Following FTX’s demise last month, which resulted in the destruction of billions of dollars’ worth of user assets, the cryptocurrency ecosystem has suffered greatly from a lack of trust. FTX was “one of the biggest financial frauds” in history, SDNY says.
Federal prosecutors termed FTX’s unexpected collapse “one of the biggest financial frauds in American history,” on Tuesday, accusing founder and former CEO Sam Bankman-Fried (SBF) of defrauding investors while enriching himself.
The U.S. Attorney for the Southern District of New York, Damian Williams, laid out the available evidence in his first public speech following Bankman-Fried’s unexpected arrest in the Bahamas late Monday. He also insisted that the probe was far from complete.
Driving the news: SBF’s eight-count indictment detailed a number of areas of wrongdoing, including deceiving FTX’s clients and investors and misleading lenders to Alameda, FTX’s sister firm and hedge fund.
Additionally, he charged SBF with directing “illegal” political donations to both parties.
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Zoom out: Following FTX’s demise last month, which resulted in the destruction of billions of dollars’ worth of user assets, the cryptocurrency ecosystem has suffered greatly from a lack of trust.
Of note: The timing of SBF’s arrest was questioned, which prevented him from appearing before a scheduled hearing in Congress to respond to inquiries from lawmakers while under oath.
Williams stated that he approved indictments on Wednesday and that the indictment occurred on Friday. The arrest was “dictated by law enforcement.”
He could not comment on the extradition procedure, but stated SBF is still in the Bahamas.
Between the lines: Other charges may be filed later.
“To anyone who participated in wrongdoing and has yet not yet come forward, come see us before we come see you,” Williams said.
Representatives of partner task forces were present:
- Michael Driscoll, assistant FBI director in charge of the New York Field Office
- Gurbir Grewal, director of SEC’s Division of Enforcement
- Gretchen Lowe, Acting Director of CFTC’s Division of Enforcement
Bottom line: According to Williams, the extradition effort is underway.
Unnamed sources claim that US authorities are probably looking for proof of substantial misrepresentations made to investors. To counter this, FTX’s Bankman-Fried hired Ghislaine Maxwell’s defense attorney.