SEC charges Samuel Bankman-Fried with defrauding investors

The Securities and Exchange Commission announced early Tuesday that it has filed charges against Samuel Bankman-Fried for defrauding investors in his crypto trading platform FTX.

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The SEC said in a statement that Bankman-Fried not only defrauded customers, but diverted funds to the company’s investment arm, Alameda Research. He concealed the diversion of FTX customers’ funds while raising more than $1.8 billion from investors, the SEC alleges, and raised approximately $1.1 billion from 90 U.S.-based investors.

Bankman-Fried, 30, was arrested Monday in the Bahamas. He was scheduled to testify before Congress on Tuesday about the collapse of FTX.

“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,” said SEC Chair Gary Gensler.

“The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws. Compliance protects both those who invest on and those who invest in crypto platforms with time-tested safeguards, such as properly protecting customer funds and separating conflicting lines of business.”

Prosecutors for the Southern District of New York confirmed to The New York Times Monday that an indictment outlining criminal charges against Bankman-Fried would be unsealed on Tuesday.

Those charges are separate from the SEC charges.

The Securities and Exchange Commission announced early Tuesday that it has filed charges against Samuel Bankman-Fried for defrauding investors with his crypto trading platform FTX.

>> Read more trending news

The SEC said in a statement that Bankman-Fried not only defrauded customers, but diverted funds to the company’s investment arm, Alameda Research. He concealed the diversion of FTX customers’ funds while raising more than $1.8 billion from investors, the SEC alleges, and raised approximately $1.1 billion from 90 U.S.-based investors.

Bankman-Fried, 30, was arrested Monday in the Bahamas. He was scheduled to testify before Congress on Tuesday about the collapse of FTX.

“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,” said SEC Chair Gary Gensler.

“The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws. Compliance protects both those who invest on and those who invest in crypto platforms with time-tested safeguards, such as properly protecting customer funds and separating conflicting lines of business.”

Prosecutors for the Southern District of New York confirmed to The New York Times Monday that an indictment outlining criminal charges against Bankman-Fried would be unsealed on Tuesday.

Those charges are separate from the SEC charges.

The U.S. Attorney for the Southern District of New York tweeted Monday: “Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning.”

The criminal charges against Mr. Bankman-Fried included wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, according to The Times who quoted a person with knowledge of the matter.

Check back for more on this developing story.

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