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Bankman-Fried Arrested, Charged With Cryptocurrency Fraud

The U.S. Securities and Exchange Commission charged Sam Bankman-Fried, the former CEO of failed cryptocurrency firm FTX, with orchestrating a scheme to defraud investors. An SEC complaint filed Tuesday alleges that Bankman-Fried raised more than $1.8 billion from investors since May 2019 by promoting FTX as a safe, responsible platform for trading crypto assets. The civil complaint says Bankman-Fried diverted customer funds to Alameda Research LLC, his privately-held crypto fund, without telling them. The complaint also says Bankman-Fried commingled FTX customers’ funds to make undisclosed venture investments, lavish real estate purchases, and large political donation, the Associated Press reports. Bankman-Fried was arrested in the Bahamas ahead of criminal charges unsealed Tuesday. He was charged with eight counts, including wire fraud on customers and lenders and conspiracy, including conspiring to defraud the U.S. and violate campaign finance laws.

Bankman-Fried was one of the world’s wealthiest people on paper; his net worth reached $26.5 billion, according to Forbes. He was a prominent personality in Washington, D.C., donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns, though he also gave money to Republicans. FTX grew to become the second-largest cryptocurrency exchange in the world. That unraveled last month, when reports called into question the strength of FTX’s balance sheet. Customers moved to withdraw billions of dollars, but FTX could not meet all the requests because it apparently had used its customers’ deposits to fund investments at Bankman-Fried’s trading arm, Alameda Research.


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A daily report co-sponsored by Arizona State University, Criminal Justice Journalists, and the National Criminal Justice Association

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