Sam Bankman-Fried set to face lawsuit for fraud in New York

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Crypto Regulation
Sam Bankman-Fried set to face lawsuit for fraud in New York

Manhattan Authorities are likely to investigate the alleged misappropriation of funds between FTX and Alameda Research. Fox News correspondent Charles Gasparino cites insiders at the Manhattan US attorney’s office.

He made the revelation public via a tweet today, Wednesday, November 17, 2022. Evidently, the prosecutor’s office hopes to draft charges before the end of 2022. The misuse of customer funds would probably be the subject of the case charges. He also stated that authorities in the Bahamas are looking to take the lead on the case.

The tweet read:

“Sources close to Manhattan US Attorney say office is looking to prepare charges by the end of the year over FTX scandal following further disclosures of Sam Bankman-Fried’s alleged misuse of customer funds and as authorities in Bahamas look to take the lead on the case.”

This is on top of the SEC probe over the possibility of misuse of FTX US funds. Also, the White House authorities recently said they looked closely at the FTX situation. A White House press secretary said cryptocurrencies are harming the lives of average Americans. The White House views crypto oversight as an important issue, they added. The secretary added that recent events in crypto highlight the need for crypto regulation.

What exactly is SBF being charged for?

So far, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Department of Justice have all opened investigations, it has been reported. The Royal Bahamas Police Force says it has also opened a probe.

As part of the chapter 11 bankruptcy proceedings, the company’s new FTX CEO, John Ray, expressed his stance on the situation. He said the situation was unprecedented and nothing like he had seen with any corporate failure in his long career. In a court filing, Ray described the situation as “a complete failure of corporate controls.” He added there was a complete absence of trustworthy financial information.

No allegations of wrongdoing have yet been made, and it is possible that no charges will be filed. FTX has admitted that it made errors that led to its bankruptcy filing. There have been reports that Bankman-Fried and other executives were lending customer deposits to its sister-trading firm, Alameda Research Inc., to plug holes in its balance sheet. 

The primary focus for investigators is whether FTX committed fraud in how it dealt with its customers, its investors or with authorities, says Christopher LaVigne, the co-chair of the cryptocurrency practice at law firm Withersworldwide.

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