An indictment from the U.S. Attorney for the Southern District of New York names Sam Bankman-Fried, the founder of FTX, on eight criminal charges.
Bankman-Fried is charged in the indictment filed in U.S. District Court in Manhattan with conspiracy to commit wire fraud and securities fraud, as well as individual charges of securities fraud and wire fraud, money laundering, and conspiracy to avoid campaign finance laws.
According to the allegations filed in the indictment, Bankman-Fried "agreed with others to defraud customers of FTX.com by misappropriating those customers' deposits and using those deposits to pay expenses and debts of Alameda Research."
Furthermore, it claims that Bankman-Fried and other individuals planned to cheat FTX's lenders "by providing false and misleading information to those lenders regarding Alameda Research's financial condition."
Additionally, according to the prosecutors, he collaborated with others to give unlawful finances to political candidates while concealing and boosting his own political contributions.
"Mr. Bankman-Fried is reviewing the charges with his legal team and considering all of his legal options," his attorney Mark Cohen, said.
Separately, the Securities and Exchange Commission accused Bankman-Fried of defrauding investors and clients in his bankrupt cryptocurrency exchange FTX on Tuesday.
Since its May 2019 inception, FTX has raised more than $1.8 billion, including from affluent investors like BlackRock, Sequoia Capital, and the Ontario Teachers' Pension Plan. This has led to a $32 billion valuation for the company. Tom Brady and Gisele, two well-known athletes and celebrities who supported FTX, are said to have acquired shares in the business.
The SEC claims that Bankman-Fried defrauded the investors who supported FTX by portraying it as a "safe, responsible" cryptocurrency trading company that employed "sophisticated, automated" risk management techniques to safeguard client funds.
The SEC claims that, in reality, Bankman-Fried gave internal instructions to software developers on how to write code that would let Alameda operate with a negative balance in its client account at FTX.
This is said to have occurred in August 2019, just four months after FTX operations started.
According to the SEC, this effectively provided Alameda with a limitless line of credit backed by consumer assets. According to the complaint, this meant that there was no discernible difference between FTX client cash and Alameda funds that Bankman-Fried utilized as his "personal piggy bank."
In the four weeks since FTX declared bankruptcy, Bankman-Fried has fought to dispel claims that he misled FTX's clients by portraying himself as an unlucky CEO who overshot his mark.
Bankman-Fried, who resigned from his position as CEO of FTX last month after the company filed for bankruptcy, has already acknowledged making mistakes while heading the company.
"Look, I screwed up," Bankman-Fried said during a virtual appearance at the New York Times' DealBook Summit. "There are things I would do anything to do over."
