The US Securities and Exchange Commission (SEC) announced Thursday that it had filed a complaint against FTX’s former CEO Sam Bankman-Fried ‘SBF’ for defrauding equity investors of up to $1.8 billion, and estimated $1.1 billion from about 90 US-based investors, all raised in the period before May 2019.
Notably, according to the regulator, SBF acted contrary to Section 17 of the Securities Act of 1933, Section 10 (b) of the Securities Act of 1934, and Rule 10b-5 thereunder. According to the report, SBF concealed the whereabouts of investors’ funds, and the funds were put in risky assets without their consent.
‘‘In his representations to investors, (SBF) promoted FTX as a safe, responsible crypto asset trading platform, specifically marketing it’s sophisticated, automated risk measures to protect customer assets. In reality, (he) concealed the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, the undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited line of credit, and the undisclosed risks from holding overvalued, illiquid assets (FTT).’’ The statement read.
See Related: United States DOJ Seizes Over 55M Robinhood Shares And US$22M In Relation To SBF And FTX
The US Regulator Is Demanding Restrictions Against the Disgraced Entrepreneur
For this reason, the agency demands that SBF be barred from issuing, purchasing, or offering any security besides his account for sale. Further SEC wants all the ill-gotten profits to be reclaimed from the disgraced executive, including a civil penalty prohibiting him from occupying any office in the capacity of a director.
FTX investors got a ray of hope after the new CEO John Ray said there was a possibility of reviving the collapsed exchange. His statement was quickly criticized by SBF, who is currently out on a $250 million recognizance bond secured by his parent’s property.
See Related: Sam Bankman-Fried Released on a $250M Bail; Former FTX Executives Plead Guilty
