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Sam Bankman-Fried, the former chief executive officer of bankrupt crypto exchange FTX, has been charged with defrauding investors by the U.S. Securities and Exchange Commission.
“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,” Gary Gensler, chairman of the SEC, said in a statement.
The charges have been announced only a day after Bankman-Fried was arrested in the Bahamas and is likely to face extradition to the United States.
The complaint alleges that Bankman-Fried ran a years-long fraud to conceal undisclosed diversion of FTX customers’ funds to Alameda Research LLC—a hedge fund operated by the FTX Group.
Alameda also got access to unlimited credit, which was funded by FTX customers, and was exempted from risk mitigation rules on the exchange, according to the complaint.
Bankman-Fried also directed Alameda to borrow billions of dollars from crypto asset lending firms for his personal use and his venture investments, according to the complaint.
“FTX’s collapse highlights the very real risks that unregistered crypto asset trading platforms can pose for investors and customers alike,” Gurbir S. Grewal, director of the SEC’s enforcement division, said in the statement.
The complaint also alleges that customer funds were diverted to Alameda so that they could be further used for VC investments, real estate purchases, and political donations.
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Image and article originally from www.bqprime.com. Read the original article here.