Sam Bankman-Fried, the former CEO of FTX, was detained today after the US Justice Department filed numerous allegations against him. As expected, SBF has now been charged by the nation’s Securities and Exchange Commission (SEC).
The SEC stated today that they were pleased with SBF’s arrest by the Royal Bahamas Police Force. With this, the watchdog warned that it would bring accusations against the FTX founder.
According to a statement by the SEC, SBF is accused of “orchestrating a conspiracy to mislead equity investors in FTX.”
The SEC stated in the announcement that SBF committed “years-long fraud.” To give the impression that his exchange was “advanced,” all of this was done. Furthermore, according to FTX, “automatic risk procedures to protect customer assets” exist.
According to the SEC, the FTX founder allegedly tried to hide various things from the exchange’s investors. This included the covert transfer of money from FTX customers to Alameda Research LLC. The secretive special treatment accorded to Alameda on the FTX platform came next. The list also included unknown risks related to FTX’s exposure to Alameda’s ownership of “overvalued, illiquid assets.”
Here Are The Allegations Against SBF By The SEC.
According to the SEC’s complaint, SBF was charged with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. A civil penalty, an officer and director bar, disgorgement of SBF’s earnings, and injunctions against further violations of the securities laws are demanded in the SEC lawsuit. Additionally, a prohibition on his taking part in the issuance, purchase, offer, or sale of securities for any purpose other than his account.
Gary Gensler, the SEC Chair, elaborated on the same by saying:
“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto. The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws.”
Billions invested
The SEC reported that since 2019, FTX, domiciled in the Bahamas, had raised more than $1.8 billion from equity investors, including roughly $1.1 billion from about 90 investors in the US.
While promoting FTX as a “secure, responsible crypto asset trading platform,” it is alleged that Mr. Bankman-Fried orchestrated a years-long deception to hide from FTX’s investors the diverting of FTX customers’ monies to Alameda Research LLC, his privately held crypto hedge fund.
The SEC claims that SBF disguised Alameda’s significant holdings of overpriced FTX-affiliated coins, which exposed FTX to exposure.
Additionally, Mr. Bankman-Fried is charged with “co-mingling” FTX clients’ money at Alameda to pay “undisclosed business investments, extravagant real estate acquisitions, and significant political donations.”
Mr. Bankman-Fried appeared to be very confident as he assured me he would not be detained and was free of any criminal activity during what turned out to be one of his final interviews before being arrested.
The 30-year-old wore his signature shorts and a worn-out T-shirt and appeared remarkably composed.
