SEC charges Sam Bankman-Fried with defrauding FTX investors

The US Securities and Exchange Commission (SEC) has filed charges against disgraced former FTX CEO Sam Bankman-Fried, with the regulator revealing the charges a few hours after Bankman-Fried’s arrest in the Bahamas.

The SEC’s complaint against the 30-year-old US citizen relates to his role in “orchestrating a scheme to defraud” FTX investors. The agency is also investigating the FTX founder as to whether he committed other securities violations, a press release published on Tuesday noted.

Bankman-Fried built a ‘house of cards’

SEC Chair Gary Gensler, who has also been criticized from within the crypto community for his apparent failures in relation to the FTX saga, noted that Bankman-Fried’s fraud charges should help cryptocurrency exchanges and other platforms seek regulatory compliance.

“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. 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.”

According to Gensler, compliance will help protect investors, with consumer funds segregated from company funds.

Gurbir S. Grewal, the Director of Enforcement as SEC, said that Sam Bankman-Fried had tried to hide his fraudulent activities by portraying himself and the exchange as the best of the lot. But as the implosion showed, that is far from the reality.

Grewal added:

“FTX’s collapse highlights the very real risks that unregistered crypto asset trading platforms can pose for investors and customers alike. While we continue to investigate FTX and other entities and individuals for potential violations of the federal securities laws, as alleged in our complaint, today we are holding Mr. Bankman-Fried responsible for fraudulently raising billions of dollars from investors in FTX and misusing funds belonging to FTX’s trading customers.”