3 crazy details from the SEC filing against Sam Bankman-Fried
![FTX founder Sam Bankman-Fried](https://cdn.mos.cms.futurecdn.net/spgwVfssVeJYuE9pk8wwhL-415-80.jpg)
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
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
![https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516-320-80.jpg)
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
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."
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Justin Klawans has worked as a staff writer at The Week since 2022. He began his career covering local news before joining Newsweek as a breaking news reporter, where he wrote about politics, national and global affairs, business, crime, sports, film, television and other Hollywood news. Justin has also freelanced for outlets including Collider and United Press International.
-
Big Tech's answer for AI-driven job loss: universal basic income
In The Spotlight A new study reveals the strengths and limitations
By Joel Mathis, The Week US Published
-
'I will not be silent' on Gaza, says Kamala Harris
Speed Read In a meeting with Israeli Prime Minister Benjamin Netanyahu, Harris supported Israel's right to defend itself while expressing a desire to end Palestinian suffering
By Arion McNicoll, The Week UK Published
-
'How long can TikTok dominate as a social network?'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
It's not your imagination — restaurant reservations are becoming harder to get
In the Spotlight Bots, scalpers and even credit card companies are making reservations a rare commodity
By Justin Klawans, The Week US Published
-
A massive copper shortage is on the horizon
Under the Radar It is estimated that mines will only meet 80% of copper needs by 2030
By Justin Klawans, The Week US Published
-
Epoch Times CFO charged with money laundering
Speed Read Weidong "Bill" Guan stands accused of laundering $67 million
By Peter Weber, The Week US Published
-
FDIC chair out after toxic work culture report
Speed Read The report revealed a trend of sexual harassment and discrimination at the Federal Deposit Insurance Corporation
By Peter Weber, The Week US Published
-
How did Starbucks 'fall from grace'?
The Explainer The coffee giant faces lower quarterly sales. Is it the economy, or have the drinks grown stale?
By Joel Mathis, The Week US Published
-
How Wall Street and Endless Shrimp may have killed Red Lobster
Under the Radar The company's shrimp deal may have worked a little too well
By Justin Klawans, The Week US Published
-
Downtown St. Louis is in a real estate 'doom loop'
Under the Radar The city is rife with abandoned buildings and vacant lots, with its real estate market in dire straits
By Justin Klawans, The Week US Published
-
How will the FTC's ban on noncompete agreements affect the workforce?
The explainer Short answer: Competition will only get fiercer
By Devika Rao, The Week US Published