SEC charges SBF with defrauding investors

• SEC states Sam Bankman-Fried “concealed his diversion of FTX customers’ funds to crypto trading firm Alameda Research while raising more than $1.8 billion from investors
• The Securities and Exchange Commission on Dec. 13, charge SBF with “orchestrating a scheme to defraud equity investors in FTX Trading Ltd. (FTX)”
• Since May, 2019, FTX raised over $1.8 billion from equity investors, “including $1.1 billion from approximately 90 U.S.-based investors.”
• The SEC complaint alleges SBF orchestrated a “years-long fraud to conceal from FTX’s investors”
• (1) the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund;
• (2) the undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited “line of credit” funded by the platform’s customers and exempting Alameda from certain key FTX risk mitigation measures; and:
• (3) undisclosed risk stemming from FTX’s exposure to Alameda’s significant holdings 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.
• SEC charge SBF with violation of anti-fraud provisions of the Securities Act 1933 and the Securities Exchange Act of 1934.

More details to come…

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