Disgraced crypto trader Sam Bankman-Fried has been denied bail on charges connected to “one of the biggest financial frauds in American history”.
The US Securities and Exchange Commission (SEC) has charged the 30-year-old founder of collapsed cryptocurrency exchange FTX with fraud and violating campaign finance laws,
After being denied bail in the Bahamas, on the grounds that he posed a “great” flight risk, a judge sent him to a nearby jail instead.
Bankman-Fried, known colloquially as SBF, will continue to be detained in the Bahamas at least until 8 February.
Bankman-Fried previously expressed regret to customers and acknowledged supervisory shortcomings at FTX, but he continues to insist that he does not believe he is directly responsible for any criminal activity.
Earlier on Tuesday, US Attorney Damian Williams in New York claimed that Bankman-Fried had engaged in one of the “largest financial frauds in American history” and had made illegal campaign donations to Democrat and Republican campaigns using “stolen customer money.”
If found guilty on all eight counts, Bankman-Fried could face a sentence of up to 115 years in prison. He was taken into custody at his residence in the gated neighbourhood of Nassau, the capital of the Bahamas.
US prosecutors claimed in the indictment that Bankman-Fried had engaged in a scheme to defraud FTX’s customers by misappropriating their deposits to pay for company expenses and debts, and to make investments on behalf of his cryptocurrency hedge fund, Alameda Research LLC. The indictment was unsealed on Tuesday morning.
He also defrauded lenders to Alameda by providing false and misleading information about the hedge fund’s condition, and sought to disguise the money he had earned from committing wire fraud, it is alleged.
In lawsuits filed on Tuesday, the SEC and the Commodity Futures Trading Commission (CFTC) both allege that Mr. Bankman-Fried engaged in fraud.
The CFTC is suing him, FTX and Alameda on charges of fraud concerning digital commodity assets.
The SEC alleges that throughout the course of the “brazen, multi-year scheme”, in which Bankman-Fried hid the fact FTX was moving client monies to Alameda, more than $1.8 billion was raised from crypto investors.
Bankman-Fried, who launched FTX in 2019, was a crypto celebrity and was seen on panels alongside well-known former leaders including former US President Bill Clinton and former UK Prime Minister Tony Blair.
He became one of the biggest Democratic fundraisers, giving President Joe Biden’s 2020 campaign $5.2 million (£4.2 million).
On November 11, FTX declared bankruptcy, leaving thousands of clients and investors with losses running into the billions of dollars. SBF left his position as CEO the following day.
Bitcoin and other digital assets fell as a result of the crash, which rippled across the cryptocurrency community.
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