Here’s all the pieces Sam Bankman-Fried is accused of by the US authorities | Engadget

On Monday night, Bahamian authorities arrested FTX founder and former CEO Sam Bankman-Fried on the request of the US authorities. The following morning, the Securities and Exchange Commission (SEC), Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC) filed formal civil and legal prices in opposition to Bankman-Fried in “parallel actions.” It was rather a lot to soak up unexpectedly, so beneath Engadget has damaged up present prices in opposition to SBF by company, with some extra context supplied.

Those indictments seemingly signify solely the beginning of Bankman-Fried’s troubles. In addition to the fees it introduced on Tuesday, the SEC mentioned it was investigating Bankman-Fried for different securities violations. The company additionally introduced that it’s actively inspecting the actions of different FTX executives and workers. As extra prices are unsealed, Engadget will proceed to replace this text.

Securities and Exchange Commission

The Securities and Exchange Commission accused SBF of defrauding FTX buyers and prospects of greater than $1.9 billion. Starting as early as May 2019 till as not too long ago as this previous November, “Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customers funds for his own personal benefit and to help grow his crypto empire,” the SEC mentioned.

All the whereas, Bankman-Fried portrayed himself as a accountable enterprise chief constructing a protected buying and selling platform with “sophisticated, automated measures to protect customer assets.” In actuality, the SEC says, “Bankman-Fried orchestrated a fraud to conceal the diversion of customer funds to his privately-held crypto hedge fund, Alameda Research.”

Today we charged FTX Trading Ltd CEO and co-founder Samuel Bankman-Fried with orchestrating a scheme to defraud fairness buyers. Investigations as to different securities legislation violations and into different entities and individuals regarding the alleged misconduct are ongoing.

— U.S. Securities and Exchange Commission (@SECGov) December 13, 2022

Bankman-Fried advised buyers and prospects FTX’s sister firm was simply one other platform on the change with no particular privileges to talk of. “These statements were false and misleading,” based on the SEC. Alameda had entry to a “virtually unlimited ‘line of credit” unknowingly funded by FTX prospects. In May 2022, when Alameda’s lenders demanded the agency repay loans value billions of {dollars}, Bankman-Fried allegedly directed FTX to divert much more cash to the hedge fund.

The SEC seeks to bar Bankman-Friend from buying and selling securities sooner or later. The company additionally needs to grab his ill-gotten positive factors and bar him from performing as an officer or director at one other firm.

Current FTX CEO John Ray III testified earlier than the House Financial Services Committee on Tuesday — SBF had mentioned he would attend the listening to earlier than his arrest. Ray spoke to among the allegations detailed by the SEC. “This is really old-fashioned embezzlement,” he advised the panel. “We’ve lost $8 billion. I don’t trust a single piece of paper in this organization.”

Department of Justice

In addition to civil prices, Bankman-Fried faces a legal indictment from the Justice Department. On Tuesday, prosecutors from the Southern District of New York filed eight prices in opposition to the previous government, together with a number of counts of wire fraud. The Justice Department alleges SBF conspired with different people to defraud buyers by sharing deceptive details about FTX and Alameda’s monetary situation. Prosecutors additional accused him of making an attempt to commit commodities and securities fraud. On prime of that, Bankman-Fried allegedly broke federal election legal guidelines by donating greater than is legally allowed and within the names of different individuals.

SBF spoke about his political donations in a current interview with journalist Tiffany Fong. “I donated to both parties. I donated about the same amount to both parties,” he mentioned. “All my Republican donations were dark. The reason was not for regulatory reasons, it’s because reporters freak the fuck out if you donate to Republicans.”

It’s value emphasizing how critical the legal prices in opposition to Bankman-Fried are. For context, a federal choose not too long ago sentenced Theranos founder and former CEO Elizabeth Holmes to 11 years in jail for defrauding the corporate’s buyers and sufferers. Meanwhile, Ramesh “Sunny” Balwani, the startup’s former chief working officer, was sentenced to almost 13 years in jail for his function within the scheme. Sam Bankman-Fried stands accused of defrauding buyers of just about $2 billion, or about twice what buyers misplaced to Theranos.

Commodity Futures Trading Commission

Rounding out the present prices in opposition to Bankman-Fried, the Commodity Futures Trading Commission accused the previous government of utilizing Alameda Research to “surreptitiously” siphon buyer funds. “At Bankman-Fried’s direction, FTX executives created features in the underlying code for FTX that allowed Alameda to maintain an essentially unlimited line of credit on FTX,” the regulator alleges. It provides that Alameda had different “unfair” benefits, together with an exemption from the platform’s auto-liquidation danger administration course of.

As early as May 2019, SBF and “at least one” different Alameda government directed the agency to make use of FTX buyer funds to commerce on competing platforms and purchase “high-risk” digital property. Additionally, the CFTC alleges that Bankman-Fried and his cohorts “took hundreds of millions of dollars in poorly-documented ‘loans’ from Alameda,” which they then used to buy actual property and make political donations.

For his actions, the CFTC is looking for to ban Bankman-Fried from buying and selling derivatives and impose civil penalties in opposition to him. It additionally needs to bar him from performing as a director or officer sooner or later.