Following his arrest in the Bahamas, US authorities on Tuesday officially charged former FTX CEO Sam Bankman-Fried with defrauding equity investors.
According to the US Securities and Exchange Commission (SEC) complaint, since 2019, FTX raised more than $1.8 billion from equity investors, including approximately $1.1 billion from approximately 90 US-based investors.
The SEC report said that Bankman-Fried promoted FTX as a safe, responsible crypto asset trading platform, specifically mentioning the platform's sophisticated, automated risk measures to the investors.
However, the complaint claims Bankman-Fried allegedly orchestrated a years-long fraud to conceal from FTX's investors.
Also read | Former FTX CEO Sam Bankman-Fried arrested in the Bahamas
"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," SEC Chair Gary Gensler said in a statement.
Moreover, the SEC complaint seeks an injunction prohibiting Bankman-Fried from participating in issuing, buying, offering or selling any securities, except on his own personal account, repayment of ill-gotten gains, civil penalties, and a bar on officers and directors.
"FTX operated behind a veneer of legitimacy Bankman-Fried created by, among other things, touting its best-in-class controls, including a proprietary 'risk engine', and FTX's adherence to specific investor protection principles and detailed terms of service," Gurbir S. Grewal, Director of the SEC's Division of Enforcement said in a statement.
"But as we allege in our complaint, that veneer wasn't just thin, it was fraudulent," he added.
Also read | FTX CEO secretly gave $27 mn to crypto news site The Block, its CEO
FTX filed for bankruptcy last month after its possible merger with leading crypto exchange Binance did not materialise.
