
SEC charges SBF with defrauding investors
SEC charge SBF with violation of anti-fraud provisions of the Securities Act 1933 and the Securities Exchange Act of 1934.

Cover art/illustration via CryptoSlate
Article updated 13:10 UTC to add details.
The Securities and Exchange Commission (SEC) charged Sam Bankman-Fried (SBF) on Dec. 13, with âorchestrating a scheme to defraud equity investors in FTX Trading Ltd (FTX).â
The SEC stated that SBF âconcealed his diversion of FTX customersâ funds to crypto trading firm Alameda Research while raising more than $1.8 billion from investors.â
Since May 2019, FTX raised over $1.8 billion from equity investors, according to the SEC press release â which clarified:
âIncluding $1.1 billion from approximately 90 U.S.-based investors.â
SBF promoted FTX as both a safe and responsible crypto asset trading platform, âspecifically touting FTXâs sophisticated, automated risk measure to protect customer assets.â
However, the SEC complaint alleged that âin reality,â SBF orchestrated a âyears-long fraud to conceal from FTXâs investorsâ three undisclosed fraudulent actions:
- âThe undisclosed diversion of FTX customersâ funds to Alameda Research LLC, his privately-held crypto hedge fund.â
- âThe undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited âline of creditâ funded by the platformâs customers and exempting Alameda from certain key FTX risk mitigation measures.â
- âUndisclosed risk stemming from FTXâs exposure to Alamedaâs significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens. The complaint further alleges that Bankman-Fried used commingled FTX customersâ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations.
The SEC has charged SBF with violation of anti-fraud provisions of the Securities Act 1933 and the Securities Exchange Act of 1934.
Overseeing the SEC Chair, Gary Gensler said:
âWe allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.â
Highlighting trading platform conduct for both investors and regulators, Gensler warned that for âplatforms that donât comply with our securities laws, the SECâs Enforcement Division is ready to take action.â