"The founder of cryptocurrency exchange FTX is facing criminal and civil securities charges in connection with an alleged $1.8 billion fraud for touting FTX Trading as a safe platform for crypto asset trading while diverting investor money to his privately held hedge fund.

FTX founder and CEO Samuel Bankman-Fried was arrested Monday in the Bahamas based on a sealed indictment, according to the U.S. attorney’s office for the Southern District of New York in a tweet.

FTX Trading collapsed last month after a run on deposits exposed $8 billion in missing customer funds, according to previous reporting by the New York Times and a separate Dec. 13 complaint filed against Bankman-Fried by the Commodity Futures Trading Commission. FTX filed for bankruptcy Nov. 11.

The Dec. 9 indictment, unsealed Dec. 13., charges Bankman-Fried with wire fraud on customers and lenders, conspiracy to commit wire fraud on customers and lenders, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the United States and violate campaign finance laws.

The U.S. Securities and Exchange Commission alleges in its Dec. 13 civil complaint that Bankman-Fried raised $1.8 billion from investors who bought an equity stake in FTX without revealing that he was diverting assets to his privately held crypto hedge fund, Alameda Research. Bankman-Fried then used those funds to make “undisclosed venture investments, lavish real estate purchases and large political donations,” according to an SEC press release summarizing the allegations."


This article was originally posted in the ABA Journal.

To read the rest of the article click here.