The United States Attorney for the Southern District of New York charged disgraced FTX founder Sam Bankman-Fried (“SBF”) with eight criminal counts, including conspiracy and wire fraud, for allegedly misusing billions of dollars in customers’ funds prior to the collapse of his “House of Cards” cryptocurrency empire.
The indictment, unsealed shortly after police in the Bahamas arrested SBF, details what is likely one of the biggest frauds in US history. SBF is alleged to have engaged in a scheme to defraud customers by misappropriating their deposits into FTX in order to pay for expenses and debts and to make investments on behalf of SBF’s crypto hedge fund, Alameda Research. Further, SBF is alleged to have made illegal campaign contributions to both Democrats and Republicans with customers’ deposits.
FTX’s current CEO, John Ray III (yes, the same John Ray III that became the CEO of Enron and oversaw its liquidation during its years in bankruptcy) told congressional lawmakers on Tuesday that FTX lost $8 billion of customer money, stating that the company allowed “absolute concentration of control in the hands of a small group of grossly inexperienced, nonsophisticated individuals.”
This latest catastrophic implosion has reignited calls for US officials to regulate the largely unregulated cryptocurrency market. Having loaded FTX’s collapse and SBF’s fall from grace to their munition coffers, critics of the cryptocurrency industry ready themselves to welcome to the regulatory fray their advocate counterparts, who are now undoubtedly uttering “Alea iacta est” from across the aisle.
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About Zachary Crane
Zachary Crane's practice is focused on consumer protection litigation. Zack is an associate in the firm's New York office.
Associate at Faruqi & Faruqi, LLP
New York office
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