By Dean Seal
The U.S. Securities and Exchange Commission is accusing Sam Bankman-Fried of fraud in a parallel enforcement action that follows the FTX founder's arrest in the Bahamas Monday night.
The Wall Street regulator claims the former FTX chief executive schemed to defraud equity investors in the crypto exchange and raised $1.8 billion without disclosing that some of FTX's customer funds were being quietly diverted to Mr. Bankman-Fried's crypto hedge fund, Alameda Research LLC.
Alameda received special treatment on the FTX platform, having been granted a virtually unlimited "line of credit" funded by the platform's customers, the SEC claims.
The civil action was filed in parallel with a sealed indictment filed by the U.S. attorney's office for the Southern District of New York. U.S. Attorney Damian Williams has said the indictment, which reportedly includes charges of wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, will be unsealed on Tuesday morning.
Mr. Bankman-Fried was arrested without incident shortly after 6 p.m. ET at his apartment in Nassau, the Bahamas, where he has remained since FTX filed for bankruptcy last month.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
12-13-22 0657ET
