Sam Bankman-Fried indicted on wire fraud and money laundering charges

The FTX founder has been charged by US prosecutors with eight criminal counts over the collapse of his crypto empire

US prosecutors charged Sam Bankman-Fried with an array of financial crimes and campaign donation violations on Tuesday.

The FTX founder is alleged to have diverted investors’ money to fund a lavish lifestyle and make risky investments in cryptocurrency.

The former billionaire was indicted on eight charges including wire fraud, money laundering, conspiracy to defraud the United States and campaign finance regulations.

Federal prosecutors in the US Southern District of New York said Mr Bankman-Fried “deliberately and knowingly” committed fraud on investors and customers since 2019.

Mr Bankman-Fried is accused of diverting customer funds from his crypto exchange FTX to the private hedge fund Alameda Research, which he also owned.

This caused both companies to collapse when cryptocurrency values plummeted.

The indictment said Mr Bankman-Fried had conspired with others to defraud FTX’s lenders “by providing false and misleading information to those lenders regarding Alameda Research’s financial condition”.

Prosecutors further allege that the 30-year-old broke campaign finance laws by masking political donations behind front companies and individuals to conceal and augment his influence.

Mr Bankman-Fried appeared in court in the Bahamas on Tuesday afternoon where a judge deemed he was a flight risk and denied his bail request, according to EyeWitness News, a local news outlet.

Chief Magistrate Joyann Ferguson-Pratt remanded Mr Bankman-Fried to the custody of the Bahamas Department of Corrections until his next appearance on 8 February.

Sam Bankman-Fried is escorted out of the Magistrate Court building after his arrest, in Nassau, Bahamas December 13, 2022 (REUTERS)

Mr Bankman-Fried was allowed to speak to his parents Joseph Bankman and Barbara Fried who were in court to support him before being taken into custody, EyeWitness News stated.

At a press conference earlier on Tuesday, US Attorney Damian Williams called FTX “one of the biggest frauds in American history”.

Mr Williams described alleged Mr Bankman-Fried had made illegal campaign donations in the “tens of millions of dollars”.

“And all of this dirty money was used in service of Bankman-Fried's desire to buy bipartisan influence and impact the direction of public policy in Washington,” he said.

He urged anyone who thought they might be a victim to contact authorities.

The US Securities and Exchange Commission had earlier slapped Mr Bankman-Fried with civil charges for allegedly orchestrating a scheme to defraud investors.

Samuel Bankman-Fried at a Senate committee hearing earlier in the year (AFP/Getty)

The civil complaint states that Mr Bankman-Fried raised more than $1.8bn from equity investors since May 2019 by falsely promoting FTX as a safe, responsible platform for trading crypto assets.

“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,” said SEC Chair Gary Gensler in a statement.

Compounding Mr Bankman-Fried’s legal peril, a second civil lawsuit was filed by the Commodity Futures Trading Commission on Tuesday.

The complaint charges all Mr Bankman-Fried, FTX and Alameda Research with “fraud and material misrepresentations” in the sale of digital commodities.

A lawyer for Mr Bankman-Fried, Mark S Cohen, said on Tuesday he is “reviewing the charges with his legal team and considering all of his legal options”.

Mr Bankman-Fried was arrested in the Bahamas on Monday and faces extradition to the US to face a jury trial.

The failed crypto baron’s arrest took lawmakers by surprise, as he had been due to testify before a Congressional hearing on Tuesday.