Bankman-Fried Charged in 'One of the Biggest Frauds' in US History

"This is one of the biggest financial frauds in American history," Damian Williams, US Attorney for the Southern District of New York, said Tuesday, announcing multiple charges against FTX founder Sam Bankman-Fried. The former CEO of the cryptocurrency exchange faces eight charges including fraud, conspiracy to commit money laundering, and conspiracy to defraud the US and violate campaign finance laws, the Guardian reports. Williams said that while Bankman-Fried is the only person to be arrested in connection with the collapsed exchange so far, the investigation is "very much ongoing, and it is moving very quickly."

Bankman-Fried was arrested in the Bahamas Monday at the request of the US after the indictment was filed. The 30-year-old, who allegedly stole billions from FTX customers, has been denied bail. The unsealing of the indictment in New York followed the filing of a civil lawsuit from theSecurities and Exchange Commission and the Commodity Futures Trading Commission Tuesday, reports the Wall Street Journal. Bankman-Fried "built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto," said SEC Chair Gary Gensler. According to the SEC complaint, Bankman-Fried diverted billions to partner firm Alameda Research and used it as a "personal piggy bank" to buy luxury real estate and make campaign contributions.

Bankman-Fried had been scheduled to testify before Congress Tuesday. John Ray III, the new FTX CEO brought in as liquidator, strongly criticized Bankman-Fried's leadership at the House Financial Services Committee hearing, the AP reports. He said the collapse of FTX caused the loss of more than $7 billion and it followed months or years of bad decisions and "virtually no internal controls." "This is not something that happened overnight or in a context of a week,” Ray told the committee, adding: "This is just plain, old-fashioned embezzlement, taking money from others and using it for your own purposes." Bankman-Fried, who reportedly plans to fight extradition from the Bahamas, could face decades in prison if convicted on all charges. (Bankman-Fried's renowned parents have been caught up in their son's downfall.)