SEC Charges Sam Bankman-Fried With Defrauding Investors

The SEC has finally come for disgraced FTX founder Sam Bankman-Fried, slapping the former billionaire with fraud charges

article-image

Blockworks exclusive art by Axel Rangel

share

Less than a day after Bahamian authorities arrested Sam Bankman-Fried, the US Securities and Exchange Commission (SEC) has slapped the fallen FTX founder with its own charges.

“The [SEC] today charged Bankman-Fried with orchestrating a scheme to defraud equity investors in [FTX], the crypto trading platform of which he was the CEO and co-founder,” the agency said in a statement.

“Investigations as to other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.”

SEC regulators say FTX under Bankman-Fried raised more than $1.8 billion from equity investors since May 2019 — with more than $1.1 billion of those funds coming from roughly 90 US-based investors.

Bankman-Fried promoted FTX as a safe and responsible crypto exchange, the SEC said, “specifically, touting FTX’s sophisticated, automated risk measures to protect customer assets. 

The complaint alleges Bankman-Fried exacted a years-long fraud to conceal from FTX equity investors three major aspects of the firm’s operations:

  • diversion of FTX user funds to his trading unit Alameda Research,
  • special treatment afforded to Alameda on the FTX platform — including a virtually unlimited “line of credit” funded by the platform’s customers,
  • increased risk due to FTX’s exposure to Alameda’s significant foldings of “overvalued, illiquid assets such as FTX-affiliated tokens.”

“The complaint further alleges that Bankman-Fried used commingled FTX customers’ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations,” the SEC said.

The SEC has charged Bankman-Fried with violating anti-fraud provisions, and seeks injunctions including one that prohibits him from handling securities professionally, disgorgement, civil penalties, and a bar from serving as an officer or director of a company moving forward.

Additional, parallel charges have also been filed by the Commodity Futures Trading Commission (CFTC) and the US Attorney’s Office for the Southern District of New York, per the statement.

Calls for Bankman-Fried to face legal action for his alleged wrongdoing have echoed across the crypto space since FTX suddenly went belly up last month. 

Now, those pleas are finally being met.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template Presentation.jpg

Research

The Solana validator landscape has changed drastically over the past year. The chain now has 1,332 active validators with 380.9 million SOL staked (63.9% of supply) as of February 2025. Validator revenue had diversified beyond inflationary rewards (still making up 55%) to include Jito tips (30%), priority fees (24%), and base fees (<1%), in January, especially with the increased activity on Solana. Since then, issuance has become dominant again (76%), while Jito tips (14%), priority fees (9%), and base fees (less than 1%) have reduced in share of February 2025. There has been a strong shift towards non-inflationary revenue sources, which have become more central to validator economics as priority fees and off-chain blockspace auctions gain traction. Client diversity has also improved drastically, with implementations such as Agave, Jito-Solana, and Frankendancer already in use, and upcoming clients like Firedancer and Sig expected to further strengthen resilience and reduce reliance on a single codebase.

article-image

BWR analyst Carlos Gonzalez Campo explains the consequences of SOL inflation and transfers lost to “leaky buckets”

article-image

Empire co-host Santiago Santos makes the case that memecoins have actually helped push infra forward…just not in the way you think

article-image

A16z Crypto lists seven buckets for tokens and recommendations for how to regulate them, in a filing submitted to the SEC

article-image

New model aims to resolve trading inefficiencies with a single execution layer and market maker changes

article-image

Investors navigating BTC face short-term unpredictability, influence from other markets

article-image

The GENIUS Act aims to establish regulatory guidelines for stablecoins