U.S. SEC Charges Sam Bankman-Fried With Investor Fraud
- Only a day after his arrest, the U.S. SEC charged Sam Bankman-Fried with defrauding investors and using customer funds to support his lavish lifestyle.
- The regulator is seeking injunctions against future securities law violations, legal repayment of his ill-gotten gains, a civil penalty, and a bar from executive roles in SEC-reporting companies.
U.S. Securities and Exchange Commission building, Washington DC, USA, 25 June 2018. Shutterstock
The U.S. Securities and Exchange Commission (SEC) has charged former FTX CEO Sam Bankman-Fried (SBF) with defrauding investors in the now bankrupt exchange, the regulator said in a press release on 13 December.
According to the announcement, the SEC aleges that SBF “orchestrated a years-long” scheme to defraud investors in FTX, and had violated the anti-fraud provisions in the Securities Act of 1933 and Securities Exchange Act of 1934. The regulator is now seeking an injunction against future securities law violations that will prohibit SBF from participating in the issuance, purchase, offer, and sale of securities. It also seeks legal repayment of his ill-gotten gains, a civil penalty, and a bar on officer and director roles at any SEC-reporting companies. The SEC’s enforcement division director, Gurbir Grewal, said in a statement:
“FTX operated behind a veneer of legitimacy Mr. Bankman-Fried created by, among other things, touting its best-in-class controls, including a proprietary ‘risk engine,’ and FTX’s adherence to specific investor protection principles and detailed terms of service. But as we allege in our complaint, that veneer wasn’t just thin, it was fraudulent.”
Court documents filed by the SEC claim that SBF inappropriately diverted billions of customer funds from FTX to his “privately-held crypto hedge fund” Alameda Research, which were then used to fund his lavish lifestyle, make undisclosed venture investments, real estate purchases, and large political donations to the Democratic party.
The disgraced founder of FTX was arrested in the Bahamas on Monday, after the U.S. Attorney’s Office for the Southern District of New York filed a “sealed indictment”. SBF was scheduled to testify before Congress on Tuesday regarding the downfall of his exchange, and while this will no longer happen, Forbes claims to have obtained a copy of his testimony. Similarly to his recent interviews, SBF was planning to push the narrative that he was unaware of the misdeeds of his companies, blaming a number of individuals but himself.
- The New York Jurors took 4 fours of deliberating before pronouncing the former FTX CEO guilty of all seven charges of fraud and conspiracy to commit fraud.
- Bankman-Fried will now have to appear in court on 28 March, 2024, where he will face a potential maximum sentence of 115 years in prison.
Former CEO of FTX Sam Bankman-Fried leaves the Federal Court in New York after pleading not guilty, 3 January, 2022.
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- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
- Joseph Pimbley, a member of litigation consulting firm PF2 Securities, will try to rebuff testimonies from Caroline Ellison, Gary Wang, Nishad Singh, and Adam Yedidia.
- During his testimony Pimbley will try to establish a timeline for the FTX-Alameda line of credit, and convince the jury it fluctuated between $1 billion and $3 billion between 2021 and 2022.