Bankman-Fried fraud used ‘dirty money’ in DC, US prosecutor says

Sam Bankman-Fried, the founder of FTX cryptocurrency exchange, is responsible for “one of the largest financial frauds in US history” and the investigation into the alleged scheme is “in full swing,” Manhattan attorney Damian Williams said on Tuesday. .

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Bankman-Fried was charged with eight criminal counts earlier in the day, including conspiracy and wire fraud, for allegedly misusing billions of dollars in client funds to support his Alameda Research crypto fund. Bankman-Fried was arrested Monday in the Bahamas, where he lived.

While the 30-year-old Bankman-Fried may not fit the typical profile of someone who defrauds investors, “you can commit fraud in shorts and t-shirts in the sun — that’s also possible,” Williams said at a news conference in New York. York. York. The alleged plan involved “dirty money” that was “used in the service of Bankman-Fried’s desire to buy bipartisan influence and influence the direction of public policy in Washington,” the federal prosecutor said.

“While this is our first public announcement, it won’t be our last,” said Williams.

Prosecutors allege that Bankman-Fried used tens of millions of dollars of the proceeds for illegal contributions to political campaigns.

“He preyed on his clients, the victims of this case, abusing the trust placed not only in his company, but in himself as the leader of that company,” said Michael Driscoll, deputy director of the FBI. in New York City. “I want to be clear: this case is about fraud. Fraud is fraud.”

If convicted, Bankman-Fried could face up to 20 years in prison for each of the charges of wire fraud and money laundering, and five years for each of the charges of commodity and securities fraud and campaign finance fraud, the U.S. Justice Department said. . said in a statement. When convicted, white-collar defendants rarely serve maximum legal sentences.

The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission separately charged Bankman-Fried Tuesday over his alleged role in the collapse of FTX.

Since FTX’s inception in 2019, Bankman-Fried “began secretly and inappropriately diverting client funds into its crypto hedge fund Alameda investigation,” SEC Enforcement Director Gubir Grewal said at the news conference. “The Bankman-Fried house of cards began to collapse as crypto prices plummeted in 2022.”

The collapse shows that trading on a non-compliant trading platform carries risks for investors and offers no protection against fraud, Grewal said. “It is imperative that non-compliant platforms comply with US regulators,” he said.

“The runway is getting shorter for them to come in and register with us, and for those who don’t, the enforcement department is ready to take action,” Grewal said.

Read more: Bankman-Fried Balks on release as US Sketches Case for Fraud

–With assistance from Bob Van Voris.

(Updates with maximum sentences for alleged crimes.)

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