The former CEO of the cryptocurrency derivatives platform FTX, Sam Bankman-Fried, is facing trial this October and will not be able to get out on bail. It is a significant development in the case as the high-profile crypto executive is accused of operating a fraudulent scheme to defraud investors of more than $27 million.
The case dates back to August 2019 when the Financial Crimes Enforcement Network (FinCEN) charged Bankman-Fried with operating an unregistered money transmitting business in violation of the Bank Secrecy Act. According to FinCEN, Bankman-Fried, through FTX and his other companies, operated an illegal money transmission business between June 2016 and April 2019.
Bankman-Fried is accused of running a fraudulent scheme, in which he accepted customer funds and falsely promised to invest them in cryptocurrency-related projects. Instead, he sent the funds to offshore accounts, which he then used to purchase luxury items or gamble. Bankman-Fried allegedly used other funds he had collected as part of his fraudulent scheme to pay back some of his victims.
The U.S. District Court for the Southern District of New York initially granted Bankman-Fried bail in November 2019, on the condition that he put up $5 million in cash and property. However, the court recently revoked Bankman-Fried’s bail after he failed to pay restitution to his victims as ordered by the court.
Bankman-Fried is now facing up to five years in prison and a fine of up to $250,000 when his trial begins in October. He has also been ordered to pay back nearly $27 million in restitution to the victims.
This case serves as a reminder that anyone engaging in the cryptocurrency industry needs to be aware of the laws and regulations related to the industry. In addition, it also shows that anyone convicted of operating an unregistered money transmitting business faces serious penalties that could include hefty fines and jail time.
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