SBF was charged with eight counts of criminal actions by the Securities and Exchange Commission that included conspiracy and wire fraud after allegedly misappropriating billions of dollars in customer funds before the collapse of his $30 billion crypto empire.
The government's indictment, which was unsealed Tuesday morning, charges SBF with conspiring “to defraud customers of FTX.com by misappropriating those customers’ deposits and using those deposits to pay expenses and debts of Alameda Research.” The charges include conspiring to commit wire fraud on customer and lenders, wire fraud on customers and lenders, conspiracy to commit commodities fraud, securities fraud, and money laundering, according to Zero Hedge.
But some of the most serious charges are conspiracy to defraud the United States, along with violations of campaign finance laws after becoming the second-largest donor to Democrats during the 2020 election cycle.
The indictment reads, in part:
[SBF] willfully and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States by engaging in violations of federal law involving the making, receiving, and reporting of a contribution, donation, or expenditure, in violation of Title 52, United States Code, Sections 30109(d) (1) (A) & (0).
[SBF] did defraud the United States, and an agency thereof, by impairing, obstructing, and defeating the lawful functions of a department and agency of the United States through deceitful and dishonest means, to wit, the Federal Election Commission’s function to administer federal law concerning source and amount restrictions in federal elections...
FTX filed for bankruptcy protection last month after revelations surfaced that the crypto company was improperly connected to investment firm Alameda Research; "both were controlled by Bankman-Fried and an insular group of amateur executives working from a luxury penthouse in the Bahamas," The Daily Wire noted further.
He's been charged, specifically, with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934, two Great Depression-era laws aimed at heading off fraudulent business practices some say led to the collapse of banks.
“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 press release. “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.”
The indictment comes after Bankman-Fried engaged in a media tour of sorts in which he claimed that he just didn't understand what was going on -- not that he was engaged in any criminal activity or fraud.
But the SEC believes otherwise: The agency, The Daily Wire notes, "asserted that Bankman-Fried defrauded more than $1.8 billion from investors, with most of the funding sourced from American citizens, while touting FTX as a 'safe' and 'responsible' platform even as he provided Alameda Research with a virtually unlimited line of credit funded by the company’s customers. The complaint also alleges that he used commingled funds to make 'undisclosed venture investments, lavish real estate purchases, and large political donations.'"
CNBC added: "Prosecutors also allege he conspired with others to make illegal donations to political candidates, using the names of other persons to mask and augment political giving."
Howard Fischer, a former Securities and Exchange Commission lawyer, told the financial news outlet, “Given the speed of the government complaints and the indictment, it seems likely that former FTX employees (most likely those in senior positions) were cooperating with the authorities, most likely in exchange for leniency.”