SEC Charges Samuel Bankman-Fried With Using FTX To Defraud Crypto Investors

Posted on January 24th, 2023 at 2:57 PM
SEC Charges Samuel Bankman-Fried With Using FTX To Defraud Crypto Investors

From the Desk of Jim Eccleston at Eccleston Law.

The Securities and Exchange Commission (SEC) has charged Samuel Bankman-Fried with operating a scheme to defraud equity investors in FTX Trading Ltd.

The SEC’s complaint alleges that FTX, which is based in the Bahamas, has raised at least $1.8 billion from equity investors, including $1.1 billion from 90 U.S.-based retail and institutional investors, since May 2019. Former CEO Bankman-Fried repeatedly touted FTX as a safe crypto asset trading platform while specifically promoting FTX’s automated risk measures that were purportedly utilized to protect investor assets.

However, the SEC accuses Bankman-Fried of operating a scheme to conceal the undisclosed diversion of FTX customers' funds to Alameda Research LLC as well as the undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited "line of credit" funded by the platform's customers and exempting Alameda from certain key FTX risk mitigation measures. The SEC further alleges that Bankman-Fried used commingled FTX funds at Alameda to pay for undisclosed venture investments, real estate purchases, and large political contributions.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

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

Return to Archive



Thank You from the bottom of our hearts for all you have done for us. When we realized this was a very bad investment - we did not know where to turn for help. Then we received your name. When we called you - you were so kind to us and then agreed to help us. For this we are so very grateful. The world would be a much nicer place if there were more people like the two of you in it. We will always remember all the help and kindness you have shown us. Thank you so very very much for everything.

Wayne and Judy S.


November 28, 2023
Arbitration Mandated for Former Morgan Stanley Advisors' Class Claim on Deferred Compensation

A federal judge in Manhattan has granted Morgan Stanley’s request to transfer a potential class action lawsuit to arbitration.

November 28, 2023
Wells Fargo Under SEC Scrutiny for Cash Sweep Programs

The Securities and Exchange Commission (SEC) is investigating Wells Fargo & Company over cash sweep options provided to investment advisory clients.

November 22, 2023
FINRA Alleges $2 Million in Client Losses and $2 Million in Commissions Due to Advisor's Churning

According to a Financial Industry Regulatory Authority (FINRA) complaint, Stewart "Paxton" Ginn excessively traded accounts over two and a half years, resulting in $2.22 million in losses and $2.24 million in commissions for him and his firm.