As the indictment today alleges Bankman Freed knowingly defrauded customers of FTX through the misappropriation of customer deposits to pay expenses and debts of a different company. In addition, Bankman Freed executed deliberate transactions designed to obscure and disguise the misuse of customer funds he preyed on his customers, the victims of this case abusing the trust placed not only in his company but in himself as the lead of that company. We are determined to help the victims of this case get a sense of justice and we will continue to make every attempt to recover as much of their funds as possible. If you're willing to deceive customers and attempt to hide your actions, we will be persistent in pursuing you and ensuring you are brought to Justice I Want to thank Damian Williams and his team at the Southern District for their cooperation and Uh partnership on this case.

I Also want to thank our partners at the SEC and the Cftc for their outstanding work. A word of thanks to Dea's Aviation division, their Foreign Operations Group for their Logistics and Resource Assistance. Over the past few days, our field offices in Boston Miami Washington DC and our league at office in Bridgetown FBI headquarters components that fed and worked on this case from Criminal Investigative Division, our third Team Crisis incident Response Group and our International Operations Division of course the Special Agents from and forensic accountants from our Securities fraud Squad as well as a money laundering Squad The Justice Department Office of International Affairs has been an important partner in this and of course as Damian noted before, his team and Securities and Commodities Fraud, Money Laundering and Transnational Criminal Enterprise Unit has been a true partner in this case. I Also want to thank our International Law Enforcement Partners These kind of cases do not have happen without that kind of coordination.

and I specifically want to note the assistance provided by the Royal Bahamas Police force. And I want to be clear this case is about fraud. Fraud is fraud. It does not matter the complexity of the investment scheme, it does not matter the amount of money involved.

If you mislead and deceive to take what does not belong to you, we will hold you accountable. And I'd like to thank everyone who's been working on this case for helping us adhere to that principle today. Thank you! I'll provide an update on everything that was said in just a moment. Good afternoon everyone! I'm Kabir Greywald, the Director of the Sec's Division of Enforcement.

today. in a parallel civil complaint, the SEC filed charges against Sam Bankman Freed alleging that he orchestrated a years-long scheme to defraud Equity Investors in FTX Trading Limited, a company that he co-founded and led as CEO until it's collapsed last month. As alleged in our complaints starting in 2019 and continuing through November 2022. Bankman Freed raised more than 1.8 billion dollars from Equity investors on the basis of Lies You see, FTX operated behind a veneer of legitimacy that Bankman Freed created by, among other things, repeatedly touting to investors Ftx's top-notch automated risk controls that he claimed protect protected customer assets and by repeatedly claiming that those assets were at all times safe, segregated, and secure.

But as we allege in our complaint that veneer wasn't just thin, it was also fraudulent. because in reality, from Ftx's inception in 2019, Bankman Freed began secretly and improperly diverting FTX customer funds to his crypto hedge fund Alameda research and there's a legend. Our complaint: He then misused those funds to make undisclosed Venture Investments lavish real estate purchases and large political donations. Bankman Freed's claims about Ftx's sophisticated risk controls and other customer protections were simply bogus.

Similarly, his representations to FTX investors and trading customers concerning Alameda were also part of that carefully crafted veneer and were similarly false and misleading. He frequently claimed that Alameda was just another customer with no special privileges at FTX. But in truth, Bankman Free directed that Alameda be exempt from the very risk management measures that he touted to FTX investors and to its customers. He also provided Alameda a virtually unlimited line of credit funded by FTX customers.

and he also diverted billions of dollars in customer funds from FTX to Alameda Bankman Freed's entire house of cards started to crumble as Crypto asset prices plummeted in May of 2022. And as Alameda's lenders demanded repayment on billions of dollars in loans to continue propping up his Empire, we allege that Bank Then Freed diverted billions more in FTX customer assets to Alameda even as it was increasingly clear that Alameda and FTX could not make those customers whole. In fact, through the summer of 2022, he deferred. he diverted hundreds of millions more in FTX customer funds to Alameda which he then used for additional Venture Investments and for loans to himself and to other FTX executives.

All the while, he continued to make misleading statements to investors about Ftx's financial condition and about its risk management. And even in November 2022, faced with billions of dollars in customer withdrawal requests that FTX could not fulfill, Bankman freed misled investors from whom he sought still more money to plug the multi-billion dollar holes that he had created, His Brazen multi-year scheme finally came to an end when FTX Alameda and their tangled web of Affiliates file for bankruptcy on November 11, 2022.. that collapse has had far-reaching consequences for FTX customers, for its investors, and for its counterparties. and our investigation into those consequences and to those individuals and entities involved remains ongoing.

But one immediate takeaway from today's announcement should be that non-compliant trading platforms pose dramatic risks to both their investors and to their customers. Among other things, they don't provide them with the same robust level of disclosures and protections against fraud and conflicts of interest. That's what traditional U.S registered Securities exchanges provide, so it's imperative that non-compliant platforms come into compliance. But as Chair Ganzler has made clear, the runway is getting shorter for them to come in and to register with us.

And for those who do not, the enforcement division stands ready to take action. I'd Like to recognize the incredible team from our crypto assets and cyber unit and from across our division responsible for today's Action Devil. And Sue Ivan Snyder David Brown Brian Huckrow Pasha Salimi investigated this matter under the supervision of Amy Hartman Michael Brennan Jorge Tenrero and David Hirsch Amy Burkhart and David Audio will lead the will lead the litigation against Bankman Freed under the supervision of Ladan Stewart and Olivia Che Finally, I Want to commend our partners here at the Southern District of Newark under the leadership of U.S Attorney, Damian Williams and our partners at the FBI and the Cftc. This is a yet another strong example of the collaboration that you see before you this afternoon.

With that, I'll turn it back to U.S Attorney Williams Thank you. We'll give a recap here. I'd like to welcome up Gretchen Lowe from the Cfdc. Oh see, Oh okay, Cftc is the one suing Sam Baker Good afternoon I'm acting Director Correction low of Acting Director of the Division of Forcement at the Cfdc.

Gretchen Lowe Thank you so much for the opportunity to speak. Speak today Today the Cftc filed a complaint against Sam Bankman Freed and his company's FDX and Alameda charging a fraudulent scheme that dates back to the launch of Ftx.com Exchange in May 2019. the Cftc's complaint specifically charges done defendants with fraud by misappropriation of customer funds as well as false statements to the public customers investors in Congress about the handling and security of those funds. As alleged, there are over 8 billion in customer losses that we've ascertained as of today.

The Rippling consequences of defendants fraud are vast and have done significant damage to the Integrity of the evolving digital asset. Market The Cfdc charges that at Bankman Freed's Direction FTX customers customer deposits intended to be used to trade digital asset commodity Futures swaps and other pro products were not appropriately segregated by FTX Instead, customer funds were held in Alameda accounts where they were co-mingled and misappropriated for a variety of unauthorized purposes such as use in high-risk Investments and other digital asset Enterprises political contributions and to purchase luxury real estate as charged. The fraudulent use of customer funds by Bankman Freedoms companies were inconsistent with the touted FTX terms of service and contrary to numerous statements made by public statements made by Bankman, Freed. The Cfdc also charges the defendants created features in the underlying code for FTX that allowed Alameda to have essentially an unlimited line of credit on the exchange.

Defendants also provided Alameda with unfair trading advantages including quicker execution times and the exemption from Ftx's Auto Liquidation risk management process. This massive and costly fraud was in the connection with commodities, interstate commerce, and as allege including Bitcoin Ether and Tether which are the most widely traded digital Assets in the world. Bitcoin and Ether also underlie derivatives contracts on Cftc designated exchanges. Lastly, standing here today with the U.S Attorney's Office at the Southern District FBI and the SEC represents yet another Stellar example of the importance of Federal regulators and Federal Criminal authorities working collaboratively and effectively with each other to achieve Justice.

The teams work quickly and tirelessly to obtain compelling evidence and to begin to hold those responsible for the FTX co-ops accountable all within a very short time frame. Thank you to all at the Sdny FBI and SEC for your cooperation and thank you to the Cftc team. Nina Rubinski, Carlin Metzger Brian Sue Ben Jackman Yousef Japan Supervised by Deputy Director Robert Howell and Chief Trial Elizabeth Pendleton and many, many others at the Commission who supported the work. I Am proud of your your hard work, your dedication to the mission of the commission and for always acting in the public interest.

So so far this is the indictment of Sandbagment Freed and some statements by other organizations filing lawsuits. Thank you. You're going to appreciate card games. Oh Q A Number One, Um, what is the situation with that tradition? And finally, um, you can't hear this.

We'll hear the response in just a moment. and then again, I'll recap right? That's the fact that you get into the profile and that's part of the way he's able to pull so many people well. you can commit fraud and shorts and t-shirts in the sun. I Mean that's possible too.

Um, so I Think that that addresses the the last question in terms of whether we're going to bring charges against anyone else. Um, look. I Can only say it this clearly, but we are not done. Ah, nice.

Yes, extradition is ongoing. Um. in the Bahamas I don't have anything to add on that next question, he's coming. Next question? All right, that was Damien Williams The U.S Attorney for the Southern District of New York holding a press conference? All right.

I'm gonna cut off the questions. That's fine. Uh, okay. so let me give you a quick little recap of uh, what just happened here.

So you had, uh, you had the U.S attorney come out with eight counts, effectively outlining four areas of uh: misconduct by sandbankment free. This is similar to some of the the statements that we've seen in the press this morning. It made it very clear: Sam Begman Freed was somebody who defrauded customers, defrauded lenders to Alameda defraud investors, and FTX and violated campaign Finance laws. Now the campaign Finance law item is actually really interesting because FTX apparently has about 73 million dollars worth of uh, donations, political donations tied uh to it.

Now 73 million dollars. This is quite a bit, and there's this potential for clawback. No clawback is when fraudulent money is given to somebody else. that money could actually be clawed back.

And uh, there are a few things going on here. Number one is when it comes to Club tax. there are a lot of state and federal laws that can make this very complicated and through bankruptcy lawyers through the bankruptcy have to determine is it going to be worthwhile going after these uh, a clawbacks essentially or has that money already been spent And are we trying to chase? like basically, you know, getting blood from a rock so to speak or trying to? Whatever folks say, Uh, so so that's going to be something that comes up. You know.

There are also questions about can money that was paid to people who promoted FTX be clawed back? Usually what what a lot of legal research now is suggesting is that generally as long as the value that was paid to advertisers was was correspondent to the return to FTX Possibly no. So probably more likely that clawbacks are focused on political donations than advertisers, though it seems like everybody was just duped by FTX which is quite terrible. There were donations from Sandbankment Freedom Alameda research along with others to individuals like Mitch McConnell Kevin McCarthy but some of these were done through sort of other individuals which what we heard here is that contributions were quote disguised to make it look like they were coming from wealthy co-conspirators and not from Sam Bankman freed himself. This is an issue because see when I ran for governor in California we had to have a clear report of every donation we got.

Who donated? How much did they donate? We had to have their address. They had to be an American citizen. Everything was correlated to know your customer almost including with donation. So political donations always tie back and everything's open in public when it comes to political donations.

or at least it should be. And in this case, here's just another example of of Sam Bakeman free trying to skirt the laws of the land. So really, eight counts on four effective areas campaign Finance Laws are very, very tight and that is one of the big items obviously in addition to the fact that he was defrauding customers, lenders, and investors along with many others. A very, very clear theme though, from all of these four pressing charges against Uh or or suing, Sam Bankman freed that this guy was basically a fraud from day one that he would publicly say oh, don't worry Alameda research is treated just like any other customer.

Meanwhile, they're exempt from Margin Call requirements. Uh, it's it's kind of shocking and it's uh, it's It's good to see Justice be served here because this is very bad. uh and hopefully something like this never happens again. but I Hate to say it.

It probably will, especially in an unregulated exchange and unregulated world. That's why I Think we have to bring these under regulation as soon as possible to protect people with FDIC Insurance on bank accounts or Sapc Insurance on brokerage accounts. Remember if you have money in like a Weeble or Robin Hood or M1 Finance you have a 500 000 of Sipc insurance. If you have cash accounts, you have potentially 250 000 or more in FDIC insurance.

For example, I think Robinhood and M1 Finance coordinate with like four different banks to get you FDIC Insurance up to a million dollars. Uh, they basically just put 250 in each individual institution, right? Some more commentary that we got here that was interesting was uh, obviously we already knew about stolen customer money being used for buying real estate and personal expenses. Uh, but uh. but was what was very interesting was when the SEC came out they talked about how from the Inception of FTX the entire organization was essentially set up as a fraud to funnel money to him personally and to his hedge fund personally with basically this unlimited line of credit and they make this really damning argument that I think is just incredible.

To show you how crooked this character is, they the SEC says this guy is so Brazen that in November of 2022 he comes out and tries to raise money again with the same arguments that everything's fine when it's not misleading people. Again, is the quote the SEC used really interesting Now I did see a comment during this: why not let Sam Beekman free testify before Congress You know is this: like a corrupt cover-up because of democratic donations or whatever little tin foily? But let's address it. So my take here is: uh, letting Sam Bangman Free testify before Congress gives him even more publicity than he's already getting. and what you really want is a presentation of evidence from both sides, not just talk.

We've had enough talk from. Sam Begman Free. You want prosecutors to say: Here's the evidence we have. Here are the emails we have.

Here's the documentation we have and you want to compare that to what evidence Sam Begman Freed's side have has you do that in court testifying before Congress under oath or not, It just lets him potentially share more propaganda and then you poison juries who could potentially in the future find him guilty, right? The less people know about 10 Magnum free, the more likely it is you can find an impartial jury. which is very difficult to do right now because I feel like everybody knows about Sam Baker Freed right? I Mean if we've got eight billion dollars in customer losses, significant damage to the Integrity of the crypto markets, it's bad. It's what the commodity Futures Trading Commission said this has damaged the Integrity of markets. Customer assets were not properly segregated.

they were co-mingled and misappropriated personally. I'm worried that that's the same kind of stuff that's happening over at Binance. Anyway, thank you so much for watching. Stay tuned.

We'll see you soon with more information. I've got information coming out on why the market is rotating down. We've got an Elon, Musk and Tesla update for you. We have a real estate update for you and we have a Fed update coming later today, so stay tuned.

There are a lot of videos coming. Thanks so much for watching. We'll see you next one! Goodbye.