FTX Founder Arrested on Fraud Charges

The United States has charged the founder of cryptocurrency exchange FTX with several financial crimes.

Sam Bankman-Fried was arrested Monday in the Bahamas. He had resigned as FTX chief last month, shortly after the company declared bankruptcy, or financial failure.

U.S. government lawyers named eight criminal charges against the 30-year-old businessman. They include wire fraud, money laundering and conspiring to defraud. He was also charged with making illegal campaign donations.

Bankman-Fried was one of the largest political donors this year.

Separately, the U.S. Securities and Exchange Commission has brought civil charges against Bankman-Fried.

The SEC is the top government supervisor of the American stock market. It says Bankman-Fried defrauded investors and illegally used their money to buy homes for himself and his family.

A lawyer for Bankman-Fried said Tuesday that he is examining the charges with his legal team and considering what to do.

At one point, the FTX founder was thought to be one of the world's richest people. He launched the business in 2019. Forbes magazine estimated his wealth at more than $26.5 billion as the company quickly grew.

FTX failed in November, when reports came out that the company and another of Bankman-Fried's, Alameda Research, did not have as much money as people thought.

FTX customers flooded the company with demands to withdraw their money, but FTX could not honor the requests. It had used the money to support Alameda Research.

Gary Gensler is the head of the SEC. He said Bankman-Fried lied to investors.

"Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto." A "house of cards" means a building of very weak structure.

The commission said Bankman-Fried then used the Alameda Research money to make high-risk investments, purchase homes and make donations to political campaigns.

And, the SEC reports, Alameda Research did not keep track of the money coming from FTX.

Bankman-Fried's arrest came just one day before he was to appear before the U.S. Congress to answer questions about FTX.

Maxine Waters is a representative from California and the leader of the House Financial Services Committee. She said she was disappointed Bankman-Fried would not speak because, in her words, "the American public deserves to hear directly ... about the actions that wiped out the hard-earned life savings of so many."

In recent interviews, Bankman-Fried said he did not "knowingly" misuse the money from his customers and he thinks people will eventually get their money back.

The SEC's team said it does not think those statements are true.

I'm Caty Weaver.

Dan Friedell adapted this story for VOA Learning English based on a report by the Associated Press.

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cryptocurrency –n. an alternative form of money that does not use banks insured by governments, instead it is kept track of only on computers

wire fraud –n. the crime of stealing money electronically

money laundering –n. receiving money through a criminal or corrupt act and then making it look like it came legally

foundation –n. the structure that supports something built on top of it

deception –n. making people think one thing but something else is the truth

wipe out–v. to remove what was there before, wash away