Former cryptocurrency exchange boss Sam Bankman-Fried has embraced his parents after being denied bail on charges related to ‘one of the biggest financial frauds in American history’ .
The 30-year-old FTX founder has been charged by the U.S. Securities and Exchange Commission (SEC) with fraud and violating campaign finance laws. He is also being prosecuted.
Next his arrest in the Bahamasa judge denied him bail, saying he was a “high” flight risk, and instead sent him to a local correctional facility.
Bankman-Fried will remain in custody in the Bahamas until at least February 8.
The latest developments cap a stunning fall from grace in recent weeks for the man known as SBF, who amassed a fortune valued at more than $20billion (£16.2billion) while riding a cryptocurrency boom to build FTX in one of the largest stock exchanges in the world before it abruptly collapsed this year.
Bankman-Fried has previously apologized to clients and acknowledged oversight failures at FTX, but said he personally does not believe he has criminal liability.
Earlier on Tuesday, U.S. Attorney Damian Williams in New York alleged that Bankman-Fried made illegal campaign contributions to Democrats and Republicans with “stolen client money”, calling him one of the “biggest financial frauds in American history”.
Bankman-Fried faces a maximum sentence of 115 years in prison if convicted on all eight counts, prosecutors said.
He was arrested at his home in a gated community in the Bahamas capital, Nassau.
In the Indictment unsealed Tuesday morningU.S. prosecutors claimed Bankman-Fried engaged in a scheme to defraud FTX clients by misappropriating their deposits to pay expenses and debts and to make investments on behalf of his crypto hedge fund, Alameda Research LLC .
He also defrauded Alameda lenders by providing false and misleading information about the state of the hedge fund, and sought to conceal the money he made by committing wire fraud, it is alleged.
The SEC and the Commodity Futures Trading Commission (CFTC) have alleged that Mr. Bankman-Fried committed fraud in lawsuits filed on Tuesday.
The CFTC sued him, Alameda and FTX alleging fraud involving digital assets.
Since at least May 2019, FTX has raised more than $1.8 billion from equity investors under a year-long “brazen, multi-year plan” in which Bankman-Fried concealed that FTX was diverting client funds to Alameda Research, according to the SEC.
Bankman-Fried, who founded FTX in 2019, was an unconventional figure who sported wild hair, T-shirts and shorts during appearances with statesmen like former US President Bill Clinton.
He has become one of the biggest Democrat donors, contributing $5.2m (£4.2m) to President Joe Biden’s 2020 campaign.
Forbes pegged his net worth a year ago at $26.5bn (£21.4bn).
FTX has filed for bankruptcy on November 11, leaving approximately one million customers and other investors facing multi-billion dollar losses. SBF resigned as CEO on the same day.
The crash rippled through the crypto world and sent bitcoin and other digital assets plummeting.
John Ray, Bankman-Fried’s successor as CEO, was called to testify on Tuesday before the House Financial Services Committee of the US Congress.
A crypto exchange is a platform where investors can trade digital tokens such as bitcoin.