The US Securities and Exchange Commission (SEC) has charged Sam Bankman-Fried with “orchestrating a scheme to defraud investors” in the failed cryptocurrency exchange FTX.
The former FTX boss was arrested on Monday.
Mr Bankman-Fried built a “house of cards on a foundation of deception” SEC Chair Gary Gensler said.
He added that the alleged fraud was a warning for other platforms to comply with US laws.
Since 2019, Bahamas-based FTX had raised more than $1.8bn (£1.46bn) from equity investors, the SEC said, including approximately $1.1 billion from about 90 US-based investors.
It is alleged that while Mr Bankman-Fried promoted FTX as a “safe, responsible crypto asset trading platform”, in reality he “orchestrated a years-long fraud” to conceal from FTX’s investors the diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund.
The SEC also alleges he concealed FTX’s exposure to Alameda’s significant holdings of overvalued FTX-affiliated tokens.
Mr Bankman-Fried is also accused of “co-mingling” FTX customers’ funds at Alameda to make “undisclosed venture investments, lavish real estate purchases, and large political donations”. Credit: bbc.com
