FTX founder Sam Bankman-Fried charged with fraud, denied bail


NASSAU, Bahamas/NEW YORK, Dec. 13 (Reuters) – US prosecutors on Tuesday charged Sam Bankman-Fried, the founder of crypto currency exchange FTX, with fraud and violating campaign finance laws and a judge in the Bahamas denied him bail and sent him in instead to a local penitentiary.

The former CEO of FTX, who was arrested in the Bahamas on Monday, bowed his head and hugged his parents after the judge denied bail due to a “major” flight risk.

He was ordered back to a correctional facility on the island until February 8, where he will initially be held in the medical ward, according to a local official.

The events of the day have seen a stunning fall from grace in recent weeks for the 30-year-old, who amassed a fortune worth more than $20 billion as he experienced a cryptocurrency boom to build FTX into one of the world’s largest cryptocurrency booms. the world’s largest stock exchanges before it abruptly collapsed this year.

Bankman-Fried has previously apologized to clients and acknowledged oversight deficiencies at FTX, but said he personally does not believe he is criminally liable.

Earlier on Tuesday, U.S. attorney Damian Williams in New York said Bankman-Fried had made illegal campaign contributions to Democrats and Republicans using “stolen client money,” saying it was part of one of the “biggest financial frauds in U.S. history.”

“While this is our first public announcement, it won’t be our last,” he said, adding that Bankman-Fried “has made tens of millions of dollars in campaign contributions.”

Bankman-Fried faces a maximum sentence of 115 years in prison if convicted on all eight counts, prosecutors said, though each sentence depends on a number of factors.

Williams declined to say whether prosecutors would charge other FTX executives and whether FTX insiders were cooperating with the investigation.

In his first face-to-face public appearance since the collapse of the cryptocurrency exchange, Bankman-Fried appeared in court on Tuesday in the Bahamas, where FTX is based and where he was arrested in his gated community in the capital Nassau.

He appeared relaxed when he arrived at the maximum security court in the Bahamas and told the court he could challenge extradition to the United States.

Bahamian prosecutors had asked that Bankman-Fried be denied bail if he challenges extradition.

“Mr. Bankman-Fried is discussing the allegations with his legal team and is considering all of his legal options,” his attorney, Mark S. Cohen, said in an earlier statement.


FTX’s current CEO, John Ray, told congressional lawmakers on Tuesday that FTX was losing $8 billion in customer money, saying the company had “absolute concentration of control in the hands of a small group of very inexperienced, non-sophisticated individuals.” showed.

In the indictment unveiled Tuesday morning, US prosecutors said Bankman-Fried was involved in a scheme to defraud FTX’s clients by embezzling their deposits to pay expenses and debts and to make investments on behalf of its crypto hedge fund, Alameda Research LLC.

He also defrauded lenders to Alameda by providing false and misleading information about the condition of the hedge fund, and tried to disguise the money he made from wire fraud, prosecutors said.

Both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) alleged that Bankman-Fried committed fraud in lawsuits filed Tuesday.

The CFTC on Tuesday sued Bankman-Fried, Alameda and FTX for alleged fraud involving digital commodities.

Since at least May 2019, FTX has raised more than $1.8 billion from equity investors in a years-long “brutal, multi-year scheme” in which Bankman-Fried hid that FTX was diverting client funds to Alameda Research, the SEC alleged.


Bankman-Fried, who founded FTX in 2019, was an unconventional figure who sported wild hair, T-shirts and shorts during panel appearances with statesmen such as former US President Bill Clinton. He became one of the largest Democratic donors, contributing $5.2 million to President Joe Biden’s 2020 campaign. Forbes estimated his wealth at $26.5 billion a year ago.

FTX filed for bankruptcy on Nov. 11, losing an estimated 1 million customers and other investors billions of dollars. The collapse reverberated in the crypto world and caused bitcoin and other digital assets to plummet.

The collapse was one of a series of crypto industry bankruptcies this year as digital asset markets collapsed from their 2021 peaks. A crypto exchange is a platform for investors to trade digital tokens such as bitcoin.

As legal challenges mount, the US Congress is also looking at legislation to rein in a loosely regulated industry.

FTX has shared findings with the SEC and US prosecutors and is investigating whether Bankman-Fried’s parents were involved in the operation.

The Bahamas Attorney General’s office said it expected Bankman-Fried to be extradited to the United States.

Bankman-Fried resigned as CEO of FTX on the same day as the bankruptcy filing. FTX’s liquidity crisis came after it secretly used $10 billion in client funds to prop up its own trading firm Alameda, Reuters reports. At least $1 billion in customer assets had disappeared.

Additional reporting by Luc Cohen and Jack Queen in New York and Hannah Lang, Chris Prentice and Susan Heavey in Washington Written by Nick Zieminski and Deepa Babington Edited by Noeleen Walder, Megan Davies, Anna Driver and Matthew Lewis

Our Standards: The Thomson Reuters Principles of Trust.

Luke Cohen

Thomson Reuters

New York Federal Court Reports. Previously worked as a correspondent in Venezuela and Argentina.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.


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