CFTC to Sue SBF, FTX and Alameda Over Fraud Charges

The US CFTC has initiated legal action against Sam Bankman-Fried, Alameda Research, a sibling company of FTX, and the crypto exchange as well.

According to a press statement, the United States Commodity Futures Trading Commission (CFTC) has initiated legal action against Sam Bankman-Fried, the founder of the now-defunct cryptocurrency exchange FTX, as well as Alameda Research, sibling company of FTX.

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In its submission, the CFTC stated that Bankman-Fried had issued deceptive assertions regarding the health of his enterprises and the usage of customer funds with actions that had a “significant price impact” on commodities like bitcoin (BTC) and ether (ETH).

The filing stated that “the use of customer funds by Alameda was not authorized by FTX customers, and FTX customers were not made aware that their funds were being used by Alameda.”  

It went on to say that this goes against both the standard operating procedures for derivatives exchanges as well as the contractual terms of service.

The document states that despite the fact that Alameda’s obligation to FTX exceeded the latter’s total lifetime revenue, Bankman-Fried’s companies “portrayed that they remained highly profitable and liquid” in public during the middle of 2022, even after a catastrophe in crypto markets that witnessed the companies as Terra and Celsius Network collapse. 

The CFTC claimed that Bankman-Fried’s optimistic public remarks about earnings were inconsistent with what the company actually observed. 

According to the filing, Bankman-Fried drafted a document in September that was never published that stated Alameda should be permanently closed down because it did not make enough money from trading.

Notably, The lawsuit news came after the U.S. Securities and Exchange Commission (SEC) filed accusations against Bankman-Fried for fraud against FTX investors. 

The document echoes SEC claims that Bankman-Fried improperly merged customer assets, tried to confuse the regulators about the matters between Alameda and FTX, and utilised client funds for lavish expenditures like private jets and “furtively” funded Super Bowl ads and many sports sponsorships.

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