Sam Bankman-Fried Charged by SEC With Fraud Over FTX Collapse

Posted on December 14th, 2022 at 3:21 PM
Sam Bankman-Fried Charged by SEC With Fraud Over FTX Collapse

From the Desk of Jim Eccleston at Eccleston Law.

The Securities and Exchange Commission (SEC) has charged FTX founder Sam Bankman-Fried with eight criminal counts, including conspiracy and wire fraud, for allegedly misappropriating billions of dollars in customer funds.

An indictment detailing the charges was unsealed after Bankman-Fried was arrested in the Bahamas on Monday evening. According to the SEC’s complaint, Bankman-Fried raised nearly $1.8 billion between May 2019 and November 2022 from investors who believed that FTX utilized appropriate controls and risk management procedures. However, Bankman-Fried regularly siphoned customer funds to his privately-held crypto hedge fund, Alameda Research, according to the SEC. The SEC further alleges that Bankman-Fried then used customer money to fund undisclosed venture investments, real estate purchases, and large donations to political candidates. Specifically, the indictment alleges that Bankman-Fried worked with others to make corporate contributions to political candidates and committees that exceeded the $25,000 annual limit.

Additionally, the SEC has accused Bankman-Fried of making false and misleading statements when he allegedly informed prospective investors that FTX used sophisticated automated risk measures to protect customer funds and that Alameda was merely another platform customer with no special privileges. After his arrest Monday evening, Bankman-Fried spent the night at a Nassau police station and will have the choice between contesting extradition to the U.S. to face the charges or waiving his right to a hearing. Request for bail has been denied.
The Commodities Futures Trading Commission (CFTC) also has filed suit.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, law, sec

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