On December 13, 2022, the US Attorney's Office for the Southern District of New York (SDNY) under the Department of Justice (DOJ) unsealed an indictment charging Sam Bankman-Fried (SBF), former CEO and founder of major crypto exchange FTX, with multiple allegations, including wire fraud, securities fraud, and money laundering. SBF was arrested in the Bahamas on December 12, 2022 at the request of the US government and faces extradition to the US. FTX and affiliates filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware on November 11, 2022 (see Article, Expert Q&A on the FTX Bankruptcy: What Parties Can Expect).

In the DOJ's unsealed indictment against SBF, the grand jury charged SBF with:

The SEC's complaint, filed December 13, 2022, alleges violations of Sections 17(a) of the Securities Act of 1933, as amended, (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934, as amended, (Exchange Act) by committing:

The CFTC's complaint, also filed on December 13, 2022, alleges that SBF, together with FTX and Alameda, violated Section 6(c)(1) of the Commodity Exchange Act (CEA), 7 U.S.C. § 9(1), and CFTC Regulation 180.1(a) by:

According to these filings, from at least May 2019 through November 2022, SBF engaged in a scheme to defraud FTX's equity investors and customers. SBF raised more than $1.8 billion from investors who purchased an equity stake in FTX. These investors were informed by SBF that FTX had in place sophisticated automated risk-management measures to protect customer assets, however, SBF diverted FTX customer assets to his privately-held cryptocurrency hedge fund Alameda Research LLC and later used those funds to make undisclosed venture investments, lavish real estate purchases, large and allegedly unlawful political donations, and loans for himself and other FTX executives. According to the filings, SBF misled FTX's investors and customers by assuring them that its funds were secure while using Alameda as a virtually unlimited line of credit funded with FTX's customer assets.

Update: On December 21, 2022, the CFTC filed an amended complaint against:

SBF, FTX, Alameda, Alameda CEO Caroline Ellison, and Alameda and FTX co-owner and co-founder Zixiao "Gary" Wang, charging them with fraud.

FTX, Alameda, and Ellison, charging them with fraudulent misstatements of material fact and material omissions.

On December 21, 2022, the SEC filed a complaint against Ellison and Wang seeking a jury trial to determine whether Ellison and Wang committed fraud in the offer or sale of securities and fraud in connection with the purchase or sale of securities.

Update: On February 13, 2023, a federal judge granted a motion filed in the SDNY to stay the civil lawsuits filed by the SEC and the CFTC against SBF until the conclusion of the DOJ criminal case.