Key Takeaways:
- Sam Bankman-Fried is reportedly charged by the SEC with scamming FTX Equity Investors.
- Since at least May 2019, FTX has raised more than $1.8 billion from equity investors, including around $1.1 billion from roughly 90 investors with U.S. addresses.
Sam Bankman-Fried, the creator of the defunct FTX cryptocurrency exchange, was charged with civil securities fraud by US authorities on Tuesday. He was taken into custody on Monday evening at his residence in the Bahamas.
In a news release, the SEC declared that in addition to charges of fraud against equity investors in FTX, he is also under investigation for possible violations of other securities laws. It also stated that there are other people still the subject of open investigations.
Since at least May 2019, FTX, domiciled in The Bahamas, has raised more than $1.8 billion from equity investors, including roughly $1.1 billion from about 90 investors in the United States, according to the SEC’s lawsuit.
Further securities law infractions and investigations against people other than SBF were also mentioned in the announcement.
The Commodity Futures Trading Commission (CFTC) and the Southern District of New York’s Attorney’s office have also brought “parallel cases” against SBF, accusing the company of violating the law.
The news statement states that the defendant (read: SBF) “hid his diversion of FTX customers’ cash to crypto trading firm Alameda Research while raising more than $1.8 billion from investors,” thus it seems that the securities regulator didn’t take much time to file indictments.
SEC explains that When touting for his exchange’s “advanced, automatic risk measure to protect customer assets,” Bankman-Fried allegedly “orchestrated a years-long fraud.”
Gary Gensler, the chair of the S.E.C., said in a statement, “We allege that Sam Bankman-Fried created a house of cards on a foundation of lies while telling investors that it was one of the safest structures in crypto.”
The Securities Act of 1933 and the Securities Exchange Act of 1934’s anti-fraud laws are allegedly violated by Bankman, according to the accusation. The SEC’s case asks for restitution of Bankman’s illicit earnings, a civil fine, an officer and director bar, injunctions against further violations of the securities laws, and a ban on him from engaging in the issuance, acquisition, offer, or sale of securities other than for his own benefit.
