Since his $32 billion cryptocurrency exchange collapsed last month, Sam Bankman-Fried has claimed over and over that the implosion of FTX was the result of sloppy internal accounting that culminated in a damaging run on deposits.
But a series of civil and criminal charges filed against Mr. Bankman-Fried on Tuesday describe a much more serious chain of events: His crypto empire was a fraud from the start.
In a criminal indictment unsealed on Tuesday in the Southern District of New York, Mr. Bankman-Fried was charged with eight counts, including wire fraud on customers and lenders and conspiracy to defraud the United States and violate campaign finance laws.
A parallel civil complaint filed by the Securities and Exchange Commission laid out a detailed narrative of FTX’s collapse, claiming that for years Mr. Bankman-Fried had illegally used customer deposits to fund his business and political activities and funneled money to the hedge fund he also founded and owned, Alameda Research.
“Bankman-Fried was orchestrating a massive, yearslong fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire,” the S.E.C. said in its civil complaint.
Mr. Bankman-Fried used customer funds to “make undisclosed venture investments, lavish real estate purchases, and large political donations,” the complaint said.
Mr. Bankman-Fried was arrested on Monday evening at his home in the Bahamas, a stunning fall from grace for an executive who was once described as a modern-day John Pierpont Morgan and became a prolific Democratic Party donor.
Mark Cohen, an attorney for Mr. Bankman-Fried, said his client “is reviewing the charges with his legal team and considering all of his legal options.”
This is a developing story. Check back for updates.
David Yaffe-Bellany and Matthew Goldstein
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