On Tuesday, a day after federal authorities arrested him in the Bahamas, FTX released more details in the case against disgraced cryptocurrency exchange founder Samuel Bankman-Fried.
Bankman-Fried is accused of defrauding clients and investors to finance a lavish lifestyle, authorities said. Beginning in 2019, he diverted his money to cover expenses, debts and risky trades, federal prosecutors said. crypto hedge fundAlameda Research, in addition to making lavish purchases and illegal campaign contributions without informing its clients, according to the 13-page indictment.
“All of this dirty money was used to serve Bankman-Fried’s desire to buy bipartisan influence and influence the direction of public policy in Washington,” Damian Williams, U.S. Attorney for the Southern District of New York, said at a news conference.
He is charged with eight felony counts ranging from fraud to money laundering. Williams called the case “one of the biggest frauds in American history.”
At the request of the US government, Bankman-Fried was arrested by Bahamian authorities a day before she was to testify before the House Financial Services Committee along with current FTX CEO John Ray III.
FTX filed for bankruptcy on November 11, when the firm ran out of money after the bank’s cryptocurrency equivalent. Clients tried to withdraw their assets at once as doubts grew about the financial strength of the company and Alameda Research.
The criminal charges against Bankman-Fried and “others” at FTX come on top of civil charges announced Tuesday by the US Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC alleges that Bankman-Fried defrauded investors and illegally used their money to buy real estate on behalf of himself and his family.
He carried out “deliberate” transactions to cover up his fraud, authorities said.
Bankman-Fried was previously one of the richest people in the world on paper; According to Forbes, at one time his wealth reached 26.5 billion dollars. He is a prominent Washington figure who has donated millions of dollars to mostly left-leaning political causes and Democratic political campaigns, although he has also given money to Republicans.
FTX has become the second largest cryptocurrency exchange in the world. The SEC complaint 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.
“Bankman-Fried’s entire house of cards began to crumble in May 2022 as crypto-asset prices plummeted and Alameda creditors demanded payments on billions of dollars in loans,” said Gurbir Grewal, the SEC’s director of enforcement.
In a congressional hearing on Tuesday, FTX’s new CEO Ray argued bluntly in the hearing: “We will never get these assets back.”
In its complaint, the SEC disputed Bankman-Fried’s claims that FTX and its clients were victims of a recent market crash that overrode existing safeguards.
“FTX operated under the guise of legality,” Grewal said. “That veneer wasn’t just thin, it was a fraud.”
Bankman-Dost faces ten years in prison.
The Associated Press contributed to this report.