U.S Authorities Unveil Indictments Against Sam Bankamn-Fried Amid FTX Collapse 

Sam Bankman-Fried, the founder of the now-defunct FTX cryptocurrency exchange, has officially been charged by the United States Attorney’s Office for the Southern District of New York (SDNY) and the Securities and Exchange Commission (SEC) weeks after his company’s implosion. 

Bankman-Fried’s House of Cards 

Earlier today, the United States securities regulator confirmed that it had leveled charges against the former billionaire CEO Sam Bankman-Fried. 

Another report from the New York Times confirmed that the U.S. Attorney’s Office for the SDNY had charged Bankman-Fried with wire fraud, securities fraud, conspiracy to commit wire fraud, money laundering, and conspiracy to commit securities fraud. As the charges state, the SEC accuses Bankman-Fried of violating the anti-fraud provisions of its Securities Act of 1933 and the Securities Exchange Act of 1934.

The SEC alleged that Bankman-Fried had orchestrated a scheme to defraud equity investors via FTX Trading Ltd. The former billionaire was accused of concealing his “diversion of FTX customers’ funds” to Alameda Research, the quant trading firm he started while raising over $1.8 billion from investors in FTX. 

Gary Gensler, the SEC’s Commissioner, alleged that Bankman-Fried had built a “house of cards” on the foundation of deception while somehow convincing investors that FTX was the safest place to engage in the crypto market. 

In its document, the SEC confirmed that it would also seek injunctions against future securities law violations, thus prohibiting Bankman-fried from issuing, purchasing, offering, or selling any securities except via his account. 

It is interesting that the indictments only mentioned Bankman-Fried. The indictments did not mention possible jail terms or repercussions, although it’s expected that the former billionaire could face a lengthy jail term if found guilty. Alameda Research chief executive Caroline Ellison, FTX co-founder Gary Wang, and other top brass members appear to be in the clear.

It’s All Stacking Up 

The charges were revealed just a day after Royal Bahamas Police Force arrested Bankman-Fried. The disgraced CEO had been living in the Bahamas following the implosion of FTX a little over a month ago, taking advantage of the company’s headquarters position. From there, he did his best to communicate with FTX’s customers and appeared at a New York Times Dealbook conference earlier this month. 

Nevertheless, the U.S. government notified Bahamian authorities that they would officially file charges against Bankman-Fried, prompting the Royal Bahamas Police Force to arrest him. Bloomberg has reported that he could now be headed to the United States, where he would be made to answer for his possible crimes. 

The former billionaire is also scheduled to testify remotely before the U.S House Committee on Financial Services this week as part of investigations into FTX’s implosion by the American government. Now that he is set to get back on American shores, it remains unclear whether the testimony will still hold or if a legal case against him has already been prepared and is ready to fly.

1) I still do not have access to much of my data — professional or personal. So there is a limit to what I will be able to say, and I won't be as helpful as I'd like.

But as the committee still thinks it would be useful, I am willing to testify on the 13th. https://t.co/KR34BsNaG1

— SBF (@SBF_FTX) December 9, 2022

Interestingly, Bahamian authorities had also been preparing a case against Bankman-Fried. As far back as late November, they were reportedly investigating FTX and the events that led to the exchange’s collapse. The investigation had reportedly included the country’s Securities Commission, the Financial Intelligence Unit, and the financial crimes unit of the Royal Bahamas Police Force.

In a statement, Bahamian Prime Minister Philip Davies explained that both countries are interested in holding all individuals associated with FTX accountable.