After being denied bail for charges related to “one the largest financial frauds in American History”, Sam Bankman-Fried, former cryptocurrency exchange boss, hugged his parents.

The US Securities and Exchange Commission (SEC), has charged the 30-year-old founder and CEO of FTX with fraud and violating campaign finance law violations. He is also being sued.

After he was arrested in the Bahamas a judge denied him bail and said he was a “great flight risk” and sent him to a local prison instead.

Bankman-Fried will be held in Bahamas custody until at least February 8.

Advertisement

These latest developments are the culmination of a dramatic fall from grace for SBF (the man better known as SBF), who amassed a fortune worth over $20bn (PS16.2bn), as he rode a crypto boom to create FTX into one the largest exchanges in the world before it collapsed abruptly this year.

Bankman-Fried previously apologized to customers and admitted oversight failures at FTX. However, he said he doesn’t personally believe he is guilty of any criminal offense.

On Tuesday, the US Attorney Damian Williams in New York accused Bankman-Fried of illegally making campaign contributions to Democrats or Republicans with “stolen client money.” He also called it part of the “biggest financial frauds” in American history.

If convicted of all eight charges, Bankman-Fried could face a maximum sentence in prison of 115 years. Prosecutors said.

He was taken into custody at his Nassau home, a gated community located in the capital of the Bahamas.

The Indictment was unsealed Tuesday morning. US prosecutors claimed Bankman-Fried participated in a scheme for defrauding FTX’s customers through misappropriating their funds to pay expenses and make investments for his crypto hedge fund Alameda Research LLC.

It is also alleged that he defrauded Alameda’s lenders by providing misleading and false information about the condition of the hedge fund and tried to hide the money he earned through wire fraud.

In lawsuits filed Tuesday, both the SEC (and the Commodity Futures Trading Commission CFTC) alleged that Mr Bankman-Fried was guilty of fraud.

Alameda, FTX and him were sued by the CFTC alleging fraud in digital commodity assets.

FTX has raised over $1.8 billion from equity investors since at least May 2019. This was in a multi-year-old “brazen, multi-year” scheme in which Bankman-Fried hid the fact that FTX was diverting customer money to Alameda Research.

Bankman-Fried was an unusual figure. He wore shorts, t-shirts, and wild hair when he appeared on panels with former American President Bill Clinton.

He was a major Democratic donor, contributing $5.2m (PS4.2m), to President Joe Biden’s 2020 campaign.

Forbes estimated his net worth at $26.5 billion (PS21.4bn) a year ago.

On November 11, filed for bankruptcy . This left an estimated 1 million customers and investors with losses in the millions. SBF was also resigned as chief executives that day.

The crypto world was impacted by the collapse, sending bitcoin and other digital assets plunging.

John Ray, Bankman Fried’s successor, was called before the House Financial Services Committee of the US Congress on Tuesday.

A crypto exchange is a platform where investors can trade digital tokens like bitcoin.