The U.S. Securities and Exchange Commission filed on Tuesday charges against FTX founder Sam Bankman-Fried, saying he engaged in a scheme to defraud investors in the cryptocurrency exchange as well as the platform's customers. The charges were made after he was arrested in the Bahamas on Monday evening after the U.S. had filed criminal charges against the 30-year-old, who had been CEO of FTX until it filed for bankruptcy in November. The indictment in the Department of Justice's criminal charges is expected to be unsealed on Tuesday morning. "Unbeknownst to those investors (and to FTX's trading customers), Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform's customer funds for his own personal benefit and to help grow his crypto empire," the SEC complaint said. SBF, as he is known, raised more than $1.8B from investors, including some U.S. investors, who bought equity stakes in FTX, "believing that that crypto exchange had appropriate controls and risk management measures." He raised funds and built up the crypto platform, while touting the importance of regulation and accountability. "But from the start, Bankman-Fried improperly diverted customer assets to his privately-held crypto hedge fund, Alameda Research LLC (“Alameda”), and then used those customer funds to make undisclosed venture investments, lavish real estate purchases, and large political donations," the SEC's complaint said. The SEC said it's seeking to claw back SBF's alleged "ill-gotten gains" and pay prejudgment interest on them, to impose civil penalties, bar SBF as an officer and director, and prohibit him from participating in the offer or sale of securities, including crypto asset securities. SBF had been due to testify before a House committee in Congress this morning. John J. Ray, III, will tell Congress this morning what he found when he took over as CEO of FTX in November.
