FTX Founder Sam Banman-Fried Charged with Fraud by US SEC

Shortly after Sam Bankman-Fried (SBF) being arrested by Bahamian police force​, the founder of bankrupt crypto exchange FTX was charged by the Securities and Exchange Commission (SEC) with defraud equity investors.

The SEC alleges that SBF built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto. Specifically, according to the complaint, FTX, based in the Bahamas, raised more than $1.8 billion from equity investors, including around $1.1 billion from approximately 90 U.S.-based investors. SBF promoted FTX as a safe, responsible crypto trading platform, particularly touting FTX's sophisticated, automated risk measures to protect customer assets.

"The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws. It also shines a light into trading platform conduct for both investors through disclosure and regulators through examination authority," said SEC Chair Gary Gensler.

The SEC seeks injunctions against future securities law violations; an injunction that prohibits SBF from participating in the issuance, purchase, offer, or sale of any securities, except for his own personal account; disgorgement of his ill-gotten gains; a civil penalty; and an officer and director bar.