The United States Commodity Futures Trading Commission, or CFTC, has filed a lawsuit against Sam Bankman-Fried, FTX and Alameda Research, claiming violations of the Commodity Exchange Act and demanding a jury trial.
According to court records filed Dec. 13 in the Southern District of New York, the CFTC filed a complaint for injunctive and other equitable relief as well as civil monetary penalties against Bankman-Fried, FTX Trading, and Alameda Research. The complaint alleged that SBF personally directed FTC executives to set up features allowing Alameda to use the crypto exchange as a line of credit for its lenders.
“Contrary to [Bankman-Fried’s] representations and without disclosure to FTX customers, Alameda and FTX comingled funds and freely used FTX customer funds as if they were their own, including as capital to deploy in their own trading and investment activities,” said the CFTC. “On information and belief, Bankman-Fried, his parents, and other FTX and Alameda employees used FTX customer funds for a variety of personal expenditures, including luxury real estate purchases, private jets, documented and undocumented personal loans, and personal political donations.”
Authorities in the Bahamas arrested Bankman-Fried on Dec. 12 following criminal charges being filed in the United States — the two countries have an extradition agreement. The U.S. Securities and Exchange Commission also filed charges against SBF on Dec. 13, alleging violations of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
Prior to his arrest, Bankman-Fried was scheduled to testify before the House Financial Services Committee on Dec. 13 on the collapse of FTX. Leaked written testimony from the former CEO had him largely blaming others for the exchange’s downfall.