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FTX’s Samuel Bankman-Fried Indicted by U.S. for ‘Planning’ Fraud

charged by the U.S. government Samuel Bankman-FreedFounder and former CEO of cryptocurrency exchange FTX.

Federal prosecutors have said that in early 2019, Bankman-Fried devised “schemes and tactics to defraud” FTX customers and investors. He used their money to cover expenses, debt and risky transactions at his crypto hedge fund, Alameda Research, and diverted it to purchase luxury real estate and make large political contributions.

Bankman-Fried was arrested in the Bahamas on Monday at the request of the US government and charged with eight criminal offenses, ranging from wire fraud to money laundering and conspiracy to commit fraud. His Bankman Fried, one of the year’s biggest political donors, was also indicted for making illegal campaign contributions.

The charges set out in the 13-page indictment could put Bankman-Fried in prison for decades and carry a maximum sentence of 115 years. Nicholas Biasa spokesperson for the U.S. Prosecutor.

Bankman-Fried has quickly fallen from the top of the cryptocurrency industry that he evangelized. FTX filed for bankruptcy on November 11th. At this time, the cryptocurrency ran out of money equivalent to a bank run.

Before bankruptcy, he was hailed by many in Washington and on Wall Street as a digital currency prodigy, working with policy makers to help bring digital currencies into the mainstream by bringing more scrutiny and trust to the industry. was seen as someone who could

He’s worth tens of billions of dollars, at least on paper, with celebrities like Tom Brady and Tony Blair When Bill Clinton to his meeting at a luxury resort in the Bahamas. He was the subject of a media outcast profile and was seen as a prominent proponent of charitable giving known as ‘effective altruism’, garnering millions of followers on Twitter.

But since the FTX bankruptcy, Bankman-Fried and his company have been compared to other disgraceful investors and companies. Bernie Madoff and Enron.

The criminal charges against Bankman-Fried and FTX “others” are in addition to the civil lawsuit announced by the US federal court on Tuesday. Securities and Exchange Commission and the Commodity Futures Trading CommissionThe SEC alleges Bankman-Fried deceived investors and illegally used their funds to purchase properties on behalf of himself and his family.

U.S. officials said Bankman-Fried would seek to recoup any financial gains from the scheme.

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

At Tuesday’s congressional hearings scheduled before Bankman-Fried’s arrest, harsh criticism was directed at the new CEO being brought in to pursue FTX’s bankruptcy proceedings. He said there was poor oversight of customers’ money and that there were “few rules” about how their funds were used.

John Ray III He told members of the House Financial Services Committee that the failure of FTX, which cost him more than $7 billion, was the culmination of months, if not years, of bad decisions and poor financial management.

“This didn’t happen overnight, it didn’t happen in a week,” he said.

“This is just plain old embezzlement, taking money from others and using it for your own ends.”

Bankman-Fried was locked up in an upscale residential area in the Bahamas before his arrest. US authorities plan to demand his extradition to the United States, but it is unclear when that request will be made.

At a court hearing in the Bahamas on Tuesday, prosecutors argued that Bankman-Fried was a flight risk and should be held without bail. His attorney said he would likely request a formal extradition hearing.

Bankman-Fried used to be one of the richest people in the world on paper. According to Forbes, at one point his net worth he reached $26.5 billion.He celebrities in washingtonwhich donated millions of dollars to mostly left-leaning political causes and Democratic political campaigns, but also funded Republicans.FTX has grown to become the second largest cryptocurrency exchange in the world.

It all came out quickly last monthwhen the report is questioned FTX balance sheet strengthAs customers tried to withdraw billions of dollars, FTX was unable to meet their demands. their money is gone.

“Sam Bankman-Fried claims he built a house of cards based on deception while telling investors it was one of the safest buildings in cryptocurrency,” said the SEC chairman. . Gary Gensler.

The SEC complaint alleges Bankman-Fried has raised over $1.8 billion from investors since May 2019 by promoting FTX as a safe and responsible platform for trading crypto assets. .

Instead, according to the complaint, Bankman-Fried diverted client funds to Alameda Research without telling the client.

“He then used the Alameda as his personal piggy bank to purchase luxury condominiums, support political campaigns, and make personal investments,” the complaint reads. “This has not been disclosed to FTX equity investors or trading customers of the platform.”

According to the SEC, Alameda did not separate its FTX investment fund from its investment in Alameda, and used the funds to “indiscriminately fund trading operations” and to other Bankman-Fried ventures. It says.

Bankman-Fried recently said he didn’t misuse customer funds “intentionally” and believed angry customers would eventually get their money back.

At Tuesday’s congressional hearing, the new FTX CEO spoke out at the hearing.

In its complaint, the SEC challenged Bankman-Fried’s recent allegations that FTX and its customers were victims of a sudden market collapse that overwhelmed protective measures that had been put in place.

“FTX was run on the legitimacy front,” he said. Gurbil Grewal, Director of the SEC’s Enforcement Division. “That veneer wasn’t just thin, it was a scam.”

The collapse of FTX, which followed other cryptocurrency debacles earlier this year, adds urgency to efforts to regulate the industry.

Yesha YadavA law professor at Vanderbilt University who specializes in financial and securities regulation says U.S. lawmakers and regulators have reacted too slowly, but says things are likely to change.

“Given so many people are losing money, lawmakers are clearly under pressure to do something,” she said.


Reprinted with permission from The Associated Press.

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