Until he resigned as the CEO of FTX last month, Sam Bankman-Fried, whose net worth peaked at an astounding $26 billion (£21 billion), managed one of the top cryptocurrency exchanges in the world from the Bahamas.
An investor claims that the ex-CEO of one of the largest bitcoin platforms in the world defrauded them of $1.8 billion (£1.5 billion). The US Securities and Exchange Commission accuses FTX's founder Sam Bankman-Fried of various offenses (SEC).
Sam Bankman-Fried, an ex-CEO of FTX, is accused of scamming investors
Sylvester Stallone has lost a lot with this. After authorities in the Bahamas received official notice that separate criminal charges had been brought against him in the US, he was taken into custody.
The 30-year-old, whose net worth peaked at $26 billion (£21 billion), oversaw the company from the island until he resigned as CEO last month. According to the SEC complaint, Bankman-Fried secretly moved client monies to his first company, Alameda Research.
The money accumulated at Alameda is said to have been used for expensive property purchases, unreported venture investments, and substantial political donations.
"We allege that Sam Bankman-Fried built a house of cards on deception while promising traders it was one of the authentic buildings in cryptocurrencies," stated SEC Chairman Gary Gensler.
Sam Bankman-Fried, the CEO and founder of FTX, testifies at a House Financial Services Committee hearing.
FTX US Derivatives CEO Sam Bankman-Fried speaks at a hearing of the House Agriculture Committee titled "Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models."
Where did we come from?
The specific charges that led to his detention in the Bahamas are anticipated to be made public later. Bankman-Fried is free to object to being extradited to face them.
The accusations surfaced the day before he was appointed to appear before the House Financial Services Committee of America. More information: How FTX founder went from star-studded £21 billion enterprise to being charged.
Since the FTX demise, which ran out of funds in the cryptocurrency equivalent of a bank run, Bankman-Fried has been the subject of investigations by both US and Bahamian authorities. It was formerly the second-largest cryptocurrency exchange in the world.
Still, when many rival businesses, Binance abruptly withdrew from a non-binding bailout offer in early November, it was on the verge of bankruptcy.
Binance also said it would sell the $529 million (£430 million) of FTT, the native token of FTX, recorded on its books. Over the past month, the value of FTX's FTT coin has plummeted.
Other investors rushed to withdraw money as a result. Still, FTX could only comply with some of the requests since it appears to have utilized client deposits to cover poor wagers at Alameda.
Bankman-Fried denied scamming investors during recent media appearances, insisting he did not "knowingly" misuse clients' assets.
He has acknowledged that "obviously I didn't do a good job" at managing FTX.