SEC charges Sam Bankman-Fried with defrauding the US clients

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Crypto Regulation
SEC charges Sam Bankman-Fried with defrauding the US clients

Sam Bankman-Fried, the former FTX CEO, has been charged by the U.S. Securities and Exchange Commission (SEC) with defrauding American clients and concealing the misappropriation of their assets.

Sam Bankman-Fried, the creator of the now-defunct crypto exchange FTX, was charged with civil securities fraud by the U.S. authorities. He was taken into custody on Monday evening at his residence in the Bahamas.

Now the SEC accuses him of misrepresenting the financial standing of the cryptocurrency exchange and its sister platform, Alameda Research, to large investors who poured close to $2 billion in FTX in recent years.

SEC: SBF deceived clients

Amid the arrest, the SEC also claimed that Bankman-Fried deceived clients by receiving billions of dollars to trade cryptocurrencies on FTX while claiming that doing so was secure. The securities regulator, however, contended that consumer funds were mixed with company assets at Alameda and used to support investments in outside businesses, purchase real estate, and make political payments.

Gary Gensler, the head of the SEC, said in a statement that Sam Bankman-Fried created a house of cards on a foundation of lies while promising investors that it was one of the safest structures in crypto.

Restrictions put on SBF

According to the SEC, Bankman-Fried is accused of breaking the anti-fraud provisions the U.S. law. The regulator calls for disgorgement of unjustified Bankman-Fried’s profits, a civil fine, an officer and director bar, and injunctions against further violations of the securities laws. Moreover, the officials want to ban him from participating in issuing, purchasing, offering, or sale of securities other than for his account.

The Commodity Futures Trading Commission (CFTC) and the U.S. Attorney’s Office for the Southern District of New York also announced charges against Bankman-Fried.

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Brenda Mary

Brenda Mary is a crypto enthusiast and a graduate of The University of Nairobi in economics. Brenda’s passion brings her back to her elementary school years as a poet. She enjoys discussing blockchain technology and is committed to producing original content. Brenda also covers other rapidly developing markets and economic and cryptocurrency studies.