Founder Sam Bankman-Fried facing criminal charge pile-on from multiple federal sources

Federal prosecutors at the Southern District of New York unveiled the indictment against disgraced FTX founder Sam Bankman-Fried on Tuesday, revealing eight charges.

The SDNY is one of several federal groups to charge Bankman-Fried this week, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Bankman-Fried is charged witH conspiracy to commit wire fraud on customers; committing wire fraud on customers; conspiracy to commit wire fraud on lenders; committing wire fraud on lenders; conspiracy to commit commodities fraud; conspiracy to commit securities fraud; conspiracy to commit money laundering, and conspiracy to defraud the US and violate campaign finance laws.

Bankman-Fried is currently in police custody in the Bahamas, where he lives and FTX is based. The U.S. is likely to request his extradition, but the process is likely to take longer than a few days.

Bipartisan lawmakers expressed frustration that disgraced FTX founder Sam Bankman-Fried was arrested in the Bahamas just one day before he was scheduled to testify to Congress on Tuesday.

Police in the Bahamas arrested Bankman-Fried on Monday evening, less than 24 hours before he was scheduled to appear remotely before the House Financial Services Committee. While Bankman-Fried did submit a written statement to the committee, the only person testifying at the hearing was current FTX CEO John Ray III.

“The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity,” Committee chair Rep. Maxine Waters, D-Calif., said.

Republicans were also dismayed by the decision to make the arrest right before the hearing. Rep. Lance Gooden, R-Texas, said he shared Waters’ feelings on the matter during a Fox News appearance.”I don’t understand why the Justice Department would not want him on record today and potentially tomorrow in a Senate hearing spilling his guts,” Gooden said. “It’s very frustrating.”

Ronn Blitzer contributed to this report.

Newly minted FTX CEO John Ray III blamed the company’s “grossly inexperienced” former leadership for the company’s collapse on Tuesday.

Ray testified before the House Financial Services Committee on Tuesday. He took over as CEO after FTX founder Sam Bankman Fried resigned the position amid the company’s collapse. Ray told lawmakers that FTX essentially gambled with customers’ funds without any safeguards to protect their investments.

“The FTX group’s collapse appears to stem from absolute concentration of control in the hands of a small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company entrusted with other people’s money or assets,” Ray said.

The Commodity Futures Trading Commission filed new charges against FTX founder Sam Bankman-Fried on Tuesday.

The CFTC is only the latest group to join the pile-on against Bankman-Fried, who also faces charges from the Securities and Exchange Commission (SEC) and federal prosecutors in New York.

The CFTC alleges that Bankman-Fried’s FTX mixed customer funds and that he violated the Commodities Exchange Act. The court filing with the Southern District of New York (SDNY) alleges that Bankman-Fried’s Alameda Research held access to up to $8 billion in FTX customer funds.

The House Financial Services Committee held a hearing on Disgraced FTX founder Sam Bankman-Fried on Tuesday.

Current FTX CEO John Ray III will provide live testimony during the hearing, but Bankman-Fried will not, having been arrested in the Bahamas on Monday. Bankman-Fried faces charges from both federal prosecutors and the Securities and Exchange Commission (SEC).

Ray is expected to testify regarding the near-total lack of corporate regulation at FTX.

The new FTX CEO said his investigation is still ongoing but has found several “unacceptable management practices” so far that the “very small group of grossly inexperienced and unsophisticated individuals” running the exchange engaged in.

The seasoned restructuring officer wrote that senior FTX management had access to customer assets they were able to redirect, held hundreds of millions of dollars of crypto access absent of security controls or encryption, and pointed to “[the] absence of audited or reliable financial statements.”

Breck Dumas contributed to this report.

Federal prosecutors in New York unsealed the indictment against disgraced former FTX CEO Sam Bankman-Fried on Tuesday, revealing the specific charges he faces in the U.S.

The Southern District of New York has charged Bankman-Fried with wire fraud; conspiracy to commit wire fraud; securities fraud; conspiracy to commit securities fraud, and money laundering, Fox Business has learned.

The U.S. has requested Bankman-Fried’s extradition to the U.S. He was arrested in the Bahamas on Monday, where he resides and FTX is based.

Sam Bankman-Fried’s testimony before the House of Representatives is now up in the air following his arrest in the Bahamas and criminal charges from multiple U.S. government sources.

Bankman-Fried had agreed to testify remotely before the House Financial Services Committee led by Chairwoman Maxine Waters, but was arrested in the Bahamas on Monday evening. He faces charges from federal prosecutors in New York and another fraud complaint from the Securities and Exchange Commission (SEC).

The SEC complaint, filed Tuesday, accuses Bankman-Fried of carrying out “a scheme to defraud equity investors in FTX Trading Ltd,” his cryptocurrency trading platform. The court filing describes the alleged operation as “a massive, years-long fraud.”

“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. “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. Compliance protects both those who invest on and those who invest in crypto platforms with time-tested safeguards, such as properly protecting customer funds and separating conflicting lines of business. It also shines a light into trading platform conduct for both investors through disclosure and regulators through examination authority. To those platforms that don’t comply with our securities laws, the SEC’s Enforcement Division is ready to take action.”

Bankman-Fried had been scheduled to appear
remotely before the House committee, but is now unlikely to appear. The committee pre-released the written testimony of current FTX CEO John Ray III, which provides insight into what will likely be discussed.

Ray took over the company following Bankman-Fried’s resignation. He has handled multiple corporate collapses in the past, and states that FTX is a prime example of failure in corporate governance.

The Securities and Exchange Commission announced they have brought charges against Samuel Bankman-Fried for allegedly violating the Securities Act and the Securities Exchange Act.

The new charges
come in addition to the federal indictment Bankman-Fried faces in New York. The former FTX billionaire was arrested in the Bahamas on Tuesday, hours before federal prosecutors announced their indictment. Tuesday’s SEC complained alleges “massive, years-long fraud.”

“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. “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. Compliance protects both those who invest on and those who invest in crypto platforms with time-tested safeguards, such as properly protecting customer funds and separating conflicting lines of business. It also shines a light into trading platform conduct for both investors through disclosure and regulators through examination authority. To those platforms that don’t comply with our securities laws, the SEC’s Enforcement Division is ready to take action.”

Bankman-Fried had initially been scheduled to testify before Congress
on Tuesday, but it is unclear how his indictment and arrest will impact the proceedings. The U.S. is expected to request his extradition from the Bahamas, where he lived and FTX was based.

“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY,” U.S. Attorney Damian Williams wrote in a public statement on Monday evening. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”