Former CEO of cryptocurrency firm FTX Sam Bankman-Fried charged with money laundering and wire fraud

Sam Bankman-Fried Credit: AP

The former CEO of failed cryptocurrency firm FTX, Sam Bankman-Fried, has been charged with orchestrating a scheme to defraud investors hours after being arrested in the Bahamas.

Mr Bankman-Fried was charged with eight counts, ranging from wire fraud to money laundering to conspiracy to commit fraud on the United States.

He was also charged with making more than $25,000 (£20,000) in illegal campaign contributions, a notable charge as Bankman-Fried was one of the largest political donors this year.

The indictment says Mr Bankman-Fried allegedly committed a years-long fraud by diverting investors’ funds to his private hedge fund and using the money to make venture investments, buy property and make large political donations.

Earlier, in civil charges by the Securities and Exchange Commission, Mr Bankman-Fried was accused of defrauding investors and using proceeds from investors to buy property on behalf of himself and his family.

The former CEO had been under criminal investigation by US and Bahamian authorities following the collapse last month of FTX. He has largely been holed up in his Bahamian luxury compound in Nassau since the company's failure.

He will be "promptly" extradited once US authorities make a formal request, US Attorney Damian Williams said after Mr Bankman-Fried's earlier arrest.

Mr Bankman-Fried said recently he did not “knowingly” misuse customers’ funds.

FTX, which is headquartered in the Bahamas, filed for bankruptcy on November 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

Mr Bankman-Fried has a right to contest his extradition, which could delay but likely not stop his transfer to the US.

His arrest comes a day before he was due to testify in front of the House Financial Services Committee.

Mr Bankman-Fried was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion (£25 billion). FTX grew to become the second-largest cryptocurrency exchange in the world.

FTX became the second-largest cryptocurrency exchange in the world. Credit: AP

But his success unravelled quickly last month, when reports called into question the strength of FTX’s balance sheet.

Along with the charges, US authorities are seeking to have Mr Bankman-Fried forfeit all financial gains he might have received as part of the scheme.

Customers moved to withdraw billions of dollars which FTX could not meet.

Bahamian authorities plan to continue their own investigation into Mr Bankman-Fried.

“The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law,” said Bahamian Prime Minister Philip Davis, in a statement.

The US Securities and Exchange Commission said it had authorised separate charges related to alleged violations of securities laws and would file them publicly on Tuesday.

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