Updated, 08:25 . The Securities and Exchange Commission said today that FTX founder and former CEO Sam Bankman-Fried "built a house of cards" by charging him with eight counts of fraud and money laundering for defrauding nearly 90 US investors. Over $1.1 billion in its cryptocurrency platform.
The 30-year-old former stuntman, whose wild story is a hot commodity in Hollywood, was arrested in the Bahamas on Monday. He faces a maximum of 115 years in federal prison if convicted of all charges.
Read the details of the case below and watch the prosecutor's press conference about the indictment at the bottom of the post.
"We allege that Sam Bankman-Fried built a fraudulent house of cards while telling investors it was one of the most secure buildings in the crypto space," SEC Chairman Gary Gensler said in announcing the charges. Bankman-Fried's alleged scam is a clarion call for crypto platforms to comply with our laws.
Bankman-Fried's story is the subject of a movie and TV series from Apple and Amazon, respectively. Late last month, Apple was close to a deal to acquire the film rights to Michael Lewis' upcoming book on the subject, with sources putting the deal at seven figures. Lewis, who wrote the screenplays for "Moneyball, " "The Big Score" and "The Blind Side," spent six months with the struggling businessman before the Bankman-Fried fight.
Meanwhile, the Russo brothers and David Weil created an eight-episode series about FTX and its founder Amazon. Program details: to be announced.
According to the SEC complaint, as of at least May 2019, Bahamas-based FTX has raised more than $1.8 billion from equity investors, including about $1.1 billion from about 90 U.S. investors. In its investor statements, Bankman-Fried promoted FTX as a safe and responsible platform for trading crypto-assets, specifically promoting FTX's sophisticated automated risk measures to protect client assets.
Eight criminal articles:
- Conspiracy to defraud customers.
- customer fraud;
- Conspiracy to defraud creditors.
- Credit fraud
- conspiracy to defraud goods;
- conspiracy to commit securities fraud;
- Conspiracy to launder money. And:
- Conspiracy to defraud the United States and violate campaign finance laws
SEC said:
The complaint alleges that Bankman-Fried actually orchestrated a multi-year fraud to conceal from FTX investors (1) the undisclosed transfer of FTX client funds to Alameda Research LLC, his hedge fund; (2) an undisclosed special deal granted to Alameda on the FTX platform, including granting Alameda a virtually unlimited "line of credit" funded by customers of the platform and to divest Alameda of certain key FTX- waive risk mitigation measures; and (iii) undisclosed risks arising from FTX's exposure to Alameda's large holdings of illiquid and overvalued assets, such as the FTX-linked notes. The complaint also alleges that Bankman-Fried used funds collected from FTX clients in Alameda to make undisclosed capital investments, make lavish real estate purchases and make large political donations.”
Separately, the US Attorney's Office for the Southern District of New York and the CFTC also announced charges against Bankman-Fried today.
Gensler added: "Compliance protects both those who invest and those who invest in cryptocurrency platforms with proven safeguards, such as the proper protection of client funds and the separation of conflicting lines of business. It also sheds light on trading platform behavior for investors through disclosure and for regulators through oversight The SEC's Division of Enforcement is ready to take action against platforms that do not comply with our securities laws.”
Gurbir Grewal, director of enforcement at the SEC, said: "FTX operates under a veneer of legitimacy created by, among other things, the disclosure of best-in-class controls, including its 'risk system' and FTX's adherence to certain principles . of security, investors and detailed terms and services. But as we alleged in our complaint, that veneer was not only thin, but deceptive.” FTX's downfall highlights the very real dangers that unregistered crypto-asset trading platforms can pose to investors and clients.
The SEC added that its investigations into other securities law violations and other entities and individuals related to the alleged violations are ongoing.
Earlier : December 12: Crypto-Crow Sam Bankman-Fried was arrested today in the Bahamas, the Department of Justice said. The Caribbean nation's attorney general said the fire comes after US prosecutors formally charged the founder and former CEO of FTX, whose wild story is a hot commodity in Hollywood, with bankruptcy.
Officials in the country have not released details of the charges, but Bankman Fried is expected to be extradited to the United States.
"As a result of the notice received and the material provided therein, it was appropriate for the Attorney General to seek the arrest and detention of SBF in accordance with our nation's extradition laws," said Ryan Bender, the Bahamas- attorney general, said today. . Read the full statement below.
FTX, valued at $32 billion by private investors earlier this year, collapsed last month after rival Binance pulled out of a proposed merger between the crypto giants. The news sent cryptocurrency markets into a tailspin, and Bankman-Fried said afterward that his company was facing an $8 billion funding shortfall due to a sudden "run" in the stock market. Within three days, traders had withdrawn about $6 billion from the site and owed creditors at least $3 billion.
FTX, which has raised nearly $2 billion from investors in three years, filed for bankruptcy on Nov. 11. John J. Ray III, who took over FTX after the launch, is scheduled to testify before the House Financial Services Committee on Tuesday.
A number of companies and celebrities are said to have major investments in the company, while FTX also has major sponsorship deals with the Miami Heat basketball team and the Mercedes-AMG Petronas F1 Formula 1 team. in between November which among others The defendants are Larry David and sports stars Tom Brady and Steve Curry.
Bankman-Fried's story is the subject of a movie and TV series from Apple and Amazon, respectively. Late last month, Apple was close to a deal to acquire the film rights to Michael Lewis' upcoming book on the subject, with sources putting the deal at seven figures. Lewis, who wrote the screenplays for "Moneyball, " "The Big Score" and "The Blind Side," spent six months with the struggling businessman before the Bankman-Fried fight.
Meanwhile, the Russo brothers and David Weil created an eight-episode series about FTX and its founder Amazon. Program details: to be announced.
Here is Pinder's full statement about Bankman-Fried's arrest.
On December 12, the Attorney General of the Bahamas announced the arrest by the Royal Bahamas Police Force of Sam Bankman Fried ("SBF"), former Executive Director of SBF, FTX, following receipt of official notice from the United States. He has filed a criminal case against the SS and is likely to request his extradition.
As a result of the notice received and the material provided therein, it was appropriate for the District Attorney's Office to arrest and detain SBF pursuant to our nation's extradition laws.
Upon receipt of a formal extradition request, the Bahamas intends to process it expeditiously in accordance with Bahamian law and treaty obligations with the United States.
In response to SBF's arrest, Prime Minister [Philip] Davis said: "The Bahamas and the United States are interested in bringing to justice all individuals associated with FTX who may have betrayed the public and broken the law. While the United States is separately pursuing criminal charges against SBF, The Bahamas will continue to launch its own regulatory and criminal investigation into the FTX collapse in cooperation with law enforcement and regulatory partners in the United States and elsewhere.