Former FTX boss Sam Bankman-Fried remains in detention in the Bahamas

The latter was indicted on Tuesday by the American courts for having defrauded the customers of his former company FTX.

Sam Bankman-Fried, a former rising star in cryptocurrencies, was indicted on Tuesday by American justice for defrauding customers and investors who had placed their money in his companies FTX and Alameda.

Apprehended Monday evening at the request of the United States in the Bahamas, where he resides, the thirties was presented to a magistrate of the archipelago, who decided to keep him in detention.

Dressed in a blue suit and without handcuffs, he said during the hearing in a court in Nassau that he could oppose his extradition to the United States, local media reported.

8 charges

US justice wants to try him on eight counts, including electronic fraud, money laundering and violation of electoral laws. Sam Bankman-Fried, nicknamed “SBF”, is accused of having, from the beginning of FTX in 2019, used the money deposited by customers wishing to speculate on cryptocurrencies to finance the activity — and risky bets — of his brokerage and investment company Alameda.

He is also accused of having lied to the financiers who lent money to Alameda about the real financial health of the company and to the investors of FTX. He finally used money “stolen” from his clients to pay tens of millions of dollars to political leaders, Democrats and Republicans alike, and thus try to “buy influence” in Washington, accused the prosecutor New York Federal, Damian Williams, at a press conference.

Financial market regulators have simultaneously filed civil complaints against the former financial prodigy. He has “built a house of cards based on deception,” said Gary Gensler, the chairman of the authority overseeing Wall Street (the SEC).

The stock market policeman accuses him of having lied to investors about the links between his two companies and of having used his clients’ money to make “risky investments, lavish real estate purchases and significant political donations”.

The agency in charge of derivatives (CFTC) accuses him for his part of fraud and false declarations.

“Mr. Bankman-Fried is reviewing the charges with his legal team and is considering all of his legal options,” his US attorney, Mark Cohen, said in a statement.

“Protect consumers”

The platform was however valued at 32 billion dollars at the start of the year. “SBF” had recruited many celebrities to promote it and met regularly with regulators in Washington.

But in early November, doubts began to surface about FTX’s ties to Alameda, and many customers sought their money back. Unable to meet their demands, the group filed for bankruptcy on 11 November.

The collapse of FTX has tripped up several companies in the cryptocurrency industry and prompted many officials to call for increased regulation. The spokeswoman for the White House thus recalled on Tuesday that the government of Joe Biden supports “legislative efforts to enact cryptocurrency legislation to better protect American consumers”.

In the United States, “if he is convicted of fraud, he could spend the rest of his life in prison, given the amount”, estimates Jacob Frenkel, of the firm Dickinson Wright. “There wouldn’t be an indictment if prosecutors weren’t absolutely confident they’re going to get a conviction,” the former SEC employee added.

Total lack of accounting

A graduate of the Massachusetts Institute of Technology, son of law professors at Stanford University, Sam Bankman-Fried had managed to legitimize cryptocurrencies with the general public and the political class. His fortune was once estimated at $25 billion.

He was still supposed to speak on Tuesday before a parliamentary committee of the House of Representatives, after John Ray, the new boss of FTX.

The former leaders of the platform have shown a “complete failure” at all levels of control, said the latter to Congress, deploring in particular “the total absence” of accounting or an independent board of directors for a company that was brewing billions of dollars.

At first glance, “the collapse of the FTX group appears to be the result of the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals,” the official said.

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