The former CEO and founder of cryptocurrency exchange FTX, Samuel Bankman-Fried, was charged with financial crimes on Tuesday. Allegedly, he deceived customers and investors in order to gain a profit and he played a central role in FTX’s collapse, which was worth billions.
Before he was arrested, Bankman-Fried hid in his luxury Bahamas villa. He is expected to be extradited to the U.S., although the timing of the extradition request is unclear.
In 2019, Bankman-Fried allegedly devised an elaborate scheme for defrauding FTX’s customers and investors. In addition to making lavish real estate purchases and large political donations, he diverted the company’s money to his crypto hedge fund, Alameda Research.
On Monday, Bankman-Fried was arrested at the request of the U.S. government. He was charged with eight crimes on Tuesday, ranging from wire fraud to money laundering to conspiracy to commit fraud. A criminal charge was also filed against Bankman Fried for illegal campaign contributions. The charges could result in a maximum penalty of 115 years.
Sam Bankman-Fried took $2.5m from victims of his Ponzi scheme and gave it to the left-wing activists at @CampaignLegal. @CampaignLegal should return every penny to the victims.
— Tom Cotton (@TomCottonAR) December 13, 2022
When FTX ran out of money Nov. 11, it filed for bankruptcy. As a result, Bankman-Fried’s dominance in the cryptocurrency industry he helped create has crumbled.
Before he went bankrupt, Bankman-Fried was regarded by many in Washington and on Wall Street as a digital currency guru. A net worth of $26.5 billion made him one of the world’s wealthiest people. He built FTX into the second-largest cryptocurrency exchange in the world and he donated millions to mostly left-leaning political causes and Democratic campaigns.
His success came crashing down last month when reports questioned FTX’s balance sheet. When customers wanted to withdraw billions of dollars, FTX couldn’t deliver — their money was gone.
Prosecutors said Bankman-Fried was a flight risk and should be held without bail. He is likely to request a formal hearing for extradition.
Bankman-Fried has been indicted on top of civil charges announced by the Securities and Exchange Commission and Commodity Futures Trading Commission on Tuesday. According to the SEC, Bankman-Fried defrauded investors and used their money to buy real estate for himself and his family.
Authorities said they’ll try to recoup any money that Bankman-Fried got from the scheme.