FTX founder SBF is being investigated by US prosecutors for possible fraud
US prosecutors laying the groundwork for a possible fraud case against Sam Bankman-Fried and others involved in the collapse of cryptocurrency giant FTX are investigating, according to a person familiar with the matter.
Prosecutors are closely examining whether hundreds of millions of dollars were wrongfully transferred to the Bahamas at the time of FTX’s Nov. 11 bankruptcy filing in Delaware, the person said, asking not to be named without permission to discuss the case publicly.
As Justice Department officials launch a full-scale investigation into how FTX has handled customer cash and assets, they met with FTX’s court-appointed supervisors this week to discuss materials they intended to collect, the person said. They are also investigating whether FTX broke the law by sending funds to Alameda Research, the bankrupt investment firm also founded by Bankman-Fried, an area of investigation previously reported on.
Bankman-Fried, who is based in the Bahamas and has not been charged with any crime, has admitted to making serious management mistakes at FTX but has steadfastly denied ever knowingly misusing client funds. A spokesman for Bankman-Fried declined to comment Friday.
That New York Times reported this week that federal prosecutors are also investigating whether Bankman-Fried was involved in market manipulation by orchestrating trades that led to the collapse of the TerraUSD ecosystem earlier this year.
Prosecutors in the Southern District of New York, including Assistant US Attorney Nicolas Roos, met for about two hours this week in a Lower Manhattan conference room with dozens of people investigating the collapse of FTX. Possible charges were not discussed at the organizational meeting. A spokesman for the Southern District declined to comment.
The meeting was attended by officials from that office and the Washington Department of Justice, agents from the Federal Bureau of Investigation and the bankruptcy team led by John J. Ray III, who was named FTX chief executive officer last month. Attorneys for Sullivan & Cromwell’s FTX, including former Securities and Exchange Commission enforcement director Steve Peikin and former Manhattan federal prosecutor Nicole Friedlander, were also in attendance, the people said.
Roos helped prosecute Nikola Corp. founder Trevor Milton, who was convicted in October of misleading investors in the electric truck company.
Bankman-Fried has given a series of media interviews over the past month detailing accounting errors that have obscured the extent of FTX’s ties to Alameda and the resulting risks. On Friday, he tweeted that he was ready to testify at a Dec. 13 hearing before the US House Financial Services Committee on the disintegration of his crypto empire.
Bahamas-based FTX and more than 100 related companies, including the company’s US arm, sent shockwaves through the crypto ecosystem with its bankruptcy filing last month. The group and its founder are now under scrutiny by regulators and prosecutors in the US and overseas.
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