SEC formally accuses ex-FTX CEO of fraud

Photo: CNBC

Representatives of the US Securities and Exchange Commission filed a fraud charge against former FTX CEO Sam Bankman-Fried. The SEC is right to say that the former head of the American cryptocurrency exchange deceived FTX investors and used client funds to fill his needs.

Yesterday, at the time of the arrest, it was known that the SBF would receive charges, but these data were classified at the official level. The SEC today issued an official statement and indicted Sam Bankman-Fried. The press release appeared on the official website of the US Securities and Exchange Commission .

The lawsuit states that since May 2019, FTX has been able to raise a whopping amount of investments in excess of $1,800,000,000, $1,100,000,000 of which came from US crypto investors.

The American exchange was promoted by the head as a company that stands out from the competition with a high level of security and responsibility. According to Sam Bankman-Fried, FTX implemented automated measures to protect customer funds.

The US Securities and Exchange Commission also reports that Sam Bankman-Fried conducted a fraudulent scheme for which he had been preparing for a long time and was engaged in the implementation for the same amount.

He was able to raise a lot of money from investors, after which he redirected the finances to his other company, Alameda Research. This was achieved through the provision of an unlimited “credit line” by the FTX exchange.

Walter Colvin correctly illustrated the situation with Alameda Research and FTX

The SEC also reported that the former head of FTX used client funds to purchase expensive real estate, make venture capital investments and donate large amounts to politics. It is known that Sam Bankman-Fried was the largest contributor to the US Democratic parties and in October 2022 ranked second in terms of the amount of funds invested there.

According to Gary Gensler, Chairman of the SEC, Sam has built a house of cards on a lie, promising investors one of the safest places in the crypto industry. In addition, he believes that under the Bankman-Fried call on people to comply with the laws of the cryptocurrency platform, he hid the motives for fraud.

Gurbir Grewal, Director of Enforcement of the US Securities and Exchange Commission, also commented on the situation:

The collapse of FTX highlights the very real risks that unregistered crypto exchanges can pose to investors and clients.

The SEC, as well as other reviewers, concluded that Sam Bankman-Fried made major decisions at Alameda Research even after Caroline Ellison and Sam Trabucco took over as co-CEOs. Thus, the SBF led two organizations at once and skillfully laundered money through cryptocurrency funds.

The former CEO of FTX, in turn, to the last denies his involvement in what happened and reports that he is poorly oriented in numbers. The US Securities and Exchange Commission is convinced that he held in his hands full control of investment and operating activities.

The first alarming bells from the American cryptocurrency exchange appeared after the complete collapse of Terra (LUNA). Then the creditors who issued the funds to Alameda Research began to demand the return of finances, but already at that moment the American cryptocurrency exchange had difficulties.

The SEC concluded that in order to save its Alameda Research company, the SBF ordered employees to use FTX client funds to do this.

Sam Bankman-Fried could have spoken at a US Senate Banking Committee hearing today, but the former head of FTX said he would not be able to attend. Thus, he gently declined the invitation of the head of the committee, Maxine Waters. Yesterday the SBF was arrested in the Bahamas, and Waters is upset that Bankman-Freed is unable to attend the hearing to testify.