‘House Of Cards’: SEC Lawsuit Alleges Bankman-Fried’s Multibillion Dollar Fraud On FTX Began ‘From The Start’
John Hugh DeMastri on December 13, 2022
The U.S. Securities and Exchange Commission (SEC) charged Sam Bankman-Fried, former CEO of cryptocurrency exchange FTX and billionaire Democratic donor, on Tuesday for allegedly orchestrating a conspiracy to defraud billions from investors on FTX’s trading platform.
Bankman-Fried, who was arrested Monday by Bahamian authorities pending a formal extradition request by U.S. prosecutors, used billions of dollars in investors’ funds to prop up Alameda Research, a trading house founded by Bankman-Fried, when crypto prices crashed in May 2022, the SEC alleged in a lawsuit. Meanwhile, Bankman-Fried allegedly made “false and misleading” statements that customers’ assets were secure and that Alameda was afforded “no special privileges” on the FTX exchange.
“Customers around the world believed his lies, and sent billions of dollars to FTX, believing their assets were secure on the FTX trading platform,” the SEC alleged in their lawsuit. “But from the start, Bankman-Fried improperly diverted customer assets to his privately-held crypto hedge fund, Alameda Research LLC (“Alameda”), and then used those customer funds to make undisclosed venture investments, lavish real estate purchases, and large political donations.”
Bankman-Fried has used recent interviews with the media to deny allegations that he committed fraud and downplay the extent to which he was aware of the crisis at FTX and Alameda. The SEC, however, alleges that the protections and privileges given to Alameda were granted at Bankman-Friedman’s explicit direction, and were intentionally hidden from investors so Alameda could use FTX investor assets however it saw fit.
“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,” SEC Chair Gary Gensler said in a press release Tuesday. Gensler went on to encourage cryptocurrency exchanges to come forward to ensure compliance with U.S. laws, both for their own protection and the protection of their clients.
The SEC declined to comment for this story, directing the Daily Caller News Foundation to the press release. A Bankman-Fried defense lawyer did not immediately respond to a DCNF request for comment.
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.