Mind-Blowing Tidbits
3 crazy details from the SEC filing against Sam Bankman-Fried
Sam Bankman-Fried, founder of the collapsed cryptocurrency exchange FTX, was arrested in the Bahamas Monday after being charged with fraud by the U.S. Securities and Exchange Commission (SEC).
In the SEC's official court filing, the agency documented a list of missteps that eventually led to the collapse of the company, and some of the details are truly unbelievable.
SBF allegedly used funds improperly from the start
Thousands of FTX customers bought into SBF's lies, the filing alleged. But SBF was using his customer's funds improperly from the very beginning of his time at the helm of the company, according to a copy of the filing shared by DL News editorial director Jim Edwards. He would allegedly funnel his customers' money into his company's hedge fund, Alameda. These funds reportedly contained a number of large undisclosed financial ties, including "venture investments, lavish real estate purchases, and large political donations." The filing went on to say that SBF "used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses."
He allegedly continued misusing funds even as the company sank
FTX began to see the writing on the wall in May, when the crypto market began to collapse and the exchange was unable to pay back practically anybody. Even as this was occurring, SBF continued defrauding investors, the SEC alleged. "When prices of crypto assets plummeted in May 2022, Alameda's lenders demanded repayment on billions of dollars of loans," the filing said. "Despite the fact that Alameda had, by this point, already taken billions of dollars of FTX customer assets ... SBF directed FTX to divert billions more in customer assets to Alameda," ensuring he could continue to amass investors.
At least one major account was associated with someone who had no ties to FTX
The SEC alleged that a number of parties were in control of investment accounts being funneled through Alameda. One of these, an $8 billion liability, was allegedly directed by SBF to be "moved to an account that would not be charged interest." While the details of this liability were not revealed in the filing, the SEC claims that "the account was associated with an individual that had no apparent connection to Alameda. As a result, this change had the effect of further concealing Alameda's liability in FTX's internal systems."