The founder of cryptocurrency exchange FTX (29) has been arrested in the Bahamas for large-scale fraud

According to the SEC’s complaint, Bankman-Fried raised more than $1.8 billion through an “organised scheme to defraud investors.” He would use the money for risky investments, buying real estate and making large political donations. The SEC talks about “years of fraud” by building a house of cards.

Over a year ago, science broke out on the then only two years old cryptocurrency trading platform, FTX.

Investors are in line

The young billionaire Bankman-Fried’s company (29) has raised an additional $420 million in capital and is valued at $25 billion.

Investors lined up to lend money to the company. Via FTX, you can trade well-known cryptocurrencies, such as Bitcoin and Ethereum.

However, the platform has also offered derivative investment products such as derivatives, options, and ETFs (Exchange Traded Funds) with which you can invest indirectly in cryptocurrencies via an underlying index.

Last month, the cryptocurrency exchange collapsed when a takeover stumbled. This was followed by the operation of digital banking services. Billions in value evaporated and FTX collapsed when it failed to find new investors. It then turns out that the fallen CEO had used his clients’ money in risky investments for his other company, called Alameda. Then the billions disappeared. He may also have misused part of that money for private expenses such as real estate.

no intention

Bankman-Fried himself has long maintained that there was no intent involved. He said his company was on the rocks due to the financial mess. But now he has been charged and arrested in the Bahamas, where he lives and his company is headquartered.

A New York City court announced that prosecutors charged Bankman Fried with a total of eight counts of felony. In addition to improper use of customer funds in Alameda’s FTX, it could also involve misleading lenders and customers about the financial health of crypto companies. He would also launder the proceeds.

The current CEO of FTX, John Ray III, has a lot of criticism for his predecessor. He stated that the collapse of the cryptocurrency exchange is the result of the concentration of almost all responsibilities in a small group of very inexperienced administrators. Additionally, there was virtually no dividing line between FTX and Alameda.