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US prosecutors charged Sam Bankman-Fried with an array of monetary crimes and campaign donation violations on Tuesday.
The FTX founder is alleged to have diverted investors’ money to fund a lavish lifestyle and make dangerous investments in cryptocurrency.
The previous billionaire was indicted on eight charges including wire fraud, money laundering, conspiracy to defraud the USA and campaign finance regulations.
Federal prosecutors within the US Southern District of Recent York said Mr Bankman-Fried “deliberately and knowingly” committed fraud on investors and customers since 2019.
Mr Bankman-Fried is accused of diverting customer funds from his crypto exchange FTX to the private hedge fund Alameda Research, which he also owned.
This caused each corporations to collapse when cryptocurrency values plummeted.
The indictment said Mr Bankman-Fried had conspired with others to defraud FTX’s lenders “by providing false and misleading information to those lenders regarding Alameda Research’s financial condition”.
Prosecutors further allege that the 30-year-old broke campaign finance laws by masking political donations behind front corporations and individuals to hide and augment his influence.
Mr Bankman-Fried appeared in court within the Bahamas on Tuesday afternoon where a judge deemed he was a flight risk and denied his bail request, based on EyeWitness News, a neighborhood news outlet.
Chief Magistrate Joyann Ferguson-Pratt remanded Mr Bankman-Fried to the custody of the Bahamas Department of Corrections until his next appearance on 8 February.
Sam Bankman-Fried is escorted out of the Magistrate Court constructing after his arrest, in Nassau, Bahamas December 13, 2022
Mr Bankman-Fried was allowed to talk to his parents Joseph Bankman and Barbara Fried who were in court to support him before being taken into custody, EyeWitness News stated.
At a press conference earlier on Tuesday, US Attorney Damian Williams called FTX “one in every of the most important frauds in American history”.
Mr Williams described alleged Mr Bankman-Fried had made illegal campaign donations within the “tens of hundreds of thousands of dollars”.
“And all of this dirty money was utilized in service of Bankman-Fried’s desire to purchase bipartisan influence and impact the direction of public policy in Washington,” he said.
He urged anyone who thought they is likely to be a victim to contact authorities.
The US Securities and Exchange Commission had earlier slapped Mr Bankman-Fried with civil charges for allegedly orchestrating a scheme to defraud investors.
Samuel Bankman-Fried at a Senate committee hearing earlier within the 12 months
The civil criticism states that Mr Bankman-Fried raised greater than $1.8bn from equity investors since May 2019 by falsely promoting FTX as a protected, responsible platform for trading crypto assets.
“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one in every of the safest buildings in crypto,” said SEC Chair Gary Gensler in an announcement.
Compounding Mr Bankman-Fried’s legal peril, a second civil lawsuit was filed by the Commodity Futures Trading Commission on Tuesday.
The criticism charges all Mr Bankman-Fried, FTX and Alameda Research with “fraud and material misrepresentations” within the sale of digital commodities.
A lawyer for Mr Bankman-Fried, Mark S Cohen, said on Tuesday he’s “reviewing the costs along with his legal team and considering all of his legal options”.
Mr Bankman-Fried was arrested within the Bahamas on Monday and faces extradition to the US to face a jury trial.
The failed crypto baron’s arrest took lawmakers by surprise, as he had been on account of testify before a Congressional hearing on Tuesday.