The US Attorney’s Office charged Sam Bankman-Fried, head of cryptocurrency platform FTX, with multiple criminal offenses.

Sam Bankman-Fried. (Photo: Forbes Mexico) (Forbes Mexico /)

The US prosecutors accused this tuesday to Sam Bankman-Friedfounder and former CEO of cryptocurrency exchange FTXfrom a series of financial crimes and campaign finance violationsclaiming that he played a central role in the collapse of FTX and concealed its problems from the public and investors.

Bankman-Fried was charged with eight countswhat’s up from wire fraud to money laundering and conspiracy to commit fraud against the United States. He was also accused of violate campaign finance lawsa notable indictment since Bankman-Fried was one of the biggest political donors this year.

The charges add to those previously announced Tuesday by the Securities and Exchange Commissionwhich alleged that Bankman-Fried defrauded investors and used their proceeds to buy real estate in his own name and that of his family.

Bankman-Fried was arrested Monday in Bahamas, where he has been living, after the United States filed criminal charges due to be made public Tuesday, according to US Attorney Damian Williams. The complaint to the SEC is independent.

A Bankman-Fried spokesman had no comment Monday night. Bankman-Fried has the right to challenge his extradition, which could delay, but probably not prevent, his transfer to the United States.

Sam Bankman Fried
WASHINGTON, DC – DECEMBER 08: CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill December 8, 2021 in Washington, DC. The committee held a hearing on “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States.” (Photo by Alex Wong/Getty Images) (Alex Wong/)

Bankman-Fried was under criminal investigation by US and Bahamian authorities after the collapse last month of FTXwhich filed for bankruptcy on November 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

Bankman-Fried was one of the richest people in the world on paper; at one point her net worth reached $26.5 billion, according to Forbes. She was a prominent figure in Washington, donating millions of dollars to mostly left-wing Democratic political causes and campaigns, though she also gave money to Republicans. FTX grew to become the second largest cryptocurrency exchange in the world.

This all came crashing down quickly last month when reports cast doubt on the strength of FTX’s balance sheet. Clients moved to withdraw billions of dollars, but FTX was unable to meet all the requests because it had apparently used client deposits to fund investments in Bankman-Fried’s trading arm, Alameda Research.

We allege that Sam Bankman-Fried built a house of cards on a basis of deception while telling investors it was one of the safest buildings in cryptosaid SEC Chairman Gary Gensler.

The SEC complaint alleges that Bankman-Fried had raised more than $1.8 billion from equity investors since May 2019 by promoting FTX as a safe and responsible platform for trading crypto assets.

Instead, the complaint says, Bankman-Fried diverted client funds to Alameda Research without telling them.

“He then used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses,” the complaint says. “None of this was disclosed to FTX equity investors or trading clients on the platform.”

Alameda failed to segregate FTX investor funds and Alameda’s investments, according to the SEC, and used that money to “indiscriminately finance its trading operations” as well as other Bankman-Fried ventures.

Bankman-Fried’s arrest came just a day before he was scheduled to testify before the House Financial Services Committee. Democratic Rep. Maxine Waters, chair of the committee, was “disappointed” that the American public and FTX clients could not see Bankman-Fried testify under oath. However, the hearing will be held on Tuesday.

Bankman-Fried recently stated that it did not “knowingly” misuse client funds and that it believes its millions of angry customers will eventually get their money back. The SEC disputed this claim Tuesday in its lawsuit.

FTX operated behind a veneer of legitimacy that Mr. Bankman-Fried created, among other things, by promoting best-in-class controls, including a proprietary “risk engine,” and FTX’s adherence to specific investor protection principles. and detailed conditions of service. But, as we allege in our complaint, that veneer was not just thin, it was fraudulent,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “FTX’s collapse highlights the very real risks that unregistered crypto asset trading platforms can pose for investors and clients alike.”

(With information from AP)

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