Here’s why CFTC is suing SBF, FTX, and Alameda

Sahana Kiran
Source – Unsplash

The crypto-verse has seen the rise and fall of the FTX empire as well as its founder Sam Bankman-Fried. Now, as the world witnessed a handcuffed SBF taken into the custody of the Bahamas law enforcement, more charges and lawsuits have been making their way. The United States Commodity Futures Trading Commission [CFTC] is the latest to file a lawsuit against not just SBF but also FTX and Alameda Research.

As per a recent announcement, CFTC pointed out that a complaint was filed in the Southern District of New York. All the above three entities were reportedly charged with fraud and material misrepresentations of the sale of digital commodities. The action of these entities paved the way for an immense loss of more than $8 billion among its customers.

It was brought to light that FTX and Alameda commingled funds and particularly used customer deposits on the exchange. SBF has time and again denied the same. Elaborating on the same, the CFTC said,

“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.”

In addition to this, the CFTC alleged that SBF urged FTX employees to formulate features in the FTX code that would favor Alameda.

Here’s what the CFTC is seeking through the lawsuit

The CFTC is pursuing a number of remedies in its ongoing legal action against the SBF, FTX, and Alameda. This includes restitution, disgorgement, civil monetary penalties, lifetime trading, and registration bans. Along with a lifetime injunction against further alleged violations of the Commodity Exchange Act [CEA] and CFTC regulations.

Currently, SBF remains in the custody of the Bahamas and was even denied bail by judge Joyann Ferguson-Pratt. However, a hearing pertaining to his extradition will be held on February 8.