapid collapse of FTX and hid its problems from the public and investors.

The indictment says, beginning in 2019, Bankman-Fried intentionally devised a scheme and artifice to defraud FTX’s customers and investors, diverting their money to pay expenses and debts at his crypto hedge fund, Alameda Research, and to make lavish real estate purchases and large political donations.

Bankman-Fried was arrested Monday by Bahamian authorities at the request of the US government, which charged him with eight criminal violations, ranging from wire fraud to money laundering to conspiracy to commit fraud. He was also charged with making illegal campaign contributions, a notable charge as Bankman-Fried was one of the largest political donors this year.

The indictment is on top of civil charges announced earlier Tuesday by the Securities and Exchange Commission.

It also alleged that Bankman-Fried defrauded investors and illegally used their money to buy real estate on behalf of himself and family.

The maximum potential prison exposure from these charges is 115 years, according to Nicholas Biase, a spokesperson for US prosecutors.

US authorities will also seek to have Bankman-Fried forfeit all financial gains he might have received as part of the scheme. They are expected to request his extradition to the US, although the timing of that request is unclear.

A lawyer for Bankman-Fried, Mark S Cohen, said on Tuesday he is reviewing the charges with his legal team and considering all of his legal options.

FTX filed for bankruptcy on Nov. 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

Since FTX collapsed, Bankman-Fried has been holed up in his Bahamian luxury compound in Nassau.

He has a right to contest his extradition, which could delay but probably not stop his transfer to the US.

Bankman-Fried was one of the world’s wealthiest people on paper; at one point his net worth reached $26.5 billion, as per a report.

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