The Securities and Exchange Commission has charged Sam Bankman-Fried with orchestrating a scheme to defraud equity investors in FTX Trading Ltd.
According to the SEC, Investigations as to other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
Here are the highlights from the press release by the SEC
- SBF orchestrated a years-long fraud to conceal from FTX’s investors
- Undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund
- 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
- undisclosed risk stemming from FTX’s exposure to Alameda’s significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens
- SBF used commingled FTX customers’ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations.
“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”
SEC Chair Gary Gensler
While the SEC’s investigations remains ongoing, the CFTC has also announced charges against Bankman-Fried.
For a while, many thought he was going to get away with it, and I thought so too. This was swift from the SEC, and I’ll keep you updated as this story unfolds
