Bankman-Fried, Founder of FTX, Charged with Fraud, 8 Charges Total

FTX CEO Sam Bankman-Fried
FTX CEO Sam Bankman-Fried

Sam Bankman-Fried, the thirty-year-old founder of the world-renowned cryptocurrency exchange FTX, was arrested on fraud charges on Monday, December 12 in the Bahamas. It is alleged that Bankman-Fried was the brain behind a fraudulent scheme to funnel users money out of the exchange and into his and others personal wallets. This plan happened over the course of multiple years, and we’re still unclear on how much money was actually lost. FTX has been a favorite exchange of millions of users for many years, so it was a huge surprise when the exchange tanked in November of 2022.

Bankman-Fried was arrested on Monday, December 12, in the Bahamas where he relocated after the news of FTX’s collapse. The young founder was brought in by the Manhattan United States Attorney’s Office, who shared an eight-count indictment backing up the arrest. In addition, the SEC (United States Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) tacked on their own civil charges in New York Federal Court. Specifically, the Manhattan indictment includes two counts of wire fraud, two counts of wire fraud conspiracy, securities fraud conspiracy, money laundering conspiracy, and conspiracy to violate campaign finance laws. New York attorneys allege that Bankman-Fried utilized his crypto exchange to promote and promise regulation and risk management to it’s customers, while secretly funneling that same money into his own wallet, specifically his own hedge fund called Alameda Research. Continuing, prosecutors allege that these stolen funds were commingled with other funds and were used to pay off Bankman-Fried own personal loans, for political donations, real estate purchases, and a Bahamian home. The government believes the diversion of funds was how Bankman-Fried created the image of the perfect “crypto empire”. It was all an illusion though.