The earlier closed charges of the U.S. Attorney’s Office against FTX CEO Sam Bankman-Fried (SBF) have been made public. Bahamian authorities arrested him on these charges. Formal charges from U.S. financial regulators followed them.
Damian Williams, U.S. Attorney for the Southern District of New York (SDNY), signed the indictment against Samuel Bankman-Fried, Founder and ex-CEO of FTX. The indictment consists of 14 pages and includes eight counts, which, when summarized, involve the following charges:
- fraud and conspiracy to defraud customers and creditors by electronic means;
- conspiracy to commit commodity and securities fraud;
- conspiracy to commit money laundering;
- conspiracy to defraud the Federal Election Commission and commit campaign finance violations.
Part of the counts involves the confiscation of any movable and immovable property obtained as a result of the acts mentioned above. If confiscation isn’t possible, the U.S. authorities are entitled “to seek forfeiture of any other property of the defendant up to the value of the above forfeitable property.”
The indictment refers only to SBF, but mentions “others known and unknown” in context. During a press conference, Damian Williams said that prosecutors were “not done” with the arrests and urged individuals who could be involved in the alleged illegal activities in FTX and Alameda to “come see us before we come see you.”
Furthermore, the prosecutor shared some details about the machinations of the former head of the FTX Group:
- SBF knowingly defrauded customers of his crypto exchange by misappropriating their deposits to pay another company’s expenses and debts.
- SBF defrauded investors at FTX and lenders at Alameda by violating campaign finance laws and investing simultaneously in the Republican and Democratic parties.
- When the machinations surfaced, SBF engaged in deliberate transactions intended to conceal and disguise the misuse of customer funds.
Charges against Sam Bankman-Fried were also filed by the U.S. Securities and Exchange Commission (SEC). Representatives of the regulator accuse SBF of violating the Securities Act and the Securities Exchange Act. According to the SEC, Bankman-Fried diverted more than $1.8 billion of FTX clients’ funds to the accounts of Alameda Research.
The U.S. Commodity Futures Trading Commission (CFTC) also brought charges against SBF. The agency filed a lawsuit against the entrepreneur, FTX, and Alameda Research, claiming violations of the Commodity Exchange Act. The complaint states that “Sam Bankman-Fried, his parents, and other FTX and Alameda employees used FTX customer funds for a variety of personal expenditures, including luxury real estate purchases, private jets, documented and undocumented personal loans, and personal political donations.” The total amount of damages is estimated to be over $8 billion. At the request of the CFTC, the lawsuit must be heard before a jury in the Southern District of New York.
Sam Bankman-Fried’s attorneys asked for their client to be released on $250,000 bail, but it was denied by a Bahamas Magistrate’s court. Chief Magistrate Joyann Ferguson-Pratt emphasized SBF’s “flight risk.” The businessman will remain in the custody of the Bahamas Department of Correctional Services until at least February 8, 2023. However, he could be extradited to the U.S. earlier because of the charges filed by U.S. agencies, as representatives of both countries had already voiced that possibility.
