FTX founder Bankman-Fried charged with fraud in ‘house of cards’ scheme

New York — FTX founder Sam Bankman-Fried was charged by the US Securities and Exchange Commission (SEC) on Tuesday with defrauding investors in what regulators called “a house of cards”, hours before he was expected to appear before a magistrate in the Bahamas.

Separate charges would be announced by the US Attorney’s Office for the Southern District for New York and the Commodity Futures Trading Commission later on Tuesday, said the SEC.

The SEC said it will seek a director and officer bar and a penalty against Bankman-Fried with sanctions such as a civil penalty and preventing Bankman-Fried from participating in future securities purchases, offers and sales except for his personal account.

“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.

Bankman-Fried was arrested on Monday night in the Bahamas and was expected to appear before a magistrate on Tuesday, his first personal public appearance since the stunning collapse of FTX, which filed for bankruptcy in November after struggling to raise money as traders rushed to withdraw $6bn from the platform in just 72 hours.

Police in the Bahamas, where FTX was based, said the 30-year-old was arrested after 6pm on Monday (1am on Tuesday SA time) at his luxury gated community called the Albany in the capital, Nassau.

Damian Williams, the US attorney for the southern district of New York, said on Monday night that the arrest was requested by the US government, and an indictment against Bankman-Fried will be unsealed on Tuesday.

A lawyer for Bankman-Fried did not respond to requests for say on Monday.

The attorney-general’s office of the Bahamas said it expects him to be extradited to the US.

Reuters