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


Blockworks exclusive art by Axel Rangel


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.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research



Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.


Plus, Imran Khan’s intriguing experiment on the speeds of crypto onramps


The SEC has signaled a timeline to issuers that could lead to a July 23 launch for the ETH funds, people close to the process told Blockworks


PayPal has unequivocally made a name for itself as a crypto adopter among fintech giants


Also, a look into how the highly-debated SAB 121 could end up shaking out for crypto custodians


Vance, an Ohio Republican, is largely seen as crypto-friendly


Plus, all the world is green as prices across the crypto space rally, with solana reaching a nearly two-week high