FTX CEO indicted for one of the biggest financial frauds in US history

By Al Mayadeen English
Source: Agencies
14 Dec 2022 09:13

Bankman-Fried has been indicted over 8 counts, including money laundering.

FTX founder Sam Bankman-Fried being escorted out of the Magistrate Court building after his arrest in Nassau, Bahamas, on Tuesday. (Reuters)

FTX founder and former CEO Sam Bankman-Fried has been indicted for his involvement in what prosecutors are saying is one of the biggest financial fraud cases in US history.

Revealed by the Southern District of New York on Tuesday, the indictment charges Bankman-Fried with 8 counts, including conspiracy to commit wire fraud, money laundering, and US campaign financial law violations with "dirty" money to buy bipartisan influence in the US and influence public policy.

"We charge that Bankman-Fried violated federal campaign finance laws by causing tens of millions of dollars in illegal campaign contributions to be made to candidates and committees associated with both Democrats and Republicans," US Attorney for the Southern District of New York Damian Williams said on Tuesday.

The charges indicate a scheme to misappropriate the deposits of FTX customers to pay Bankman-Fried's debts in private research and trading firm Alameda from 2019, until FTX collapsed last month, according to the indictment.

The US Securities and Exchange Commission and the Commodity Futures Trading Commission sued Bankman-Fried separately for his alleged role in FTX's collapse: "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," said Gary Gensler, chief of the SEC.

Bankman-Fried was arrested in the Bahamas on Monday and is facing extradition to the US despite denying any wrongdoing.

FTX, a cryptocurrency derivatives exchange, tanked in November as the result of a liquidity crisis that prompted multiple federal investigations. It is alleged that the liquidity crisis was mostly due to affiliated trading firm Alameda using client funds to cover loans after the collapse of the Luna crypto network.

Last month, Bankman-Fried resigned as the chief executive of FTX, according to the company. Before the company's downfall, he was in charge of the world's second-largest crypto exchange.

The former FTX CEO tried to organize a bailout but failed - this left FTX struggling to raise billions of dollars and many customers unable to retain their money.