The U.S. Securities and Exchange Commission (SEC) has filed eight charges against FTX founder and former CEO Sam Bankman-Fried, accusing the 30-year-old cryptocurrency manager of “orchestrating a massive, years-long fraud” resulting in the loss of tens of billions of customer funds.
Bankman-Fried was arrested in the Bahamas where he lives on Monday. The Bahamas are expected to extradite him to face charges in the United States. Numerous tech leaders had wondered why he had yet to face criminal charges and why the media and politicians handled him kindly with “kid gloves,” despite growing evidence that he may have committed fraud.
The SEC accused him of wire fraud, securities fraud, money laundering, and campaign finance law violations. The charges accuse him of funneling customers’ money to his privately held crypto hedge fund and using the funds “to make undisclosed venture investments, lavish real estate purchases, and large political donations.”
The purchases include 15 condos in an ocean-side building and over $40 million in political donations.
His crypto exchange declared bankruptcy in November, forbidding its numerous international investors from withdrawing their funds.
On November 7, four days before FTX filed for bankruptcy, Bankman-Fried published a now-deleted tweet reassuring investors, “FTX is fine. Assets are fine … FTX has enough to cover all client holdings.” The SEC says the tweet was “false and misleading.”
FTX’s new CEO called the company’s records “a complete failure of corporate controls and such complete absence of trustworthy financial information,” adding that the company went belly up because a “very small group of grossly inexperienced and unsophisticated individuals” at the company “failed to implement virtually any of the systems or controls” for competent managing investor funds.
After the company filed for bankruptcy, Bankman-Fried offered media interviews and apologized for not paying more attention to the company’s financial dealings.
“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,” SEC Chair Gary Gensler said in a statement.