This allegedly happened in August of 2019, just about four months after operations at FTX began. In reality, the SEC alleges, Bankman-Fried internally directed software code to be written in a way that allowed Alameda, to function with a negative balance in its the customer account at FTX. The SEC alleges that Bankman-Fried duped those investors who backed FTX by promoting it as a “safe, responsible” crypto trading firm that used “sophisticated, automated” risk measures to protect customer funds. Star athletes and celebrities who backed FTX also reportedly received a stake in the company, including Tom Brady and Gisele. The 14-page indictment also alleges that Bankman-Fried conspired with others to violate federal election laws by making political donations to candidates and fundraising committees between 2020 and November 2022, in excess of federal legal limits and in the names of other people.įTX achieved a $32 billion valuation by raising more than $1.8 billion since launching in May 2019, including from sophisticated investors such as BlackRock, Sequoia Capital and the Ontario Teachers’ Pension Plan. Bankman-Fried also allegedly defrauded lenders to Alameda by providing them misleading information about the hedge fund’s financial condition. Prosecutors allege Bankman-Fried conspired with others on numerous schemes, including misusing customer deposits held in FTX that were used to cover the expenses of Alameda. Prosecutors from the Southern District of New York unsealed an indictment Tuesday, charging Bankman-Fried with wire fraud and multiple counts of conspiracy, including conspiracy counts to defraud investors, lenders, and the United States, commit commodities and securities fraud and money laundering, and violate campaign finance laws. Cohen, Bankman-Fried’s lawyer, said in a statement.īankman-Fried, was arrested without incident at his apartment complex shortly after 6 pm ET Monday in Nassau, and is set to appear in court Tuesday, the Royal Bahamas Police Force said in a statement. Bankman-Fried is reviewing the charges with his legal team and considering all of his legal options,” said Mark S. The SEC said there are ongoing investigations into “other securities law violations” and into other entities and individuals. Regulators signaled this may be just the first of multiple charges to come. The Commodity Futures Trading Commission also charged Bankman-Fried in a parallel action with the SEC. “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,” SEC Chair Gary Gensler said in a statement. The Securities and Exchange Commission said Bankman-Fried, “orchestrated a years-long fraud” to conceal from FTX investors the diversion of customer funds to Alameda Research, his crypto-trading hedge fund. Separately Tuesday, US markets regulators charged Bankman-Fried with defrauding investors and customers in his failed crypto exchange FTX. But Chief Magistrate of the Commonwealth of The Bahamas Joyann Ferguson-Pratt has denied Bankman-Fried bail. He did not waive his right to an extradition hearing, according to a US official. He could face up to 115 years in prison if convicted on all eight counts, according to congressional statutory maximum sentencing guidelines. The 30-year-old Bankman-Fried was arrested at his home in the Bahamas on Monday and appeared in court in Nassau Tuesday. FTX founder Sam Bankman-Fried was indicted on eight criminal charges including wire fraud and conspiracy by misusing customer funds, according to an indictment from the US Attorney of the Southern District of New York.
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