FTX’s Samuel Bankman-Fried charged by US for ‘scheme’ to defraud

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NEW YORK — The U.S. government charged Samuel Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes on Tuesday, alleging he intentionally deceived customers and investors to enrich himself and others, while playing a central role in the company’s multibillion-dollar collapse.

Federal prosecutors say that beginning in 2019 Bankman-Fried devised “a scheme and artifice to defraud” FTX’s customers and investors. He diverted their money to cover expenses, debts and risky trades at his crypto hedge fund, Alameda Research, and to make lavish real estate purchases and large political donations.

Bankman-Fried was arrested Monday in the Bahamas at the request of the U.S. government, which charged him with eight criminal violations, ranging from wire fraud to money laundering to conspiracy to commit fraud. Bankman Fried, one of the largest political donors this year, was also charged with making illegal campaign contributions.

The charges laid out in the 13-page indictment could land Bankman-Fried in jail for decades, carrying maximum penalties of 115 years, according to Nicholas Biase, a spokesperson for U.S. prosecutors.

Bankman-Fried has fallen hard and fast from the top of the cryptocurrency industry he helped to evangelize. FTX filed for bankruptcy on Nov. 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

Before the bankruptcy, he was considered by many in Washington and on Wall Street as a wunderkind of digital currencies, someone who could help take them mainstream, in part by working with policymakers to bring more oversight and trust to the industry.

He was worth tens of billions of dollars — at least on paper — and was able to attract celebrities like Tom Brady or former politicians like Tony Blair and Bill Clinton to his conferences at luxury resorts in the Bahamas. He was the subject of fawning profiles in media, was considered a prominent advocate for a type of charitable giving known as “effective altruism,” and commanded millions of followers on Twitter.

But since FTX’s implosion, Bankman-Fried and his company have been likened to other disgraced financiers and companies, such as Bernie Madoff and Enron.

The criminal indictment against Bankman-Fried and “others” at FTX is on top of civil charges announced Tuesday by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC alleges Bankman-Fried defrauded investors and illegally used their money to buy real estate on behalf of himself and his family.

U.S. authorities said they will try to claw back any of Bankman-Fried’s financial gains from the alleged scheme.



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