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US accuses FTX boss of conspiracy and fraud

Sam Bankman-Fried stands accused of defrauding investors out of nearly $2 billion

The US Securities and Exchange Commission (SEC) stated on Tuesday that former FTX chief executive Sam Bankman-Fried orchestrated a years-long scheme to defraud equity investors, raising more than $1.8 billion. 

Bankman-Fried was arrested Monday in the Bahamas and is facing possible extradition to the US on criminal charges.

According to a statement on the SEC website, the fallen crypto billionaire concealed risks and FTX’s relationship with its trading firm Alameda Research, and used commingled customer funds.

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“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” SEC Chair Gary Gensler said.

The regulator says Bankman-Fried diverted billions of dollars of customer funds to help grow his other entities. Alameda Research was reportedly allowed to carry a negative balance on FTX and was exempt from the exchange’s risk protocols.

According to the SEC complaint, Bankman-Fried personally directed that FTX’s “risk engine” not apply to Alameda and hid the extent of the ties between the two companies from investors.


READ MORE: FTX founder arrested in Caribbean

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The SEC also charges that as late as last month, Bankman-Fried was continuing to mislead investors while trying to fill a multi-billion-dollar hole in FTX’s balance sheet. It only stopped when FTX and Alameda filed for bankruptcy protection on November 11, the regulator said.

The SEC is seeking to bar Bankman-Fried as an officer or director of a public company and to prohibit him from offering crypto or other securities. The securities market regulator is also seeking to force him to turn over his ill-gotten assets.

For more stories on economy & finance visit RT’s business section

December 13, 2022 at 10:39PM
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