Prosecutors in the United States have allegedly begun a criminal inquiry into whether or not disgraced FTX founder Sam Bankman-Fried, a prominent Democrat, committed financial crimes that contributed to the company’s bankruptcy last month.
To what extent Bankman-Fried “steered the values of two interrelated currencies, TerraUSD and Luna, to benefit the firms he controlled, including FTX and Alameda Research, a hedge fund he co-founded and owned,” as reported by the New York Times, is at the heart of the probe.
According to the article, federal prosecutors and the Securities and Exchange Commission (SEC) are looking into whether Bankman-Fried breached the law by sending client cash from FTX to Alameda.
Bloomberg News stated that the same agencies investigated whether the corporation committed money laundering rules before the company went public.
The Bahamas-based FTX began in 2019, and by 2022, it had amassed more than a million users. When CoinDesk reported last month that FTX and Alameda Research, two branches of Bankman-cryptocurrency Fried’s empire, shared considerable overlap on their balance sheets in the form of the cryptocurrency FTT, which FTX originated, users suddenly requested withdrawals totaling $6 billion.
Disorganized at age 30, he went from being wealthy with $15.6 billion to “no material riches” in just over two days.
I don’t know of moments when I lied,” Bankman-Fried told CNBC’s Andrew Ross Sorkin at the Dealbook Summit at the end of last month. “There are times when I was functioning as a, um, as a representative, as a marketer for FTX.”
Bankman-Fried said, “I didn’t ever try to perpetrate a fraud on anyone.” It was a successful enterprise. Thus the events of this month came as a complete surprise to me.