Bankman-Fried built 'house of cards': SEC
Though cryptocurrency can seem a mystical world, the civil complaint from the Securities and Exchange Commission reads like a standard case of securities fraud, accusing Sam Bankman-Fried of building a "house of cards."
Bankman-Fried raised $1.8 billion for FTX while "orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire," the complaint said.
Customers sent billions of dollars to FTX believing their assets were secure but, from the start, the SEC said Bankman-Fried "improperly diverted customer assets to his privately-held crypto hedge fund, Alameda Research LLC, and then used those customer funds to make undisclosed venture investments, lavish real estate purchases, and large political donations."
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Federal prosecutors in New York said they would unseal related criminal charges later Tuesday.
"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," said SEC Chair Gary Gensler.
The civil complaint seeks penalties and fines, but also to prohibit Bankman-Fried from "participating in the offer or sale of securities including crypto asset securities" in the future, a move that would complete his fall as the poster child for the emerging cryptocurrency marketplace.