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SDNY: FTX’s Bankman-Fried Behind “One Of The Biggest Financial Scams” In US History

FTX crypto-exchange founder Sam Bankman-Fried is responsible for one of the biggest financial scams in American history, and an investigation into the alleged scheme is very much underway, said Manhattan U.S. Attorney Damian Williams on Tuesday. 

Bankman-Fried made illegal campaign donations to both Democrats and Republicans using customer funds, said Williams, noting that FTX was “one of the biggest financial frauds” in American history, reports Axios

Williams, US attorney for the southern district of New York, said that the investigation that led to charges against Bankman-Fried is not done, and further arrests are expected. Williams declined to say if the prosecution will pursue charges against other FTX executives.

Bankman-Fried is accused of misleading FTX customers, investors and lenders to Alameda Research. 

Bankman-Fried has apologized to customers and acknowledged oversight failures of FTX, but said he doesn’t believe he is criminally responsible. 

Williams argues Bankman-Fried had knowingly defrauded customers and investors at FTX, and creditors at Alameda Research, a crypto hedge fund that he founded in 2017. The beleaguered CEO has been charged with eight felonies, including conspiracy and wire fraud.

The Commodity Futures Trading Commission (CFTC) announced similar fraud charges Tuesday against Bankman-Fried. The Commission complained  in the complaint the firm caused customers to lose $8 billion in deposits, alleging fraud related to digital commodities. 

The lawsuit alleged that FTX was fraudulent from its founding in 2019, when Bankman-Fried raided customers accounts to finance highly risky trading moves of his hedge fund, Alameda Research, which is essentially his family’s company. 

The civil complaint filed with the SEC lays out the core of the allegations against Bankman-Fried, alleging his hedge fund, Alameda Research, was given an unlimited credit line funded by FTX customers, despite ensuring depositors their money was safe and secured. 

In response to questions about why Bankman-Fried was not allowed to testify to Congress prior to being arrested,Williams said that the attorney’s office authorized charges against Bankman-Fried last Wednesday, and that the indictment against Bankman-Fried was filed on Friday.

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