The Blubber

Per SEC

The SEC released a press release that they are officially charging Samuel Bankman-Fried (SBF), founder of FTX, with defrauding investors via the trading platform. The CFTC and the US District Attorney's Office for the Southern District of New York are also filing lawsuits against the founder.

"The complaint alleges that, in reality, Bankman-Fried orchestrated a years-long fraud to conceal from FTX’s investors"

Per the complaint, there was an "undisclosed diversion" of customer funds from FTX to Alameda, and the latter received special treatment, given an unlimited "line of credit" using customer funds. The complaint also said that the money of customers of the crypto platform was also used to make lavish real estate purchases and political donations.

Gary Gensler, the Chair of the SEC, stated SBF's actions and how he promised his customers safety in the crypto space. Gensler also highlighted how the situation shed light on trading platform conduct through disclosure and regulators.

Gensler: "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,"

SBF was charged with violating the Securities Act 1933 and Securities Exchange Act 1934 anti-fraud provisions. Aside from banning the FTX founder from selling, purchasing, offering, or issuing securities, there is also a demand that he loses his gains and faces a civil penalty.

SEC's Division of Enforcement Director, Gurbir S. Grewal, specifically detailed how SBF tried to appeal to the public with what was described as a "veneer of legitimacy," sharing how the platform promised to adhere to its terms of service in terms of investor protection principles.

Grewal: "We are holding Mr. Bankman-Fried responsible for fraudulently raising billions of dollars from investors in FTX and misusing funds belonging to FTX’s trading customers."

In a recent Twitter Spaces interview with us, when asked whether he would be testifying in front of Congress in person, SBF said that he won't and would only be calling in.

Resources:

SEC

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