US Charges FTX CEO Sam Bankman-Fried With Defrauding Investors

(BBC)- The US Securities and Exchange Commission (SEC) has charged Sam Bankman-Fried with “orchestrating a scheme to defraud investors” in the failed cryptocurrency exchange FTX.

The former FTX boss was arrested on Monday.

Mr Bankman-Fried built a “house of cards on a foundation of deception” SEC Chair Gary Gensler said.

He added that the charges for alleged fraud were a warning for other platforms to comply with US laws.

Speaking to BBC News earlier this month, Mr Bankman-Fried sought to distance himself from accusations of illegal activity.

“I didn’t knowingly commit fraud. I don’t think I committed fraud. I didn’t want any of this to happen. I was certainly not nearly as competent as I thought I was,” he told BBC News cyber reporter Joe Tidy.

Mr Bankman-Fried also denied allegations he must have been aware FTX’s affiliated trading company, Alameda Research, was using FTX customer funds.

Since 2019, Bahamas-based FTX had raised more than $1.8bn (£1.46bn) from equity investors, the SEC said, including approximately $1.1 billion from about 90 US-based investors.

It is alleged that while Mr Bankman-Fried promoted FTX as a “safe, responsible crypto asset trading platform”, in reality he “orchestrated a years-long fraud” to conceal from FTX’s investors the diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund.

The SEC also alleges he concealed FTX’s exposure to Alameda’s significant holdings of overvalued FTX-affiliated tokens.

Mr Bankman-Fried is also accused of “co-mingling” FTX customers’ funds at Alameda to make “undisclosed venture investments, lavish real estate purchases, and large political donations”.