FTX founder Sam Bankman-Fried charged with fraud, released on bail

FTX founder Sam Bankman-Fried charged with fraud, released on bail
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NASSAU, Bahamas/NEW YORK, Dec 13 (Reuters) – US prosecutors on Tuesday charged Sam Bankman-Fried, founder of cryptocurrency exchange FTX, with violating fraud and campaign finance laws, and a Bahamas judge denied his bail release. he sent it. to a local reformatory instead.

The former CEO of FTX, who was arrested in the Bahamas on Monday, bowed his head and hugged his family after the magistrate refused bail, citing a “huge” risk of escape.

It was decided that he would be held in a reformatory on the island nation until February 2. According to a local official, he will first be held in the medical department on January 8.

The events of the day preempted the dramatic fall from disgrace in recent weeks for the 30-year-old who amassed a fortune worth over $20 billion while experiencing a cryptocurrency boom to make FTX one of the world’s largest exchanges before suddenly crashing this year. .

Bankman-Fried previously apologized to customers and admitted surveillance errors at FTX, but said he personally felt he had no criminal liability.

Earlier Tuesday, US Attorney General Damian Williams in New York said Bankman-Fried made illegal campaign contributions to Democrats and Republicans with “stolen customer money” and said it was part of one of the “largest financial scams in American history.”

“While this is our first public announcement, it won’t be the last,” he said, adding that Bankman-Fried has “contributed tens of millions of dollars to the campaign.”

Bankman-Fried would face a maximum sentence of 115 years in prison if convicted of all eight crimes, although prosecutors say any sentence will depend on a number of factors.

Williams declined to say whether prosecutors will bring charges against other FTX executives and whether any FTX employees cooperated in the investigation.

Bankman-Fried has appeared publicly for the first time since the cryptocurrency exchange crash and appeared in court on Tuesday in the Bahamas, where FTX is located and was arrested at its gated community in the capital, Nassau.

He looked relieved when he reached the tightly guarded area. Bahamas court and told the court that he could fight to be extradited to the United States.

Bahamian prosecutors have requested that Bankman-Fried be released on bail if he objects to extradition.

“Mr. Bankman-Fried, with his legal team, is investigating the charges and considering all of his legal options,” he said.


John Ray, the current CEO of FTX, told congressmen on Tuesday that FTX lost 8 billion dollars The client’s money said the company showed “absolute concentration of control in the hands of a small group of largely inexperienced, uninformed individuals.”

In the indictment released Tuesday morning, US prosecutors said Bankman-Fried hatched a plan to defraud FTX’s clients by embezzling deposits and investing on behalf of his own crypto hedge fund Alameda Research LLC to pay off spending and debt.

Prosecutors also said that the hedge fund defrauded Alameda’s lenders by providing false and misleading information about its status, and tried to hide money it had earned from wire fraud.

both the USA Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) alleged that Bankman-Fried committed fraud in lawsuits filed Tuesday.

On Tuesday, the CFTC sued Bankman-Fried, Alameda, and FTX for alleged fraud involving digital commodity assets.

According to the SEC’s claim, FTX has held 1.8 percent of equity investors since at least May 2019, in a years-long “arrogant, multi-year program” in which Bankman-Fried concealed that FTX was diverting client funds to Alameda Research. Raised over a billion dollars.


Bankman-Fried, who founded FTX in 2019, was an unconventional figure wearing messy hair, T-shirts and shorts in panel appearances with statesmen like former US President Bill Clinton. It has contributed $5.2 million to President Joe Biden’s 2020 campaign, making it one of the largest Democratic donors. Forbes put his net worth at $26.5 billion a year ago.

FTX filed for bankruptcy on November 1. 11, facing an estimated 1 million customers and other investors billions of losses dollar. Collapse resonated in the crypto world and caused bitcoin and other digital assets to plummet.

The collapse was one of a series of bankruptcies in the United States. crypto industry This year, as the digital asset markets fell from their 2021 highs. A crypto exchange is a platform where investors can buy and sell digital tokens such as bitcoin.

As legal challenges mount, the U.S. Congress is trying to pass legislation to rein in a loosely regulated industry.

FTX shared its findings with the SEC and US prosecutors and is investigating whether Bankman-Fried’s family was involved in the operation.

The Bahamas Attorney General said it awaits the extradition of Bankman-Fried to the United States.

Bankman-Fried stepped down as CEO of FTX on the day of filing for bankruptcy. FTX’s liquidity crisis followed secretly used $10 billion in client funds To support the proprietary trading company Alameda, Reuters reported. At least $1 billion in client funds were gone.

Additional reporting by Luc Cohen and Jack Queen in New York and Writing by Hannah Lang, Chris Prentice and Susan Heavey, Nick Zieminski and Deepa Babington in Washington, Editing by Noeleen Walder, Megan Davies, Anna Driver and Matthew Lewis

Our standards: Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

Reports on the federal courts of New York. He previously worked as a reporter in Venezuela and Argentina.

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