FTX founder Sam Bankman-Fried charged with fraud and denied bail in Bahamas

US prosecutors on Tuesday accused Sam Bankman-Fried, the founding father of crypto forex trade FTX, of fraud and violating marketing campaign finance legal guidelines and a choose within the Bahamas denied him bail, sending him to an area correctional facility as an alternative.

He was ordered remanded to a correctional facility within the island nation till Feb. 8, the place he’ll initially held within the medical division, based on an area official. 

The day’s occasions capped a surprising fall from grace in latest weeks for the 30-year-old, who amassed a fortune valued over $20 billion as he rode a cryptocurrency growth to construct FTX into one of many world’s largest exchanges earlier than it abruptly collapsed this yr. 

Bankman-Fried has beforehand apologized to prospects and acknowledged oversight failings at FTX, however stated he doesn’t personally suppose he has any prison legal responsibility. 

Earlier on Tuesday, US Lawyer Damian Williams in New York stated Bankman-Fried made unlawful marketing campaign contributions to Democrats and Republicans with “stolen buyer cash,” saying it was a part of one of many “largest monetary frauds in American historical past.” 

“Whereas that is our first public announcement, it won’t be our final,” he stated, including Bankman-Fried “made tens of tens of millions of {dollars} in marketing campaign contributions.”

Bankman-Fried faces a most sentence of 115 years in jail if convicted on all eight counts, prosecutors stated, although any sentence would rely upon a variety of things. 

Williams declined to say whether or not prosecutors would deliver expenses in opposition to different FTX executives and whether or not any FTX insiders have been cooperating with the investigation.

In his first in-person public look because the cryptocurrency trade’s collapse, Bankman-Fried appeared in court docket on Tuesday within the Bahamas, the place FTX is predicated and the place he was arrested at his gated group within the capital, Nassau.

He appeared relaxed when he arrived on the closely guarded Bahamas court docket and advised the court docket he might battle extradition to america. 

Bahamian prosecutors had requested that Bankman-Fried be denied bail if he fights extradition. 

“Mr. Bankman-Fried is reviewing the costs along with his authorized crew and contemplating all of his authorized choices,” his lawyer, Mark S. Cohen, stated in an earlier assertion.

FTX’s present CEO, John Ray, advised congressional lawmakers on Tuesday that FTX misplaced $8 billion of shopper cash, saying the corporate confirmed “absolute focus of management within the arms of a small group of grossly inexperienced, non-sophisticated people.”

Within the indictment unsealed on Tuesday morning, U.S. prosecutors stated Bankman-Fried had engaged in a scheme to defraud FTX’s prospects by misappropriating their deposits to pay for bills and money owed and to make investments on behalf of his crypto hedge fund, Alameda Analysis LLC.

He additionally defrauded lenders to Alameda by offering false and deceptive details about the hedge fund’s situation and sought to disguise the cash he had earned from committing wire fraud, prosecutors stated. 

Each the US Securities and Change Fee (SEC) and the Commodity Futures Buying and selling Fee (CFTC) alleged Bankman-Fried dedicated fraud in lawsuits filed on Tuesday.

The CFTC sued Bankman-Fried, Alameda and FTX on Tuesday, alleging fraud involving digital commodity belongings.

Since at the least Could 2019, FTX raised greater than $1.8 billion from fairness traders in a years-long “brazen, multi-year scheme” in which Bankman-Fried hid FTX was diverting buyer funds to Alameda Analysis, the SEC alleged. 

Bankman-Fried, who based FTX in 2019, was an unconventional determine who sported wild hair, t-shirts and shorts on panel appearances with statesmen like former US President Invoice Clinton.

He turned one of many largest Democratic donors, contributing $5.2 million to President Joe Biden’s 2020 marketing campaign. Forbes pegged his web price a yr in the past at $26.5 billion.

FTX filed for chapter on Nov. 11, leaving an estimated 1 million prospects and different traders going through losses within the billions of {dollars}. The collapse reverberated throughout the crypto world and despatched bitcoin and different digital belongings plummeting.

The collapse was considered one of a sequence of bankruptcies in the crypto business this yr as digital asset markets tumbled from 2021 peaks. A crypto trade is a platform on which traders can commerce digital tokens reminiscent of bitcoin. 

As authorized challenges mount, the US Congress can be crafting laws to rein in a loosely regulated business. 

FTX has shared findings with the SEC and US prosecutors and is investigating whether or not Bankman-Fried’s mother and father have been concerned within the operation. 

The legal professional normal’s workplace of the Bahamas stated it anticipated Bankman-Fried to be extradited to america. 

Bankman-Fried resigned as FTX’s CEO the identical day because the chapter submitting. FTX’s liquidity crunch got here after he secretly used $10 billion in buyer funds to assist his proprietary buying and selling agency Alameda, Reuters has reported. At the very least $1 billion in buyer funds had vanished.