NEW YORK — The U.S. government charged Samuel Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes on Tuesday, alleging he intentionally deceived customers and investors to enrich himself and others, while playing a central role in the company’s multibillion-dollar collapse.
Federal prosecutors said Bankman-Fried devised “a scheme and artifice to defraud” FTX’s customers and investors beginning in 2019, the year it was founded. He illegally diverted their money to cover expenses, debts and risky trades at the crypto hedge fund he started in 2017, Alameda Research, and to make lavish real estate purchases and large political donations, prosecutors said in a 13-page indictment.
Bankman-Fried, 30, was arrested Monday in the Bahamas at the request of the U.S. government, and remains in custody after being denied bail.
He has been charged with eight criminal violations, ranging from wire fraud to money laundering to conspiracy to commit fraud. If convicted of all the charges, Bankman-Fried — referred to by crypto enthusiasts as “SBF” — could face decades in jail.
At a news conference on Tuesday, U.S. Attorney Damian Williams in New York called it “one of the biggest frauds in American history,” and said the investigation is ongoing and fast-moving. Bankman-Fried has fallen hard and fast from the top of the cryptocurrency industry he helped to evangelize. FTX filed for bankruptcy on Nov. 11, when it ran out of money after the cryptocurrency equivalent of a bank run.
Before the bankruptcy, he was considered by many in Washington and on Wall Street as a wunderkind of digital currencies, someone who could help take them mainstream, in part by working with policymakers to bring more oversight and trust to the industry.
Bankman-Fried had been worth tens of billions of dollars and was able to attract celebrities like Tom Brady or former politicians like Tony Blair and Bill Clinton to his conferences at luxury resorts in the Bahamas. One prominent Silicon Valley firm, Sequoia Capital, invested hundreds of millions of dollars in FTX.
Sporting shorts and t-shirts to contrast himself with the buttoned-down world of Wall Street, he was the subject of fawning media profiles, a vocal advocate for a type of charitable giving known as “effective altruism,” and garnered millions of Twitter followers.