The filing states that after successfully raising more than $1.8 billion for the now-defunct crypto exchange, Bankman-Fried did so on false pretenses given to investors.
The United States Securities and Exchange Commission (SEC) has officially charged Sam Bankman-Fried, the former CEO of FTX, with defrauding investors in the crypto asset trading platform. A report from the SEC states that Bankman-Fried is being charged with “defrauding investors in crypto asset trading platform FTX.”
These charges come after previously filed charges against the co-founder of FTX in December 2022. Today’s charges note that Bankman-Fried “concealed his diversion of FTX customer funds to crypto trading firm Alameda Research while raising more than $1.8 billion from investors.”
The fall of Sam Bankman-Fried has been one of the most devastating in the relatively young history of cryptocurrency. As the co-founder and CEO of FTX, he orchestrated one of the greatest financial fraud schemes in history, causing FTX to decimate the industry that had operated within their exchange as one of their strongest pillars.
Since November, there has been a steady uncovering of fraudulent and criminal activity on Bankman-Fried’s behalf. This culminated in his arrest in December and now, in official charges made by the United States regulatory agency.
The SEC has officially charged Bankman-Fried with defrauding FTX investors. Specifically, the SEC has filed a complaint stating that he “orchestrated a scheme to defraud equity investors in FTX Trading Ltd.” The claims center around his misrepresentation of the platform to potential investors.
The filing states that after successfully raising more than $1.8 billion, Bankman-Fried did so on false pretenses given to investors. The charges state that during the funding round, Bankman-Fried “promoted FTX as a safe, responsible crypto asset trading platform, specifically routing FTX’s sophisticated, automated risk measure to protect customer assets.”
It is now clear that those assurances were not based on the reality of the platform’s accounting figures, the SEC noted.
This case serves as a reminder of the importance of due diligence for investors in the crypto asset industry. It also highlights the need for increased regulation and oversight in this rapidly growing field.
The SEC’s ongoing investigation and prosecution of fraud in the crypto asset market is critical for protecting investors and maintaining the integrity of the industry. The charges against Bankman-Fried send a clear message that fraud and deception will not be tolerated and will be met with severe consequences.