U.S. Securities and Exchange Commission accused the founder of the cryptocurrency exchange FTX of defrauding investors

The Securities and Exchange Commission, a securities regulator, has charged Sam Bankman-Fried, the founder and former CEO of the bankrupt cryptocurrency exchange FTX, with defrauding investors.

“The Securities and Exchange Commission today charged Samuel Bankman-Fried with orchestrating a scheme to defraud equity investors in FTX Trading Ltd. (FTX), a cryptocurrency trading platform of which he was the CEO and co-founder,” the statement said.

According to the agency, the FTX cryptocurrency exchange has received more than $1.8 billion from investors since at least 2019, with most of the funds, $1.1 billion, coming from investors in the United States. Although Bankman-Fried promised investors that his platform was “safe” and conducted business “responsibly,” in reality he funneled the funds he received to a private cryptocurrency hedge fund, Alameda Research LLC, the commission alleged.

According to the complaint filed by the agency, Bankman-Fried is accused of violating provisions of the Securities Trading Fraud Act. The commission seeks to prohibit the businessman from “participating in the issuance, purchase, offer or sale of any securities other than for his personal use,” to repay “illegally gained wealth,” to impose a civil penalty on him, and to bar him from holding executive positions. The investigation into the businessman’s activities continues.

The U.S. Attorney for the Southern District of New York earlier said that Bankman-Fried was detained in the Bahamas at the request of the U.S. government. Investors last month withdrew a record 91,000 bitcoins totaling about $1.5 billion from FTX, the largest outflow in its history.