The US Securities and Exchange Commission (SEC) is accusing the founder of bankrupt crypto exchange FTX, Sam Bankman-Fried, of setting up a system to defraud the platform's investors, the stock market watchdog reported on Tuesday.
Bankman-Fried was arrested in the Bahamas after U.S. prosecutors filed criminal complaints against him. He allegedly raised more than $1.8 billion from investors, according to news agency Bloomberg.
"We confirm that Sam Bankman-Fried erected a house of cards based on deception while telling investors it was one of the safest buildings in crypto,” SEC Chairman Gary Gensler said.
“The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws,” Gensler added.
In its complaint, the SEC is demanding that Bankman-Fried be prohibited from participating in the issuance, purchase, offer or sale of financial products except in a personal capacity.
It is also demanding that he repay his ill-gotten gains, that he be sanctioned and that he no longer be allowed to perform executive functions.
In addition to the SEC, complaints have also been filed against Bankman-Fried by a New York attorney and the U.S. Commodity Futures Trading Commission.
The authorities in the Bahamas have already announced that the US may seek his extradition. They will also conduct their own criminal investigation into the collapse of FTX, Philip Davis, the Bahamian prime minister, said.
FTX was considered one of the world’s leading cryptocurrency exchange platforms. In early November, it suddenly found itself unable to return to its customers the money they had there. The group filed for bankruptcy on 11 November.
