SEC v. Samuel Bankman-Fried, No. 1:22-cv-10501, Southern District of New York (Jan. 19, 2023) — Complaint

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
___________________________________________
)
SECURITIES AND )
EXCHANGE COMMISSION, )
)
Plaintiff, )  Civil Action No. 22-cv-10501
)
v.                         )
)    JURY   TRIAL DEMANDED
SAMUEL BANKMAN-FRIED   ,         )
)
)
Defendant.         )
___________________________________________ )
COMPLAINT
Plaintiff Securities and Exchange Commission (the “Commission”), for its complaint
against Defendant, Samuel Bankman-Fried   (“ Bankman-Fried  ”), alleges as follows:
SUMMARY
1.From at least May 2019 through November 2022, Bankman-Fried engaged in a
scheme to defraud equity investors in FTX Trading Ltd. (“FTX”), the crypto asset trading
platform of which he was CEO and co-founder   , at the same time that he was also   defrauding the
platform’s customers.  Bankman-Fried raised more than $1.8 billion from investors, including
U.S. investors, who bought an equity stake in FTX believing that FTX had appropriate controls
and risk management measures.  Unbeknownst to those investors (and to FTX’s trading
customers),  Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of
dollars of the trading platform’s customer funds for his own personal benefit and to help grow
his crypto empire.
2.   Throughout this period, Bankman-Fried portrayed himself as a responsible leader
of  the  crypto    community.  He touted the importance of regulation and accountability.  He told the

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public, including investors, that FTX was both innovative and responsible.  Customers around
the world believed his lies, and sent billions of dollars to FTX, believing their assets were secure
on the    FTX   trading platform.  But from the start, Bankman-Fried    improperly diverted customer
assets to his privately-held crypto hedge fund, Alameda Research LLC (“Alameda”), and then
used those customer funds to make undisclosed venture investments, lavish real estate purchases,
and large political donations.
3. Bankman-Fried   hid all of this from FTX’s equity investors, including U.S.
investors, from whom he sought to raise billions of  dollars in additional funds.  He repeatedly
cast FTX as an innovative and conservative trailblazer in the crypto markets.  He told investors
and prospective investors that FTX had top-notch, sophisticated automated risk measures in
place to protect customer assets, that those assets were safe and secure, and   that Alameda was
just another platform customer with no special privileges.  These statements were false and
misleading.  In truth, Bankman-Fried had exempted Alameda from the risk mitigation measures
and had provided Alameda with significant special treatment on the FTX platform, including a
virtually unlimited “line of credit” funded by the platform’s customers.
4. While he spent lavishly on office space and condominiums in The Bahamas, and
sank billions of dollars of customer funds into speculative venture investments, Bankman-Fried’s
house of cards began to crumble.  When prices of crypto assets plummeted in May 2022,
Alameda’s lenders demanded repayment on billions of dollars of loans.  Despite the fact that
Alameda had, by this point, already taken billions of dollars of FTX customer assets, it was
unable to satisfy its loan obligations.  Bankman-Fried directed FTX to divert billions more in
customer assets to Alameda to ensure that Alameda maintained its lending relationships, and that
money could continue to flow in from lenders and other investors.

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5. But Bankman-Fried   did not stop there.  Even as it was increasingly clear that
Alameda and FTX could not make customers whole, Bankman-Fried continued to
misappropriate FTX customer funds.  Through the summer of  2022, he directed hundreds of
millions more in FTX customer funds to Alameda, which he then used for additional venture
investments and for “loans” to himself and other FTX executives.  All the while, he continued to
make misleading statements to investors about FTX’s financial condition and risk management.
Even in November 2022, faced with billions of dollars in customer withdrawal demands that
FTX   could not fulfill, Bankman-Fried    misle d investors from whom he needed money to plug a
multi-   billion   -dollar hole.  His brazen, multi-year   scheme finally came to an end when FTX,
Alameda, and their tangled web of affiliated entities filed for bankruptcy on November 11, 2022.
VIOLATIONS
6. By engaging in the conduct set forth in this Complaint, Defendant has violated
Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)]; and Section
10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule
10b-5 thereunder [17 C.F.R. § 240.10b-5].
7. Unless Defendant is permanently restrained and enjoined, he will continue to
engage in the acts, practices, transactions and courses of business set forth in this Complaint and
in acts, practices, transactions and courses of business of similar type and object.
NATURE OF THE PROCEEDING AND RELIEF SOUGHT
8. The Commission brings this action pursuant to the authority conferred upon it by
Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) of the Exchange
Act [15 U.S.C. §§ 78u(d)(1)].
9. The Commission seeks a final judgment:  (i) permanently enjoining Defendant

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from engaging in the acts, practices, transactions and courses of business alleged herein;
(ii)  ordering Defendant to disgorge his ill-gotten gains and to pay prejudgment interest thereon
pursuant to Section 21(d)(5) and (7) of the Exchange Act [15 U.S.C. §§ 78u(d)(5) and (7)]; (iii)
imposing civil money penalties on Defendant pursuant to Section 20(d) of the Securities Act [15
U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)];
(iv) imposing an officer and director bar pursuant to Section 20(e) of the Securities Act [15
U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; (v)
prohibiting Defendant from participating in the offer or sale of securities including crypto asset
securities pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)]; and
(vi) ordering such other and further relief the Court may find appropriate pursuant to Section
21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)].
JURISDICTION AND VENUE
10. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and
22 of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v], and Sections 21(d), 21(e), and 27
of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].  In connection with the conduct
alleged in this Complaint, Defendant, directly or indirectly, made use of the means or
instruments of transportation or communication in, and the means or instrumentalities of,
interstate commerce, or of the mails.
11. Venue is proper in the Southern District of New York pursuant to Section 22(a) of
the Securities Act [15 U.S.C. § 77v(a)], and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
Among other acts, Defendant made false and misleading statements to investors  residing in this
District.

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DEFENDANT
12. Samuel Bankman-Fried (“Bankman-Fried”), age 30, was a co-founder and
majority owner of FTX and, prior to stepping down on November 11, 2022, its CEO.  He was
also a co-founder and majority owner of Alameda.  He resided in Hong Kong and The Bahamas.
RELEVANT ENTITIES
13. FTX Trading Ltd. (d/b/a FTX.com) (“FTX”) is an Antigua and Barbuda
limited corporation.  FTX’s principal place of business was in Hong Kong and The Bahamas.
FTX operated a global crypto asset trading platform and began operations in or around May
2019.  FTX was available to customers in most countries, but was not permitted to provide
services to customers in the United States and several other countries.  FTX was founded by
Bankman-Fried, Gary Wang (“Wang”), and Nishad Singh (“Singh”).  On or about November 11,
2022, FTX and certain of its affiliates filed Chapter 11 bankruptcy petitions in the United States
Bankruptcy Court for the District of Delaware, Case No. 22-11068 (Bankr. Del.).
14. Alameda Research LLC (“Alameda”) is a Delaware company that had
operations in the United States, Hong Kong, and The Bahamas.  Alameda was  a quantitative
trading firm  specializing in crypto assets (a “crypto hedge fund”).  Bankman-Fried and Wang co-
founded Alameda in or around October 2017, and, prior to Alameda’s bankruptcy filing, had
been    its  sole equity owners, with Bankman-Fried owning 90%, and Wang owning 10%, of the
company.  Bankman-Fried was CEO of Alameda from its inception until in or around October
2021, at which time Caroline Ellison (“El  lison”) and Sam Trabucco (“Trabucco”) became co-
CEOs.  In or around August 2022, Ellison became the sole CEO.  Alameda has filed for Chapter
11 bankruptcy in the United States Bankruptcy Court for the District of Delaware, Case No. 22-
11068 (Bankr. Del.).

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FACTS
A. Bankman-Fried Created a Complex Web of Entities, with FTX and Alameda
at Its Center.
15. In or    around October 2017, Bankman-Fried and Wang founded Alameda, a
quantitative trading firm specializing in crypto assets.
1

16. At inception, Alameda was focused on arbitrage trading strategies, but went on to
employ other strategies including market making, yield farming (pooling of crypto assets in
exchange for interest or other rewards), and volatility trading  .  Alameda also offered over-the-
counter trading services, and made and managed other debt and equity investments.
17. At  first  , Bankman-Fried was responsible for trading operations, and Wang
handled the engineering and programming functions.  Over time, Alameda hired additional
employees, including Singh (in or around December 2017), Ellison (in or around March 2018),
and Trabucco (in or around 2019).  By the end of 2021, Alameda had approximately 30
employees.  At times, Alameda shared office space and employees with FTX.
18. Bankman-Fried remained the ultimate decision-maker at Alameda, even after
Ellison and Trabucco became co-CEOs in or around October 2021.  Bankman-Fried   directed
investment and operational decisions, frequently communicated with Alameda employees, and
had full access to Alameda’s records and databases.
19. In or around 2018, Bankman-Fried    began work on building a crypto asset   trading
platform.  Together with Wang and Singh, Bankman-Fried ultimately founded FTX, which
began operations in or around May 2019.

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 Crypto assets are unique digital assets maintained on a cryptographically-secured blockchain.  A blockchain or
distributed ledger is a peer-to-peer database spread across a network of computers that records all transactions in
theoretically unchangeable, digitally recorded data packages. The system relies on cryptographic techniques for
secure recording of transactions.  Crypto    tokens may be traded on crypto asset trading platforms in exchange for
other crypto assets or fiat currency (legal tender issued by a country).

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20. FTX offered its customers a number of services.  For example:
a. FTX offered a “spot market,” a trading platform through which customers
could trade crypto assets with other FTX customers in exchange for fiat
currency (i.e., currency such as U.S. Dollars) or other crypto assets.
b. FTX   offered “spot margin trading” services, which allowed FTX
customers to trade using assets they did not have (i.e., to trade “on
margin   ”) by posting collateral in their FTX accounts and borrowing crypto
assets through the “spot market” on the FTX platform.  FTX also allowed
customers to lend their crypto assets to other FTX customers who would
then use those crypto assets to spot trade.
c. FTX offered an off-platform (over-the -counter or “OTC  ”) portal that
enabled customers to connect and request quotes for spot crypto assets and
to conduct trades.
21. Bankman-Fried was the ultimate decision-maker at FTX from the platform’s
inception in or around May 2019 until he resigned as CEO on or about November 11, 2022 (“the
Relevant Period”).
22. In or around January 2020, Bankman-Fried, Wang, and Singh founded FTX US, a
crypto asset trading platform designed primarily for  customers in the United States.
2

23. Over time, Bankman-Fried expanded his holdings to include a number of
companies focused on making and managing private (or “venture”) investments.
24. This interconnected web of companies grew to include over 100 separate entities,
with Bankman-Fried   at the top and Alameda, his crypto hedge fund, at the center.

2
 FTX US is the d/b/a for a subsidiary of West Realm Shires Inc., a separate legal entity  from FTX Trading Ltd. that
provided different services.  FTX US’s conduct is not the subject of the allegations in this complaint.

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25. Throughout the Relevant Period, in multiple public statements, Bankman-Fried
held himself out as a visionary leader in the crypto industry, and touted his efforts to create a
regulated and thriving crypto asset market.  He conducted an intensive public relations campaign
to brand himself and his companies as honest stewards of crypto.
26. The reality was very different:  From the start, contrary to what FTX investors
and trading customers were told, Bankman-Fried    continually diverted FTX customer funds to
Alameda and then used those funds to continue to grow his empire, using billions of dollars to
make undisclosed private venture investments, political contributions, and real estate purchases.
27. At th  e same time, throughout the Relevant Period, Bankman-Fried solicited equity
investors by touting FTX’s controls and risk management, ultimately raising at least $1.8 billion
dollars from investors in exchange for various classes of stock in FTX through multiple
fundraising rounds, including raising:  (1) approximately $8 million from the sale of shares of
FTX    Series A preferred stock, with fundraising completed in or around August 2019;
(2) approximately $1 billion from the sale of shares of FTX Series B preferred stock, with
fundraising completed in or around July 2021; (3) approximately $420 million from the sale of
shares of FTX Series B-1 stock, with fundraising completed in or around October 2021; and (4)
approximately $500 million from the sale of shares of FTX Series C stock, with fundraising
completed in or around January 2022.  Of this total, approximately $1.1 billion was invested in
FTX   by  approximately 90  investors based in the United States.
28. For the entire span of the Relevant Period, while raising money from equity
investors, Bankman-Fried  , and those speaking at his direction and on his behalf, claimed in
widely distributed public forums and directly to investors that:   FTX was a safe crypto asset
trading platform; FTX had a comparative advantage due to its automated risk mitigation

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procedures; and FTX and its customers were protected from other customers’ losses due to
FTX’s     automated liquidation process.  As discussed further herein, these statements and others
were misleading in light of Bankman-Fried’s    failure to disclose to FTX investors the diversion of
FTX customer funds to Alameda, which he then used for his own purposes, including loans to
himself.  Similarly, Bankman-Fried’s statements concerning the separation of FTX and Alameda,
made throughout the Relevant Period, were misleading because he did not disclose the special
treatment afforded to Alameda on FTX, including its virtually unlimited “line of credit” at FTX,
its ability to carry a negative balance in its FTX customer account, and its exemption from
FTX’s automated liquidation process—none of which any other customer of the platform
enjoyed, but which changed the risk profile of FTX  .
29. Bankman-Fried also misrepresented the risk profile of investing in FTX
throughout the Relevant P eriod by failing to disclose FTX’s exposure to Alameda and, relatedly,
that the collateral Alameda deposited on FTX consisted largely of illiquid, FTX-affiliated tokens,
including FTT.  In addition to these material omissions, Bankman-Fried   also   made material
misrepresentations to FTX investors about FTX’s risk management and its relationship with
Alameda.  As detailed below, Bankman-Fried made these material misstatements throughout the
Relevant Period, and the entire time he was raising or attempting to raise funds for FTX—from
the  time FTX began operations in May 2019 through its ultimate demise in November 2022.
B. Bankman-Fried U
sed Alameda to Carry Out His Fraudulent Scheme.
30. Alameda (and its many subsidiaries) served a number of essential functions in
Bankman-Fried’s growing web of companies. For example, Alameda was the primary market
maker on FTX at the time of FTX’s inception in 2019.  In this capacity, Alameda, at Bankman-
Fried’s direction, was tasked with creating liquidity on FTX to allow the platform to function
more efficiently.  Bankman-Fried also made venture investments through an Alameda

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subsidiary.  Most crucially, Bankman-Fried used Alameda to house FTX customer assets and to
deploy those assets, under Bankman-Fried’s direction, to help grow his empire.
31. From the inception of FTX, Bankman-Fried diverted FTX customer funds to
Alameda, and he continued to do so until FTX’s collapse in November 2022.
32. Bankman-Fried diverted FTX customer funds to Alameda in essentially two
ways:     (1) by directing FTX customers to deposit fiat currency (e.g., U.S. Dollars) into bank
accounts controlled by Alameda; and (2) by enabling Alameda to draw down from a virtually
limitless “line of credit” at FTX, which was funded by FTX customer assets.
33. As a result, there was no meaningful distinction between FTX customer funds and
Alameda’s own funds.  Bankman-Fried thus gave Alameda carte blanche to use FTX customer
assets    for its own trading operations and for whatever other purposes Bankman-Fried saw fit.  In
esse nce, Bankman-Fried placed billions of dollars of FTX customer funds into Alameda.  He
then used Alameda as  his personal piggy bank to buy luxury condominiums, support political
campaigns, and make private investments, among other uses.  None of this was disclosed to FTX
equity investors or to the platform’s trading customers.
i. FTX Customers Deposited Billions of Dollars into Alameda-Owned
Bank Accounts, Which Alameda Spent on Its Own Trading Operations
and to Expand Bankman-Fried’s Empire.
34. From the start of  FTX’s operations in or around May 2019 until at least 2021,
FTX   customers deposited fiat currency (e.g., U.S. Dollars) into bank accounts controlled by
Alameda.  Billions of dollars of FTX customer funds were so deposited into Alameda-controlled
bank accounts.
35. At least some of these bank accounts were not in Alameda’s name, but rather in
the name of North Dimension Inc. (“North Dimension”), an Alameda subsidiary.  North
Dimension’s website does not disclose any connection to Alameda.  Bankman-Fried directed

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FTX to have customers send funds to North Dimension in an effort to hide the fact that the funds
were being sent to an account controlled by Alameda.
36. Alameda did not segregate these customer funds, but instead commingled them
with  its other assets, and used them indiscriminately to fund its trading operations and Bankman-
Fried’s other ventures.
37. This multi-billion   -dollar liability was reflected in an internal account in the FTX
database that was not tied to Alameda but was instead called “[email protected].”  Characterizing the
amount of customer funds sent to Alameda as an internal FTX account had the effect of
concealing Alameda’s liability in FTX’s internal systems.
38. In quarterly balance sheets that Alameda provided to its third-party   lenders,
Alameda tracked this liability as a “loan,” but did not specify that the “loan” was from FTX.
Instead, Alameda combined this liability with loans it had received from third-party lenders.
39. Alameda was not required to pay interest on the liability reflected in the
“[email protected]” account.
40. In 2022, FTX began trying to separate Alameda’s portion of the liability in the
“[email protected]” account from the portion that was attributable to FTX (i.e., to separate out
customer deposits sent to Alameda-controlled bank accounts from deposits sent to FTX-
controlled bank accounts).  Alameda’s portion—which amounted to more than $8 billion in FTX
customer assets that had been deposited into Alameda-controlled bank accounts—was initially
moved to a different account in the FTX database.  However, because this change caused FTX’s
internal systems to automatically charge Alameda interest on the more than $8 billion liability,
Bankman-Fried directed that the Alameda liability be moved to an account that would not be
charg  ed interest.  This account was associated with an individual that had no apparent connection

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to Alameda.  As a result, this change had the effect of further concealing Alameda’s liability in
FTX’s internal systems.
ii. The FTX Platform, By Design, Granted Special Treatment to Alameda,
Including Features that Allowed Alameda to Divert FTX Customer
Assets.
41. In addition to receiving cash deposits directly from FTX customers, Alameda
benefited from undisclosed features of the FTX platform, which allowed it to divert FTX
customer assets.  For example:
a. Negative Balance:   Alameda was able to maintain a negative balance in its
customer account at FTX.  Bankman-Fried directed software code to be written in
or a round August 2019, and updated in or around May 2020, that ultimately
allowed Alameda to maintain a negative balance in its account, untethered from
any collateral requirements.  No other customer account at FTX was permitted to
maintain a negative balance.
b. Line of Credit: On multiple occasions, Bankman-Fried directed FTX to increase
the amount by which Alameda could maintain a negative balance in its account.
In effect, this gave an unofficial “line of credit” to Alameda, since Alameda was
able to draw down on its FTX customer account and use those funds—which
were actually the funds deposited by other FTX customers—for its own trading.
At Bankman-Fried’s direction, Alameda’s “line of credit” was continually raised
to the point where it grew to tens of billions of dollars and effectively became
limitless.  No other FTX customer had a similar “line of credit.”
c. Liquidation Exemption: In or around May 2020, Bankman-Fried directed that
Alameda be exempted from the “auto-liquidation” feature of FTX’s spot margin
trading services.  As a result, Alameda’s collateral could fall below the requisite

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margin levels without triggering the automatic liquidation of its account.
Alameda was the only customer exempted from FTX’s automatic account
liquidation.
42. All of these special privileges were afforded to Alameda—and only Alameda—at
Bankman-Fried’s direction, and all were hidden from investors.  These privileges permitted
Alameda to draw on FTX customer assets to a virtually unlimited extent for its own uses.
Because its own FTX trading account was able to maintain a negative balance of billions of
dollars, unbacked by sufficient collateral, Alameda was able to divert billions of dollars in FTX
customer assets.  Alameda did just that in 2022.
iii. In 2022, Alameda Diverted Billions More in FTX Customer Assets.
43. Starting in or aro und 2021, Bankman-Fried directed Alameda to borrow billions
of dollars from third  -party   crypto asset lending firms in order to fund Bankman-Fried’s venture
investments and for his personal use.  Certain of these loans included provisions permitting the
len ders to demand re-payment at any time.
44. In or around May 2022, as prices of crypto assets were dropping precipitously,
several of these lenders demanded re-payment from Alameda.  Because Alameda did not have
sufficient assets to cover all of these obligations, Bankman-Fried directed Alameda to draw on
its “line of credit” from FTX.  Billions of dollars of FTX customer funds were thus diverted to
Alameda and used by Alameda to re-pay its third-party loan obligations.
45. Because Alameda now had billions of dollars  more in liability to FTX (on top of
the billions of dollars reflected in the [email protected] account) Bankman-Fried  —concerned that
this   enormous liability would alarm Alameda’s lenders—directed Alameda to hide this “line of
credit” in Alameda’s balance she et.
46. Despite the fact that Alameda now owed FTX billions of dollars with no

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immediate prospects of raising capital to pay off its “line of credit,” Bankman-Fried continued to
direct Alameda to draw on the “line of credit” in the summer of 2022.  The customer funds
diverted to Alameda were used, among other things, to pay hundreds of millions of dollars in
“loans” to Bankman-Fried and other FTX executives, as well as hundreds of millions more to
fund additional venture investments.
iv. Bankman-Fried Assured Investors that FTX Customer Assets Were
Secure, and Hid Alameda’s Close Relationship with FTX.
47. Throughout the Relevant Period, Bankman-Fried was directly involved in
soliciting potential investors in FTX.  Bankman-Fried met, and otherwise communicated, with
FTX investors including investors based in the United States.  Along with another FTX
employee, Bankman-Fried was the point-person for investor relations at FTX.
48. FTX’s Terms of Service, which were publicly available on FTX’s website and
accessible to investors, assured FTX customers that their assets were secure, providing:  “you
control the Digital Assets held in your Account;”  “[t]itle to your Digital Assets shall at all times
remain with you and shall not transfer to FTX;” and “none of the digital assets in your account
are the property of, or shall or may be loaned to, FTX Trading.”  The Terms of Service further
provided:  “Once we receive fiat currency we may issue you an equivalent amount of electronic
money (“E-Money”)...which represents the fiat currency that you have loaded” and “[y]ou may
redeem all or part of any E-Money held in your Account at any time.”
49. Similarly, FTX posted on its website a document entitled, “FTX’s Key Principles
for Ensuring Investor Protections on Digital-  Asset Platforms,” in which FTX represented that it
“segregates customer assets from its own assets across our platforms.”  FTX    further represented
in that document that it maintained “liquid assets for customer withdrawals...[to] ensure a
customer without losses can redeem its assets from the platform on demand.”

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50. In addition to making this document available to the public on its website, FTX
specifically provided it to potential investors, including a U.S. investor who had invested $35
million in FTX’s Series B fundraising round in July 2021.  As described above, these statements
to the public, customers, and investors were false—FTX did not segregate its customer assets
from its own assets, and, as events would later demonstrate, did not maintain liquidity to allow
customer withdrawals on demand.
51. FTX investors were provided with FTX’s audited financial statements, and FTX
represented in its purchase agreements that those financial statements “fairly present in all
material respects the financial condition and operating results of” FTX.  These audited financial
statements, which do not include information about Alameda’s undocumented “line of credit”
from FTX and other information discussed herein, were, at the very least, materially misleading.
Ind eed, FTX’s current CEO has voiced “substantial concern as to the information presented in
these audited financial statements.”
52. Throughout the Relevant Period, Bankman-Fried made public statements assuring
that customer assets were safe at FTX.  For example, he stated in a tweet on or about June 27,
2022:  “Backstopping customer assets should always be primary.  Everything else is secondary.”
He likewise tweeted on or about August 9, 2021:  “As always, our users’ funds and safety comes
first.  We will always allow withdrawals (except in cases of suspected money
laundering/theft/etc.).”
53. Bankman-Fried also told investors, and directed other FTX and Alameda
employees to tell investors, that Alameda received no preferential treatment from FTX.  For
example, Bankman-Fried told the Wall Street Journal in or around July 2022:  “There are no
par ties that have privileged access.”  Likewise, in a Bloomberg article published in or about

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September 2022, Bankman-Fried claimed that “Alameda is a wholly separate entity” than FTX.
In the same article, Ellison is quoted as stating about Alameda:  “We’re at arm’s length and don’t
get any different treatment from other market makers.”  Bankman-Fried made similar statements
directly to investors.
54. Bankman-Fried knew or recklessly disregarded that these statements were false
and misleading because he was   directly involved in establishing Alameda’s preferential
treatment.
C. FTX Had Poor Controls and Deeply Inadequate Risk Management
Procedures, in Stark Contrast to Bankman-Fried’s Claims that It Was a
Mature, Conservative Company.
55.  From its inception, FTX had poor controls and fundamentally deficient risk
management procedures.  Assets and liabilities of all forms were generally treated as
interchangeable, and there were insufficient distinctions between the assignment of debts and
credits to Alameda, FTX, and executives, including Bankman-Fried, Wang, and Singh.  This
reality was a sharp contrast to the image of FTX that Bankman-Fried consistently portrayed to
the public and to investors—a mature company that managed funds and risk in a conservative,
rigorous manner.
56. FTX invested significant resources to develop and promote its brand as a
trustworthy company.  For example, in materials provided to one investor in or around June
2022, FTX cultivated and promoted its reputation:
FTX has an industry-leading brand, endorsed by some of the most
trustworthy public figures, including Tom Brady, MLB, Gisele
Bundchen, Steph Curry, and the Miami Heat, and backed by an
industry-leading set of investors.  FTX has the cleanest brand in
crypto.

57. FTX also promoted itself as a company that was willing to work collaboratively
with regulators and lawmakers.  In the same materials, FTX claimed:  “FTX is also the only

17
major digital asset venue to maintain positive, constructive relationships with regulators and
lawmakers.”
i. The FTX Automated Risk Engine
58. Bankman-Fried repeatedly touted FTX’s automated risk mitigation protocols—
which he called FTX’s “risk engine”—to the public, and prospective investors, as a safe and
reliable way for crypto asset trading platforms to manage risk.  Bankman-Fried promoted the
concept of “24/7” automated risk monitoring as an innovative benefit of cryptocurrency markets,
including at a hearing on or about December 8, 2021, to the U.S. House of Representatives
Committee on Financial Services, where Bankman-Fried concluded his remarks by stating:
And the last thing I will say is if you look at what precipitated
some of the 2008 financial crisis, you will see a number of
bilateral, bespoke, non-reported transactions happening between
financial counterparties, which then got repackaged and
releveraged again and again and again, such that no one knew how
much risk was in that system until it all fell apart.  If you compare
that to what happened on FTX or other major cryptocurrencies in
use today, there is complete transparency about the full open
interest.  There is complete transparency about the positions that
are held.  There is a robust, consistent risk framework applied.

59. In addition to generally promoting the benefits of automated risk engines,
Bankman-Fried repeatedly claimed that FTX’s own risk engine was especially sophisticated and
carefully calibrated.  In a submission to the Commodity Futures Trading Commission, FTX
touted its automated system, claiming that it calculated a customer’s margin level every 30
seconds; and that if the collateral on deposit fell below the required margin level, FTX’s
automated system would sell the customer’s portfolio assets until the collateral on deposit
exceeded the required margin level.
60. These statements were materially false and misleading because of a critical
omission:  Bankman-Fried did not reveal that the automatic risk engine did not apply to the

18
accounts of its most important customer—Alameda.  As discussed above, one of the special
benefits that Bankman-F ried afforded Alameda was that its collateral on deposit was allowed to
fall below FTX’s required margin level without FTX liquidating any part of Alameda’s portfolio.
61. Bankman-Fried thus misled FTX’s investors by representing that its risk engine
would protect FTX customer funds and would limit FTX’s exposure to any single customer,
while failing to disclose that Bankman-Fried had personally directed that the engine not apply to
one of its largest customers.
62. As   Bankman-F ried   acknowledged in a network television interview on or about
December 1, 2022:  “I wasn’t even trying, like, I wasn’t spending any time or effort trying to
manage risk on FTX.”  Bankman-Fried continued:  “What happened, happened—and, if I had
been spending an hour a day thinking about risk management on FTX, I don’t think that would
have happened.”
ii. The Valuation of Alameda’s Collateral
63. The collateral that Alameda had  on deposit, consisting largely of enormous
positions in illiquid crypto assets issued by FTX and Bankman-Fried (  including the “FTT  ” token,
the native crypto asset of FTX), compounded the undisclosed risk to FTX’s investors.  Bankman-
Fried and FTX’s system valued this collateral at trading prices, but the collateral deposited by
Alameda was not worth the value assigned to it.  Alameda and FTX collectively owned the
majority of these tokens, and only a small portion of the FTX-affiliated tokens were in
circulation.  As such, the tokens were illiquid, and, as Bankman-Fried knew or was reckless in
not knowing, if Alameda or FTX tried to sell Alameda’s holdings, market prices for the tokens
would fall, thereby driving down the value of Alameda’s deposited collateral at FTX.  As a
result, even if FTX had liquidated Alameda’s portfolio, the sales of those thinly traded tokens
would not have generated sufficient funds to cover the amount Alameda borrowed from FTX.

19
64. Bankman-Fried was well aware of the impact of Alameda’s positions on FTX’s
risk profile.  On or about October 12, 2022, for example, Bankman-Fried, in a series of tweets,
analyzed the manipulation of a digital asset on an unrelated crypto platform.  In explaining what
occurred, Bankman-Fried distinguished between an asset’s “current price” and its “fair price,”
and recognized that “large positions – especially in illiquid tokens – can have a lot of impact.”
Bankman-Fried asserted that FTX’s risk engine required customers to “fully collateralize a
position” when the customer’s position is “large and illiquid enough.”  But Bankman-Fried
knew, or was reckless in not knowing, that by not mitigating for the impact of large and illiquid
tokens posted as collateral by Alameda, FTX was engaging in precisely the same conduct, and
creating the same risk, that he was warning against.  Alameda was drawing down a virtually
unlimited line of credit from FTX, collateralized by a large illiquid position.
65. The reality of FTX’s exposure to the risk created by the valuation of Alameda’s
positions stood in stark contrast to Bankman-Fried’s    assertions about risk management at FTX in
his October 2022 Twitter analysis, in which he described FTX’s approach and claimed that
constructing the rules for FTX’s risk engine in a manner that is “conservative, and handles
apparent large moves gracefully” is “probably the most important thing we do at FTX.”
Bankman-Frie  d further claimed, contrasting FTX to the failed endeavor:  “There are a bunch of
other risk engine protection and sanity checks, too, which would have caught something like
this.”
66. Not only did Bankman-Fried fail to tell investors that he had exempted Alameda
from FTX’s risk engine, he also falsely told certain investors that FTX had no exposure to FTT
at all.     In late summer 2021, for example, Bankman-Fried told a potential U.S. investor in FTX’s
series B fundraising round that FTX did not hold FTT and, consequently, the investor would not

20
have any exposure to FTT.  The investor ultimately invested $30 million.  For the reasons
described above, Bankman-Fried knew or was reckless in not knowing that at the time that he
made those representations, they were false and misleading.  Specifically, Bankman-Fried knew
or was reckless in not knowing that any investment in FTX carried significant exposure to FTT,
as the token was, among other things, posted as collateral for billions of dollars that FTX had
loaned to Alameda to engage in speculative investments.
iii. Loans to FTX Executives and Real Estate Purchases
67. The FTX funds transferred to Alameda were used not only for Alameda’s
proprietary trading, but also to fund loans to FTX executives, including Bankman-Fried himself,
and to fund personal real estate purchases.  Between March 2020 and September 2022,
Bankman-Fried executed promissory notes for loans from Alameda totaling more than $1.338
billion, including two instances in which Bankman-Fried was both the borrower in his individual
capacity and the lender in his capacity as CEO of Alameda.
68. Bankman-Fried also used commingled funds from Alameda to make large
political donations and to purchase tens of millions of dollars in Bahamian real estate for himself,
his parents, and other FTX executives.  Singh and Wang also borrowed $554 million and $224.7
million, respectively, by executing promissory notes with Alameda in 2021 and 2022.
69. The loans to Bankman-Fried and other individuals were poorly documented, and
at times not documented at all.  Similarly, the record keeping regarding the purchase and
ownership of real estate was poorly organized and documented.  Neither the fact of the loans and
purchases, nor the poor documentation of significant company liabilities and expenditures, was
disclosed to investors.

21
D. Despite the Precarious Financial Position of FTX and Alameda, Bankman-
Fried Continued to Use FTX Customer Assets in the Summer of 2022,
Including to Rescue Distressed Crypto Firms and to Further Mislead
Investors.
70. In May 2022, the crypto markets plummeted due to a significant loss in value of
certain crypto assets and networks and the collateral effects on the interrelated markets.
Bankman-Fried characterized FTX, and himself, as playing an important role in stabilizing the
industry.  Bankman-Fried entered into a series of transactions with other members of the
industry, providing credit to and taking over other failing firms.  On or about June 21, 2022, after
giving    a $250 million line of revolving credit to BlockFi, a global crypto financial services
company, to provide the company with access to capital to ease liquidity concerns, Bankman-
Fried tweeted:  “We take our duty seriously to protect the digital asset ecosystem and its
customers.”
71. At the same time that Bankman-Fried was positioning himself as a hero in the
industry, however, the plummeting value of crypto assets was impacting Alameda, and as a
result impacting FTX.  As discussed above, as a result of the same market conditions impacting
Blo ckFi’s liquidity, many of Alameda’s lenders demanded repayment of loans they had made to
Alameda.  Bankman-Fried directed Alameda to draw down billions of dollars from its “line of
credit   ” from FTX to repay some of its loans—money that came from FTX’s spot market funded
by FTX customers.
72. Thus, in the summer of 2022, Bankman-Fried knew, or was reckless in not
knowing, that FTX was in a precarious financial condition.  However, he continued to spend
hundreds of millions of dollars to purchase and support other crypto companies, and allowed
Alameda to use FTX customer funds to repay its debts.  In addition, Bankman-Fried and other
FTX executives continued to withdraw customer funds in the form of the poorly documented and

22
undisclosed “loans” described above.  Specifically, on or about July 22, 2022, Bankman-Fried
loaned himself $136 million.  When he made this loan, Bankman-Fried knew, or was reckless in
not knowing, of the significant financial risk it posed to both Alameda and FTX.  Collectively,
Bankman-Fried’s actions in the summer of 2022 further imperiled FTX’   s financial condition.
73. Despite FTX’s tenuous financial condition at this time, Bankman-Fried continued
to present a false and misleading positive account of the company to investors.  In a meeting with
FTX    U.S. investors in September 2022, for example, an FTX presentation included the claim
that :  “Outside of BlockFi, we didn’t increase our exposure to crypto.”  This statement was false
and misleading:  the customer funds that FTX diverted to Alameda, including customer funds
that Alameda used to repay its lenders, were collateralized in part by Alameda’s FTT holdings.
Bankman-Fried knew or was reckless in not knowing that, as a result, FTX’s exposure to crypto,
including its own FTT token, increased substantially as Alameda increased its borrowing, backed
by FTT as collateral, in the second quarter of 2022.
74. In that same meeting with FTX investors, FTX also represented that certain
investments did not involve the assets of FTX or its customers.  Contrary to that representation,
two $100 million investments made by FTX’s affiliated investment vehicle, FTX Ventures Ltd.,
were funded with FTX customer funds that had been diverted to Alameda.
E. Even as His Scheme Was Spiraling Out of Control, Bankman-Fried
Continued to Mislead Investors and the Public About FTX’s True Financial
Condition.
75. On   or about November 2, 2022, CoinDesk, a crypto news website, published an
article stating that based on its review of an Alameda balance sheet it had obtained, Alameda
held a large position in FTT and other FTX-associated tokens.
76. On   or about November 6, 2022, the CEO of Binance, a crypto asset trading
platform, announced that “[d]ue to recent revelations that have came [sic] to light,” Binance

23
would liquidate its FTT holdings.  Binance held FTT then valued at more than $500 million,
which it had received from FTX as part of Bankman-Fried’s buyout of Binance’s equity in FTX
as an early round investor.
77. Binance’s announcement caused many FTX customers to withdraw their funds
from FTX.  Bankman-Fried knew or was reckless in not knowing that given Alameda’s large
FTT  holdings, any further drop in the value of FTT threatened the solvency of FTX, given
Alameda’s multi-billion   -dollar liability.  To prevent a collapse in the market price of FTT that
Binance’s sales might cause, Ellison tweeted an offer to buy Binance’s entire stake, for $22 per
token (“@cz_binance if you’re looking to minimize the market impact on your FTT sales,
Alameda will happily buy it all from you today at $22!”).
78. Attempting to maintain public and investor confidence in FTX, Bankman-Fried
tweeted on or about November 7, 2022:  “FTX is fine.  Assets are fine ... FTX has enough to
cover all client holdings.  We don’t invest client assets (even in treasuries).  We have been
processing all withdrawals, and will continue to be ....”  That tweet was false and misleading,
and Bankman-Fried later deleted it.  Bankman-Fried knew that FTX, at his direction, allowed
Ala meda to invest “client assets” and that Alameda had in fact done so, using FTX customer
funds to make investments far  riskier than “treasuries.”
79. The next day, November 8, 2022, FTX paused all customer withdrawals, and the
price of FTT plummeted by approximately 80%.  Alameda’s collateral on deposit was worth far
less than the amount Alameda had borrowed from FTX.  FTX    was left with billions of dollars in
effectively unrecoverable loans.
80. Facing a solvency crisis, Bankman-Fried searched for investors who could
provide additional funding.  On or about November 8, 2022, the CEO of Binance tweeted:  “FTX

24
asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-
binding LOI, intending to fully acquire http://FTX.com and help cover the liquidity crunch. We
will be conducting a full DD [due diligence] in the coming days.”
81. It only took one day, however, for Binance to decide not to acquire FTX.  On or
about November 9, Binance announced:  “As a result of corporate due diligence, as well as the
latest news reports regarding mishandled customer funds and alleged US agency investigations,
we have decided that we will not pursue the potential acquisition of http://FTX.com.”
82. FTX customers withdrew approximately $5 billion from the platform that day.
83. At the same time, Bankman-Fried sought emergency funding from other
investors, including U.S. investors, to cover a shortfall at FTX of approximately $8 billion.  As
part of this effort, Bankman-Fried circulated a balance sheet to potential investors that listed a
negative $8 billion entry labeled as a “hidden, poorly internally labeled ‘fiat@ account.’”  This
entry   was a reference to the above-described [email protected] account and reflected FTX customer
funds deposited in Alameda’s bank accounts.
84. During a meeting with Alameda employees on or about November 9, 2022,
Ellison admitted that she, Bankman-Fried, Wang, and Singh were aware that FTX customer
funds had been used by Alameda.
85. On the morning of November 10, 2022, confronting the implosion of FTX and
Alameda, Bankman-Fried tweeted:  “1) I’m sorry.  That’s the biggest thing. I f*cked up, and
should have done better.”
3
  In the same tweet thread, Bankman-Fried announced that Alameda
was “winding down trading” and soon would not trade on FTX at all.  Bankman-Fried
maintained that “FTX International currently has a total market value of assets/collateral higher

3
 Expletives have been redacted in part with asterisks.

25
than client deposits (moves with prices!).”  And he stated, among other things, that he was trying
to “raise liquidity,” claiming “[t]here are a number of players who we are in talks with, LOIs
[letters of intent], term sheets, etc.”
86. The next day, November 11, 2022, Bankman-Fried resigned from FTX.  Shortly
ther eafter, FTX and approximately 100 affiliated entities, including FTX US, filed for Chapter
11 bankruptcy protection.
FIRST CLAIM FOR RELIEF
FRAUD IN THE OFFER OR SALE OF SECURITIES
(Violations of Section 17(a) of the Securities Act)
87. The Commission re-alleges and incorporates by reference the allegations
contained in paragraphs 1 through 86.
88. By reason of the conduct described above, Defendant, in connection with the offer
or sale of securities, by the use of the means or instrumentalities of interstate commerce or of the
mails, directly or indirectly, acting knowingly, recklessly, or, as to (ii) and (iii), negligently
(i) employed devices, schemes, or artifices to defraud; (ii) obtained money or property by means
of untrue statements of material facts and omissions to state material facts necessary in order to
make the statements made, in light of the circumstances under which they were made, not
misleading; and (iii) engaged in acts, practices, or courses of business which operated or would
operate as a fraud or deceit upon any persons, including purchasers or sellers of the securities.
89. By reason of the conduct described above, Defendant violated Securities Act
Sections 17(a) [15 U.S.C. § 77q(a)].

26
SECOND CLAIM FOR RELIEF
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES
 (Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder)
90. The Commission re-alleges and incorporates by reference the allegations
contained in paragraphs 1 through 86.
91. By reason of the conduct described above, Defendant, directly or indirectly, in
connection with the purchase or sale of securities, by the use of the means or instrumentalities of
interstate commerce or of the mails, or of any facility of any national securities exchange,
knowingly or recklessly, (i) employed devices, schemes, or artifices to defraud; (ii) made untrue
statements of a material fact or omitted to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made, not misleading;
and (iii) engaged in acts, practices, or courses of business which operated or would operate as a
fraud or deceit upon any persons, including purchasers of the securities.
92. By reason of the conduct described above, Defendant violated Exchange Act
Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
A.   Permanently restraining and enjoining Defendant, his officers, agents, servants,
employees and attorneys, and those persons in active concert or participation with them who
receive actual notice of the injunction by personal service or otherwise, and each of them, from
violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and Section 10(b) of the
Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5];
B. Ordering Defendant pay disgorgement plus prejudgment interest of all ill-gotten

27
gains    obtained by reason of the unlawful conduct alleged in this Complaint, pursuant to
Exchange Act Sections 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(5) and 78u(d)(7)];
C. Ordering Defendant to pay civil monetary penalties pursuant to Section 20(d) of
the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C.
§ 78u(d)(3)];
D.   Ordering Defendant barred from acting as an    officer or director pursuant to
Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange
Act   [15 U.S.C. § 78u(d)(2)];
E.    Prohibiting Bankman-Fried from participating, directly or indirectly, including,
but not limited to, through any entity controlled by him, in the issuance, purchase, offer, or sale
of any securities, including crypto asset securities, provided, however, that such injunction shall
not prevent Bankman-Fried from purchasing or selling securities, including crypto asset
securities, for his own personal account; and
F.    Granting such other and further relief as this Court may deem just and proper.

28
JURY DEMAND
The Commission demands trial by jury.
DATED:  New York, New York
December 13, 2022
                              Respectfully submitted,

                                   _________________________________
Jorge G. Tenreiro
David L. Hirsch (not admitted in SDNY)
Ladan F. Stewart
Amy   Harman Burkart
David J. D’Addio
SECURITIES AND EXCHANGE
  COMMISSION
                           100 Pearl Street, Suite 20-100
New York, New York 10004
(212) 336-0153 (Stewart)
Email: [email protected]

Attorneys for the Plaintiff

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

___________________________________________ 
) 

SECURITIES AND ) 
EXCHANGE COMMISSION, ) 

)  
Plaintiff, )  Civil Action No. 22-cv-10501 

)  
v.      ) 

) JURY TRIAL DEMANDED 
SAMUEL BANKMAN-FRIED,   ) 

) 
) 

Defendant.   ) 
___________________________________________ ) 

COMPLAINT 

Plaintiff Securities and Exchange Commission (the “Commission”), for its complaint 

against Defendant, Samuel Bankman-Fried (“Bankman-Fried”), alleges as follows: 

SUMMARY  

1. From at least May 2019 through November 2022, Bankman-Fried engaged in a

scheme to defraud equity investors in FTX Trading Ltd. (“FTX”), the crypto asset trading 

platform of which he was CEO and co-founder, at the same time that he was also defrauding the 

platform’s customers.  Bankman-Fried raised more than $1.8 billion from investors, including 

U.S. investors, who bought an equity stake in FTX believing that FTX had appropriate controls 

and risk management measures.  Unbeknownst to those investors (and to FTX’s trading 

customers), Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of 

dollars of the trading platform’s customer funds for his own personal benefit and to help grow 

his crypto empire. 

2. Throughout this period, Bankman-Fried portrayed himself as a responsible leader

of the crypto community.  He touted the importance of regulation and accountability.  He told the 

Case 1:22-cv-10501   Document 1   Filed 12/13/22   Page 1 of 28



2 

public, including investors, that FTX was both innovative and responsible.  Customers around 

the world believed his lies, and sent billions of dollars to FTX, believing their assets were secure 

on the FTX trading platform.  But from the start, Bankman-Fried improperly diverted customer 

assets to his privately-held crypto hedge fund, Alameda Research LLC (“Alameda”), and then 

used those customer funds to make undisclosed venture investments, lavish real estate purchases, 

and large political donations.   

3. Bankman-Fried hid all of this from FTX’s equity investors, including U.S. 

investors, from whom he sought to raise billions of dollars in additional funds.  He repeatedly 

cast FTX as an innovative and conservative trailblazer in the crypto markets.  He told investors 

and prospective investors that FTX had top-notch, sophisticated automated risk measures in 

place to protect customer assets, that those assets were safe and secure, and that Alameda was 

just another platform customer with no special privileges.  These statements were false and 

misleading.  In truth, Bankman-Fried had exempted Alameda from the risk mitigation measures 

and had provided Alameda with significant special treatment on the FTX platform, including a 

virtually unlimited “line of credit” funded by the platform’s customers.   

4. While he spent lavishly on office space and condominiums in The Bahamas, and 

sank billions of dollars of customer funds into speculative venture investments, Bankman-Fried’s 

house of cards began to crumble.  When prices of crypto assets plummeted in May 2022, 

Alameda’s lenders demanded repayment on billions of dollars of loans.  Despite the fact that 

Alameda had, by this point, already taken billions of dollars of FTX customer assets, it was 

unable to satisfy its loan obligations.  Bankman-Fried directed FTX to divert billions more in 

customer assets to Alameda to ensure that Alameda maintained its lending relationships, and that 

money could continue to flow in from lenders and other investors.   

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3 

5. But Bankman-Fried did not stop there.  Even as it was increasingly clear that 

Alameda and FTX could not make customers whole, Bankman-Fried continued to 

misappropriate FTX customer funds.  Through the summer of 2022, he directed hundreds of 

millions more in FTX customer funds to Alameda, which he then used for additional venture 

investments and for “loans” to himself and other FTX executives.  All the while, he continued to 

make misleading statements to investors about FTX’s financial condition and risk management.  

Even in November 2022, faced with billions of dollars in customer withdrawal demands that 

FTX could not fulfill, Bankman-Fried misled investors from whom he needed money to plug a 

multi-billion-dollar hole.  His brazen, multi-year scheme finally came to an end when FTX, 

Alameda, and their tangled web of affiliated entities filed for bankruptcy on November 11, 2022. 

VIOLATIONS 

6. By engaging in the conduct set forth in this Complaint, Defendant has violated 

Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)]; and Section 

10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 

10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

7. Unless Defendant is permanently restrained and enjoined, he will continue to 

engage in the acts, practices, transactions and courses of business set forth in this Complaint and 

in acts, practices, transactions and courses of business of similar type and object. 

NATURE OF THE PROCEEDING AND RELIEF SOUGHT 

8. The Commission brings this action pursuant to the authority conferred upon it by 

Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) of the Exchange 

Act [15 U.S.C. §§ 78u(d)(1)].  

9. The Commission seeks a final judgment:  (i) permanently enjoining Defendant 

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4 

from engaging in the acts, practices, transactions and courses of business alleged herein; 

(ii) ordering Defendant to disgorge his ill-gotten gains and to pay prejudgment interest thereon 

pursuant to Section 21(d)(5) and (7) of the Exchange Act [15 U.S.C. §§ 78u(d)(5) and (7)]; (iii) 

imposing civil money penalties on Defendant pursuant to Section 20(d) of the Securities Act [15 

U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; 

(iv) imposing an officer and director bar pursuant to Section 20(e) of the Securities Act [15 

U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; (v) 

prohibiting Defendant from participating in the offer or sale of securities including crypto asset 

securities pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)]; and 

(vi) ordering such other and further relief the Court may find appropriate pursuant to Section 

21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)]. 

JURISDICTION AND VENUE 

10. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and 

22 of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v], and Sections 21(d), 21(e), and 27 

of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].  In connection with the conduct 

alleged in this Complaint, Defendant, directly or indirectly, made use of the means or 

instruments of transportation or communication in, and the means or instrumentalities of, 

interstate commerce, or of the mails. 

11. Venue is proper in the Southern District of New York pursuant to Section 22(a) of 

the Securities Act [15 U.S.C. § 77v(a)], and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  

Among other acts, Defendant made false and misleading statements to investors residing in this 

District. 

Case 1:22-cv-10501   Document 1   Filed 12/13/22   Page 4 of 28



5 

DEFENDANT 

12. Samuel Bankman-Fried (“Bankman-Fried”), age 30, was a co-founder and 

majority owner of FTX and, prior to stepping down on November 11, 2022, its CEO.  He was 

also a co-founder and majority owner of Alameda.  He resided in Hong Kong and The Bahamas.   

RELEVANT ENTITIES 

13. FTX Trading Ltd. (d/b/a FTX.com) (“FTX”) is an Antigua and Barbuda 

limited corporation.  FTX’s principal place of business was in Hong Kong and The Bahamas.  

FTX operated a global crypto asset trading platform and began operations in or around May 

2019.  FTX was available to customers in most countries, but was not permitted to provide 

services to customers in the United States and several other countries.  FTX was founded by 

Bankman-Fried, Gary Wang (“Wang”), and Nishad Singh (“Singh”).  On or about November 11, 

2022, FTX and certain of its affiliates filed Chapter 11 bankruptcy petitions in the United States 

Bankruptcy Court for the District of Delaware, Case No. 22-11068 (Bankr. Del.).    

14. Alameda Research LLC (“Alameda”) is a Delaware company that had 

operations in the United States, Hong Kong, and The Bahamas.  Alameda was a quantitative 

trading firm specializing in crypto assets (a “crypto hedge fund”).  Bankman-Fried and Wang co-

founded Alameda in or around October 2017, and, prior to Alameda’s bankruptcy filing, had 

been its sole equity owners, with Bankman-Fried owning 90%, and Wang owning 10%, of the 

company.  Bankman-Fried was CEO of Alameda from its inception until in or around October 

2021, at which time Caroline Ellison (“Ellison”) and Sam Trabucco (“Trabucco”) became co-

CEOs.  In or around August 2022, Ellison became the sole CEO.  Alameda has filed for Chapter 

11 bankruptcy in the United States Bankruptcy Court for the District of Delaware, Case No. 22-

11068 (Bankr. Del.). 

Case 1:22-cv-10501   Document 1   Filed 12/13/22   Page 5 of 28



6 

FACTS 

A. Bankman-Fried Created a Complex Web of Entities, with FTX and Alameda 
at Its Center. 

15. In or around October 2017, Bankman-Fried and Wang founded Alameda, a 

quantitative trading firm specializing in crypto assets.1  

16. At inception, Alameda was focused on arbitrage trading strategies, but went on to 

employ other strategies including market making, yield farming (pooling of crypto assets in 

exchange for interest or other rewards), and volatility trading.  Alameda also offered over-the-

counter trading services, and made and managed other debt and equity investments. 

17. At first, Bankman-Fried was responsible for trading operations, and Wang 

handled the engineering and programming functions.  Over time, Alameda hired additional 

employees, including Singh (in or around December 2017), Ellison (in or around March 2018), 

and Trabucco (in or around 2019).  By the end of 2021, Alameda had approximately 30 

employees.  At times, Alameda shared office space and employees with FTX. 

18. Bankman-Fried remained the ultimate decision-maker at Alameda, even after 

Ellison and Trabucco became co-CEOs in or around October 2021.  Bankman-Fried directed 

investment and operational decisions, frequently communicated with Alameda employees, and 

had full access to Alameda’s records and databases.  

19. In or around 2018, Bankman-Fried began work on building a crypto asset trading 

platform.  Together with Wang and Singh, Bankman-Fried ultimately founded FTX, which 

began operations in or around May 2019.   

                                                 
1 Crypto assets are unique digital assets maintained on a cryptographically-secured blockchain.  A blockchain or 
distributed ledger is a peer-to-peer database spread across a network of computers that records all transactions in 
theoretically unchangeable, digitally recorded data packages. The system relies on cryptographic techniques for 
secure recording of transactions.  Crypto tokens may be traded on crypto asset trading platforms in exchange for 
other crypto assets or fiat currency (legal tender issued by a country). 

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20. FTX offered its customers a number of services.  For example:  

a. FTX offered a “spot market,” a trading platform through which customers 

could trade crypto assets with other FTX customers in exchange for fiat 

currency (i.e., currency such as U.S. Dollars) or other crypto assets.   

b. FTX offered “spot margin trading” services, which allowed FTX 

customers to trade using assets they did not have (i.e., to trade “on 

margin”) by posting collateral in their FTX accounts and borrowing crypto 

assets through the “spot market” on the FTX platform.  FTX also allowed 

customers to lend their crypto assets to other FTX customers who would 

then use those crypto assets to spot trade.   

c. FTX offered an off-platform (over-the-counter or “OTC”) portal that 

enabled customers to connect and request quotes for spot crypto assets and 

to conduct trades. 

21. Bankman-Fried was the ultimate decision-maker at FTX from the platform’s 

inception in or around May 2019 until he resigned as CEO on or about November 11, 2022 (“the 

Relevant Period”).   

22. In or around January 2020, Bankman-Fried, Wang, and Singh founded FTX US, a 

crypto asset trading platform designed primarily for customers in the United States.2 

23. Over time, Bankman-Fried expanded his holdings to include a number of 

companies focused on making and managing private (or “venture”) investments.  

24. This interconnected web of companies grew to include over 100 separate entities, 

with Bankman-Fried at the top and Alameda, his crypto hedge fund, at the center. 

                                                 
2 FTX US is the d/b/a for a subsidiary of West Realm Shires Inc., a separate legal entity from FTX Trading Ltd. that 
provided different services.  FTX US’s conduct is not the subject of the allegations in this complaint.   

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25. Throughout the Relevant Period, in multiple public statements, Bankman-Fried 

held himself out as a visionary leader in the crypto industry, and touted his efforts to create a 

regulated and thriving crypto asset market.  He conducted an intensive public relations campaign 

to brand himself and his companies as honest stewards of crypto. 

26. The reality was very different:  From the start, contrary to what FTX investors 

and trading customers were told, Bankman-Fried continually diverted FTX customer funds to 

Alameda and then used those funds to continue to grow his empire, using billions of dollars to 

make undisclosed private venture investments, political contributions, and real estate purchases. 

27. At the same time, throughout the Relevant Period, Bankman-Fried solicited equity 

investors by touting FTX’s controls and risk management, ultimately raising at least $1.8 billion 

dollars from investors in exchange for various classes of stock in FTX through multiple 

fundraising rounds, including raising:  (1) approximately $8 million from the sale of shares of 

FTX Series A preferred stock, with fundraising completed in or around August 2019; 

(2) approximately $1 billion from the sale of shares of FTX Series B preferred stock, with 

fundraising completed in or around July 2021; (3) approximately $420 million from the sale of 

shares of FTX Series B-1 stock, with fundraising completed in or around October 2021; and (4) 

approximately $500 million from the sale of shares of FTX Series C stock, with fundraising 

completed in or around January 2022.  Of this total, approximately $1.1 billion was invested in 

FTX by approximately 90 investors based in the United States. 

28. For the entire span of the Relevant Period, while raising money from equity 

investors, Bankman-Fried, and those speaking at his direction and on his behalf, claimed in 

widely distributed public forums and directly to investors that:  FTX was a safe crypto asset 

trading platform; FTX had a comparative advantage due to its automated risk mitigation 

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procedures; and FTX and its customers were protected from other customers’ losses due to 

FTX’s automated liquidation process.  As discussed further herein, these statements and others 

were misleading in light of Bankman-Fried’s failure to disclose to FTX investors the diversion of 

FTX customer funds to Alameda, which he then used for his own purposes, including loans to 

himself.  Similarly, Bankman-Fried’s statements concerning the separation of FTX and Alameda, 

made throughout the Relevant Period, were misleading because he did not disclose the special 

treatment afforded to Alameda on FTX, including its virtually unlimited “line of credit” at FTX, 

its ability to carry a negative balance in its FTX customer account, and its exemption from 

FTX’s automated liquidation process—none of which any other customer of the platform 

enjoyed, but which changed the risk profile of FTX. 

29. Bankman-Fried also misrepresented the risk profile of investing in FTX 

throughout the Relevant Period by failing to disclose FTX’s exposure to Alameda and, relatedly, 

that the collateral Alameda deposited on FTX consisted largely of illiquid, FTX-affiliated tokens, 

including FTT.  In addition to these material omissions, Bankman-Fried also made material 

misrepresentations to FTX investors about FTX’s risk management and its relationship with 

Alameda.  As detailed below, Bankman-Fried made these material misstatements throughout the 

Relevant Period, and the entire time he was raising or attempting to raise funds for FTX—from 

the time FTX began operations in May 2019 through its ultimate demise in November 2022.   

B. Bankman-Fried Used Alameda to Carry Out His Fraudulent Scheme.  

30. Alameda (and its many subsidiaries) served a number of essential functions in 

Bankman-Fried’s growing web of companies. For example, Alameda was the primary market 

maker on FTX at the time of FTX’s inception in 2019.  In this capacity, Alameda, at Bankman-

Fried’s direction, was tasked with creating liquidity on FTX to allow the platform to function 

more efficiently.  Bankman-Fried also made venture investments through an Alameda 

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subsidiary.  Most crucially, Bankman-Fried used Alameda to house FTX customer assets and to 

deploy those assets, under Bankman-Fried’s direction, to help grow his empire. 

31. From the inception of FTX, Bankman-Fried diverted FTX customer funds to 

Alameda, and he continued to do so until FTX’s collapse in November 2022. 

32. Bankman-Fried diverted FTX customer funds to Alameda in essentially two 

ways:  (1) by directing FTX customers to deposit fiat currency (e.g., U.S. Dollars) into bank 

accounts controlled by Alameda; and (2) by enabling Alameda to draw down from a virtually 

limitless “line of credit” at FTX, which was funded by FTX customer assets.   

33. As a result, there was no meaningful distinction between FTX customer funds and 

Alameda’s own funds.  Bankman-Fried thus gave Alameda carte blanche to use FTX customer 

assets for its own trading operations and for whatever other purposes Bankman-Fried saw fit.  In 

essence, Bankman-Fried placed billions of dollars of FTX customer funds into Alameda.  He 

then used Alameda as his personal piggy bank to buy luxury condominiums, support political 

campaigns, and make private investments, among other uses.  None of this was disclosed to FTX 

equity investors or to the platform’s trading customers. 

i. FTX Customers Deposited Billions of Dollars into Alameda-Owned 
Bank Accounts, Which Alameda Spent on Its Own Trading Operations 
and to Expand Bankman-Fried’s Empire. 

34. From the start of FTX’s operations in or around May 2019 until at least 2021, 

FTX customers deposited fiat currency (e.g., U.S. Dollars) into bank accounts controlled by 

Alameda.  Billions of dollars of FTX customer funds were so deposited into Alameda-controlled 

bank accounts. 

35. At least some of these bank accounts were not in Alameda’s name, but rather in 

the name of North Dimension Inc. (“North Dimension”), an Alameda subsidiary.  North 

Dimension’s website does not disclose any connection to Alameda.  Bankman-Fried directed 

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FTX to have customers send funds to North Dimension in an effort to hide the fact that the funds 

were being sent to an account controlled by Alameda. 

36. Alameda did not segregate these customer funds, but instead commingled them 

with its other assets, and used them indiscriminately to fund its trading operations and Bankman-

Fried’s other ventures. 

37. This multi-billion-dollar liability was reflected in an internal account in the FTX 

database that was not tied to Alameda but was instead called “[email protected].”  Characterizing the 

amount of customer funds sent to Alameda as an internal FTX account had the effect of 

concealing Alameda’s liability in FTX’s internal systems. 

38. In quarterly balance sheets that Alameda provided to its third-party lenders, 

Alameda tracked this liability as a “loan,” but did not specify that the “loan” was from FTX.  

Instead, Alameda combined this liability with loans it had received from third-party lenders. 

39. Alameda was not required to pay interest on the liability reflected in the 

“[email protected]” account.  

40. In 2022, FTX began trying to separate Alameda’s portion of the liability in the 

“[email protected]” account from the portion that was attributable to FTX (i.e., to separate out 

customer deposits sent to Alameda-controlled bank accounts from deposits sent to FTX-

controlled bank accounts).  Alameda’s portion—which amounted to more than $8 billion in FTX 

customer assets that had been deposited into Alameda-controlled bank accounts—was initially 

moved to a different account in the FTX database.  However, because this change caused FTX’s 

internal systems to automatically charge Alameda interest on the more than $8 billion liability, 

Bankman-Fried directed that the Alameda liability be moved to an account that would not be 

charged interest.  This account was associated with an individual that had no apparent connection 

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to Alameda.  As a result, this change had the effect of further concealing Alameda’s liability in 

FTX’s internal systems. 

ii. The FTX Platform, By Design, Granted Special Treatment to Alameda, 
Including Features that Allowed Alameda to Divert FTX Customer 
Assets. 

41. In addition to receiving cash deposits directly from FTX customers, Alameda 

benefited from undisclosed features of the FTX platform, which allowed it to divert FTX 

customer assets.  For example: 

a. Negative Balance:  Alameda was able to maintain a negative balance in its 

customer account at FTX.  Bankman-Fried directed software code to be written in 

or around August 2019, and updated in or around May 2020, that ultimately 

allowed Alameda to maintain a negative balance in its account, untethered from 

any collateral requirements.  No other customer account at FTX was permitted to 

maintain a negative balance.   

b. Line of Credit: On multiple occasions, Bankman-Fried directed FTX to increase 

the amount by which Alameda could maintain a negative balance in its account.  

In effect, this gave an unofficial “line of credit” to Alameda, since Alameda was 

able to draw down on its FTX customer account and use those funds—which 

were actually the funds deposited by other FTX customers—for its own trading.  

At Bankman-Fried’s direction, Alameda’s “line of credit” was continually raised 

to the point where it grew to tens of billions of dollars and effectively became 

limitless.  No other FTX customer had a similar “line of credit.” 

c. Liquidation Exemption: In or around May 2020, Bankman-Fried directed that 

Alameda be exempted from the “auto-liquidation” feature of FTX’s spot margin 

trading services.  As a result, Alameda’s collateral could fall below the requisite 

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margin levels without triggering the automatic liquidation of its account.  

Alameda was the only customer exempted from FTX’s automatic account 

liquidation.   

42. All of these special privileges were afforded to Alameda—and only Alameda—at 

Bankman-Fried’s direction, and all were hidden from investors.  These privileges permitted 

Alameda to draw on FTX customer assets to a virtually unlimited extent for its own uses.  

Because its own FTX trading account was able to maintain a negative balance of billions of 

dollars, unbacked by sufficient collateral, Alameda was able to divert billions of dollars in FTX 

customer assets.  Alameda did just that in 2022. 

iii. In 2022, Alameda Diverted Billions More in FTX Customer Assets. 

43. Starting in or around 2021, Bankman-Fried directed Alameda to borrow billions 

of dollars from third-party crypto asset lending firms in order to fund Bankman-Fried’s venture 

investments and for his personal use.  Certain of these loans included provisions permitting the 

lenders to demand re-payment at any time.  

44. In or around May 2022, as prices of crypto assets were dropping precipitously, 

several of these lenders demanded re-payment from Alameda.  Because Alameda did not have 

sufficient assets to cover all of these obligations, Bankman-Fried directed Alameda to draw on 

its “line of credit” from FTX.  Billions of dollars of FTX customer funds were thus diverted to 

Alameda and used by Alameda to re-pay its third-party loan obligations. 

45. Because Alameda now had billions of dollars more in liability to FTX (on top of 

the billions of dollars reflected in the [email protected] account) Bankman-Fried—concerned that 

this enormous liability would alarm Alameda’s lenders—directed Alameda to hide this “line of 

credit” in Alameda’s balance sheet. 

46. Despite the fact that Alameda now owed FTX billions of dollars with no 

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immediate prospects of raising capital to pay off its “line of credit,” Bankman-Fried continued to 

direct Alameda to draw on the “line of credit” in the summer of 2022.  The customer funds 

diverted to Alameda were used, among other things, to pay hundreds of millions of dollars in 

“loans” to Bankman-Fried and other FTX executives, as well as hundreds of millions more to 

fund additional venture investments. 

iv. Bankman-Fried Assured Investors that FTX Customer Assets Were 
Secure, and Hid Alameda’s Close Relationship with FTX.  

47. Throughout the Relevant Period, Bankman-Fried was directly involved in 

soliciting potential investors in FTX.  Bankman-Fried met, and otherwise communicated, with 

FTX investors including investors based in the United States.  Along with another FTX 

employee, Bankman-Fried was the point-person for investor relations at FTX. 

48. FTX’s Terms of Service, which were publicly available on FTX’s website and 

accessible to investors, assured FTX customers that their assets were secure, providing:  “you 

control the Digital Assets held in your Account;” “[t]itle to your Digital Assets shall at all times 

remain with you and shall not transfer to FTX;” and “none of the digital assets in your account 

are the property of, or shall or may be loaned to, FTX Trading.”  The Terms of Service further 

provided:  “Once we receive fiat currency we may issue you an equivalent amount of electronic 

money (“E-Money”)…which represents the fiat currency that you have loaded” and “[y]ou may 

redeem all or part of any E-Money held in your Account at any time.”   

49. Similarly, FTX posted on its website a document entitled, “FTX’s Key Principles 

for Ensuring Investor Protections on Digital-Asset Platforms,” in which FTX represented that it 

“segregates customer assets from its own assets across our platforms.”  FTX further represented 

in that document that it maintained “liquid assets for customer withdrawals…[to] ensure a 

customer without losses can redeem its assets from the platform on demand.”   

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15 

50. In addition to making this document available to the public on its website, FTX 

specifically provided it to potential investors, including a U.S. investor who had invested $35 

million in FTX’s Series B fundraising round in July 2021.  As described above, these statements 

to the public, customers, and investors were false—FTX did not segregate its customer assets 

from its own assets, and, as events would later demonstrate, did not maintain liquidity to allow 

customer withdrawals on demand. 

51. FTX investors were provided with FTX’s audited financial statements, and FTX 

represented in its purchase agreements that those financial statements “fairly present in all 

material respects the financial condition and operating results of” FTX.  These audited financial 

statements, which do not include information about Alameda’s undocumented “line of credit” 

from FTX and other information discussed herein, were, at the very least, materially misleading.  

Indeed, FTX’s current CEO has voiced “substantial concern as to the information presented in 

these audited financial statements.”  

52. Throughout the Relevant Period, Bankman-Fried made public statements assuring 

that customer assets were safe at FTX.  For example, he stated in a tweet on or about June 27, 

2022:  “Backstopping customer assets should always be primary.  Everything else is secondary.”  

He likewise tweeted on or about August 9, 2021:  “As always, our users’ funds and safety comes 

first.  We will always allow withdrawals (except in cases of suspected money 

laundering/theft/etc.).” 

53. Bankman-Fried also told investors, and directed other FTX and Alameda 

employees to tell investors, that Alameda received no preferential treatment from FTX.  For 

example, Bankman-Fried told the Wall Street Journal in or around July 2022:  “There are no 

parties that have privileged access.”  Likewise, in a Bloomberg article published in or about 

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September 2022, Bankman-Fried claimed that “Alameda is a wholly separate entity” than FTX. 

In the same article, Ellison is quoted as stating about Alameda:  “We’re at arm’s length and don’t 

get any different treatment from other market makers.”  Bankman-Fried made similar statements 

directly to investors. 

54. Bankman-Fried knew or recklessly disregarded that these statements were false 

and misleading because he was directly involved in establishing Alameda’s preferential 

treatment. 

C. FTX Had Poor Controls and Deeply Inadequate Risk Management 
Procedures, in Stark Contrast to Bankman-Fried’s Claims that It Was a 
Mature, Conservative Company. 

55.  From its inception, FTX had poor controls and fundamentally deficient risk 

management procedures.  Assets and liabilities of all forms were generally treated as 

interchangeable, and there were insufficient distinctions between the assignment of debts and 

credits to Alameda, FTX, and executives, including Bankman-Fried, Wang, and Singh.  This 

reality was a sharp contrast to the image of FTX that Bankman-Fried consistently portrayed to 

the public and to investors—a mature company that managed funds and risk in a conservative, 

rigorous manner.  

56. FTX invested significant resources to develop and promote its brand as a 

trustworthy company.  For example, in materials provided to one investor in or around June 

2022, FTX cultivated and promoted its reputation: 

FTX has an industry-leading brand, endorsed by some of the most 
trustworthy public figures, including Tom Brady, MLB, Gisele 
Bundchen, Steph Curry, and the Miami Heat, and backed by an 
industry-leading set of investors.  FTX has the cleanest brand in 
crypto.   
 

57. FTX also promoted itself as a company that was willing to work collaboratively 

with regulators and lawmakers.  In the same materials, FTX claimed:  “FTX is also the only 

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major digital asset venue to maintain positive, constructive relationships with regulators and 

lawmakers.”   

i. The FTX Automated Risk Engine 

58. Bankman-Fried repeatedly touted FTX’s automated risk mitigation protocols—

which he called FTX’s “risk engine”—to the public, and prospective investors, as a safe and 

reliable way for crypto asset trading platforms to manage risk.  Bankman-Fried promoted the 

concept of “24/7” automated risk monitoring as an innovative benefit of cryptocurrency markets, 

including at a hearing on or about December 8, 2021, to the U.S. House of Representatives 

Committee on Financial Services, where Bankman-Fried concluded his remarks by stating: 

And the last thing I will say is if you look at what precipitated 
some of the 2008 financial crisis, you will see a number of 
bilateral, bespoke, non-reported transactions happening between 
financial counterparties, which then got repackaged and 
releveraged again and again and again, such that no one knew how 
much risk was in that system until it all fell apart.  If you compare 
that to what happened on FTX or other major cryptocurrencies in 
use today, there is complete transparency about the full open 
interest.  There is complete transparency about the positions that 
are held.  There is a robust, consistent risk framework applied.   

 
59. In addition to generally promoting the benefits of automated risk engines, 

Bankman-Fried repeatedly claimed that FTX’s own risk engine was especially sophisticated and 

carefully calibrated.  In a submission to the Commodity Futures Trading Commission, FTX 

touted its automated system, claiming that it calculated a customer’s margin level every 30 

seconds; and that if the collateral on deposit fell below the required margin level, FTX’s 

automated system would sell the customer’s portfolio assets until the collateral on deposit 

exceeded the required margin level.   

60. These statements were materially false and misleading because of a critical 

omission:  Bankman-Fried did not reveal that the automatic risk engine did not apply to the 

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accounts of its most important customer—Alameda.  As discussed above, one of the special 

benefits that Bankman-Fried afforded Alameda was that its collateral on deposit was allowed to 

fall below FTX’s required margin level without FTX liquidating any part of Alameda’s portfolio. 

61. Bankman-Fried thus misled FTX’s investors by representing that its risk engine 

would protect FTX customer funds and would limit FTX’s exposure to any single customer, 

while failing to disclose that Bankman-Fried had personally directed that the engine not apply to 

one of its largest customers.   

62. As Bankman-Fried acknowledged in a network television interview on or about 

December 1, 2022:  “I wasn’t even trying, like, I wasn’t spending any time or effort trying to 

manage risk on FTX.”  Bankman-Fried continued:  “What happened, happened—and, if I had 

been spending an hour a day thinking about risk management on FTX, I don’t think that would 

have happened.”  

ii. The Valuation of Alameda’s Collateral 

63. The collateral that Alameda had on deposit, consisting largely of enormous 

positions in illiquid crypto assets issued by FTX and Bankman-Fried (including the “FTT” token, 

the native crypto asset of FTX), compounded the undisclosed risk to FTX’s investors.  Bankman-

Fried and FTX’s system valued this collateral at trading prices, but the collateral deposited by 

Alameda was not worth the value assigned to it.  Alameda and FTX collectively owned the 

majority of these tokens, and only a small portion of the FTX-affiliated tokens were in 

circulation.  As such, the tokens were illiquid, and, as Bankman-Fried knew or was reckless in 

not knowing, if Alameda or FTX tried to sell Alameda’s holdings, market prices for the tokens 

would fall, thereby driving down the value of Alameda’s deposited collateral at FTX.  As a 

result, even if FTX had liquidated Alameda’s portfolio, the sales of those thinly traded tokens 

would not have generated sufficient funds to cover the amount Alameda borrowed from FTX.   

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64. Bankman-Fried was well aware of the impact of Alameda’s positions on FTX’s 

risk profile.  On or about October 12, 2022, for example, Bankman-Fried, in a series of tweets, 

analyzed the manipulation of a digital asset on an unrelated crypto platform.  In explaining what 

occurred, Bankman-Fried distinguished between an asset’s “current price” and its “fair price,” 

and recognized that “large positions – especially in illiquid tokens – can have a lot of impact.”  

Bankman-Fried asserted that FTX’s risk engine required customers to “fully collateralize a 

position” when the customer’s position is “large and illiquid enough.”  But Bankman-Fried 

knew, or was reckless in not knowing, that by not mitigating for the impact of large and illiquid 

tokens posted as collateral by Alameda, FTX was engaging in precisely the same conduct, and 

creating the same risk, that he was warning against.  Alameda was drawing down a virtually 

unlimited line of credit from FTX, collateralized by a large illiquid position.  

65. The reality of FTX’s exposure to the risk created by the valuation of Alameda’s 

positions stood in stark contrast to Bankman-Fried’s assertions about risk management at FTX in 

his October 2022 Twitter analysis, in which he described FTX’s approach and claimed that 

constructing the rules for FTX’s risk engine in a manner that is “conservative, and handles 

apparent large moves gracefully” is “probably the most important thing we do at FTX.”  

Bankman-Fried further claimed, contrasting FTX to the failed endeavor:  “There are a bunch of 

other risk engine protection and sanity checks, too, which would have caught something like 

this.” 

66. Not only did Bankman-Fried fail to tell investors that he had exempted Alameda 

from FTX’s risk engine, he also falsely told certain investors that FTX had no exposure to FTT 

at all.  In late summer 2021, for example, Bankman-Fried told a potential U.S. investor in FTX’s 

series B fundraising round that FTX did not hold FTT and, consequently, the investor would not 

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have any exposure to FTT.  The investor ultimately invested $30 million.  For the reasons 

described above, Bankman-Fried knew or was reckless in not knowing that at the time that he 

made those representations, they were false and misleading.  Specifically, Bankman-Fried knew 

or was reckless in not knowing that any investment in FTX carried significant exposure to FTT, 

as the token was, among other things, posted as collateral for billions of dollars that FTX had 

loaned to Alameda to engage in speculative investments. 

iii. Loans to FTX Executives and Real Estate Purchases 

67. The FTX funds transferred to Alameda were used not only for Alameda’s 

proprietary trading, but also to fund loans to FTX executives, including Bankman-Fried himself, 

and to fund personal real estate purchases.  Between March 2020 and September 2022, 

Bankman-Fried executed promissory notes for loans from Alameda totaling more than $1.338 

billion, including two instances in which Bankman-Fried was both the borrower in his individual 

capacity and the lender in his capacity as CEO of Alameda.   

68. Bankman-Fried also used commingled funds from Alameda to make large 

political donations and to purchase tens of millions of dollars in Bahamian real estate for himself, 

his parents, and other FTX executives.  Singh and Wang also borrowed $554 million and $224.7 

million, respectively, by executing promissory notes with Alameda in 2021 and 2022. 

69. The loans to Bankman-Fried and other individuals were poorly documented, and 

at times not documented at all.  Similarly, the record keeping regarding the purchase and 

ownership of real estate was poorly organized and documented.  Neither the fact of the loans and 

purchases, nor the poor documentation of significant company liabilities and expenditures, was 

disclosed to investors. 

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D. Despite the Precarious Financial Position of FTX and Alameda, Bankman-
Fried Continued to Use FTX Customer Assets in the Summer of 2022, 
Including to Rescue Distressed Crypto Firms and to Further Mislead 
Investors.  

70. In May 2022, the crypto markets plummeted due to a significant loss in value of 

certain crypto assets and networks and the collateral effects on the interrelated markets.  

Bankman-Fried characterized FTX, and himself, as playing an important role in stabilizing the 

industry.  Bankman-Fried entered into a series of transactions with other members of the 

industry, providing credit to and taking over other failing firms.  On or about June 21, 2022, after 

giving a $250 million line of revolving credit to BlockFi, a global crypto financial services 

company, to provide the company with access to capital to ease liquidity concerns, Bankman-

Fried tweeted:  “We take our duty seriously to protect the digital asset ecosystem and its 

customers.”  

71. At the same time that Bankman-Fried was positioning himself as a hero in the 

industry, however, the plummeting value of crypto assets was impacting Alameda, and as a 

result impacting FTX.  As discussed above, as a result of the same market conditions impacting 

BlockFi’s liquidity, many of Alameda’s lenders demanded repayment of loans they had made to 

Alameda.  Bankman-Fried directed Alameda to draw down billions of dollars from its “line of 

credit” from FTX to repay some of its loans—money that came from FTX’s spot market funded 

by FTX customers.    

72. Thus, in the summer of 2022, Bankman-Fried knew, or was reckless in not 

knowing, that FTX was in a precarious financial condition.  However, he continued to spend 

hundreds of millions of dollars to purchase and support other crypto companies, and allowed 

Alameda to use FTX customer funds to repay its debts.  In addition, Bankman-Fried and other 

FTX executives continued to withdraw customer funds in the form of the poorly documented and 

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undisclosed “loans” described above.  Specifically, on or about July 22, 2022, Bankman-Fried 

loaned himself $136 million.  When he made this loan, Bankman-Fried knew, or was reckless in 

not knowing, of the significant financial risk it posed to both Alameda and FTX.  Collectively, 

Bankman-Fried’s actions in the summer of 2022 further imperiled FTX’s financial condition.   

73. Despite FTX’s tenuous financial condition at this time, Bankman-Fried continued 

to present a false and misleading positive account of the company to investors.  In a meeting with 

FTX U.S. investors in September 2022, for example, an FTX presentation included the claim 

that:  “Outside of BlockFi, we didn’t increase our exposure to crypto.”  This statement was false 

and misleading:  the customer funds that FTX diverted to Alameda, including customer funds 

that Alameda used to repay its lenders, were collateralized in part by Alameda’s FTT holdings.  

Bankman-Fried knew or was reckless in not knowing that, as a result, FTX’s exposure to crypto, 

including its own FTT token, increased substantially as Alameda increased its borrowing, backed 

by FTT as collateral, in the second quarter of 2022.   

74. In that same meeting with FTX investors, FTX also represented that certain 

investments did not involve the assets of FTX or its customers.  Contrary to that representation, 

two $100 million investments made by FTX’s affiliated investment vehicle, FTX Ventures Ltd., 

were funded with FTX customer funds that had been diverted to Alameda.   

E. Even as His Scheme Was Spiraling Out of Control, Bankman-Fried 
Continued to Mislead Investors and the Public About FTX’s True Financial 
Condition. 

75. On or about November 2, 2022, CoinDesk, a crypto news website, published an 

article stating that based on its review of an Alameda balance sheet it had obtained, Alameda 

held a large position in FTT and other FTX-associated tokens.   

76. On or about November 6, 2022, the CEO of Binance, a crypto asset trading 

platform, announced that “[d]ue to recent revelations that have came [sic] to light,” Binance 

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would liquidate its FTT holdings.  Binance held FTT then valued at more than $500 million, 

which it had received from FTX as part of Bankman-Fried’s buyout of Binance’s equity in FTX 

as an early round investor.   

77. Binance’s announcement caused many FTX customers to withdraw their funds 

from FTX.  Bankman-Fried knew or was reckless in not knowing that given Alameda’s large 

FTT holdings, any further drop in the value of FTT threatened the solvency of FTX, given 

Alameda’s multi-billion-dollar liability.  To prevent a collapse in the market price of FTT that 

Binance’s sales might cause, Ellison tweeted an offer to buy Binance’s entire stake, for $22 per 

token (“@cz_binance if you’re looking to minimize the market impact on your FTT sales, 

Alameda will happily buy it all from you today at $22!”).    

78. Attempting to maintain public and investor confidence in FTX, Bankman-Fried 

tweeted on or about November 7, 2022:  “FTX is fine.  Assets are fine … FTX has enough to 

cover all client holdings.  We don’t invest client assets (even in treasuries).  We have been 

processing all withdrawals, and will continue to be ….”  That tweet was false and misleading, 

and Bankman-Fried later deleted it.  Bankman-Fried knew that FTX, at his direction, allowed 

Alameda to invest “client assets” and that Alameda had in fact done so, using FTX customer 

funds to make investments far riskier than “treasuries.”    

79. The next day, November 8, 2022, FTX paused all customer withdrawals, and the 

price of FTT plummeted by approximately 80%.  Alameda’s collateral on deposit was worth far 

less than the amount Alameda had borrowed from FTX.  FTX was left with billions of dollars in 

effectively unrecoverable loans.     

80. Facing a solvency crisis, Bankman-Fried searched for investors who could 

provide additional funding.  On or about November 8, 2022, the CEO of Binance tweeted:  “FTX 

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asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-

binding LOI, intending to fully acquire http://FTX.com and help cover the liquidity crunch. We 

will be conducting a full DD [due diligence] in the coming days.”   

81. It only took one day, however, for Binance to decide not to acquire FTX.  On or 

about November 9, Binance announced:  “As a result of corporate due diligence, as well as the 

latest news reports regarding mishandled customer funds and alleged US agency investigations, 

we have decided that we will not pursue the potential acquisition of http://FTX.com.” 

82. FTX customers withdrew approximately $5 billion from the platform that day.   

83. At the same time, Bankman-Fried sought emergency funding from other 

investors, including U.S. investors, to cover a shortfall at FTX of approximately $8 billion.  As 

part of this effort, Bankman-Fried circulated a balance sheet to potential investors that listed a 

negative $8 billion entry labeled as a “hidden, poorly internally labeled ‘fiat@ account.’”  This 

entry was a reference to the above-described [email protected] account and reflected FTX customer 

funds deposited in Alameda’s bank accounts.   

84. During a meeting with Alameda employees on or about November 9, 2022, 

Ellison admitted that she, Bankman-Fried, Wang, and Singh were aware that FTX customer 

funds had been used by Alameda.   

85. On the morning of November 10, 2022, confronting the implosion of FTX and 

Alameda, Bankman-Fried tweeted:  “1) I’m sorry.  That’s the biggest thing. I f*cked up, and 

should have done better.”3  In the same tweet thread, Bankman-Fried announced that Alameda 

was “winding down trading” and soon would not trade on FTX at all.  Bankman-Fried 

maintained that “FTX International currently has a total market value of assets/collateral higher 

                                                 
3 Expletives have been redacted in part with asterisks.   

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than client deposits (moves with prices!).”  And he stated, among other things, that he was trying 

to “raise liquidity,” claiming “[t]here are a number of players who we are in talks with, LOIs 

[letters of intent], term sheets, etc.”   

86. The next day, November 11, 2022, Bankman-Fried resigned from FTX.  Shortly 

thereafter, FTX and approximately 100 affiliated entities, including FTX US, filed for Chapter 

11 bankruptcy protection.   

FIRST CLAIM FOR RELIEF 

FRAUD IN THE OFFER OR SALE OF SECURITIES  

(Violations of Section 17(a) of the Securities Act) 

87. The Commission re-alleges and incorporates by reference the allegations 

contained in paragraphs 1 through 86. 

88. By reason of the conduct described above, Defendant, in connection with the offer 

or sale of securities, by the use of the means or instrumentalities of interstate commerce or of the 

mails, directly or indirectly, acting knowingly, recklessly, or, as to (ii) and (iii), negligently 

(i) employed devices, schemes, or artifices to defraud; (ii) obtained money or property by means 

of untrue statements of material facts and omissions to state material facts necessary in order to 

make the statements made, in light of the circumstances under which they were made, not 

misleading; and (iii) engaged in acts, practices, or courses of business which operated or would 

operate as a fraud or deceit upon any persons, including purchasers or sellers of the securities.   

89. By reason of the conduct described above, Defendant violated Securities Act 

Sections 17(a) [15 U.S.C. § 77q(a)]. 

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SECOND CLAIM FOR RELIEF 

FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES  

 (Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder) 

90. The Commission re-alleges and incorporates by reference the allegations 

contained in paragraphs 1 through 86. 

91. By reason of the conduct described above, Defendant, directly or indirectly, in 

connection with the purchase or sale of securities, by the use of the means or instrumentalities of 

interstate commerce or of the mails, or of any facility of any national securities exchange, 

knowingly or recklessly, (i) employed devices, schemes, or artifices to defraud; (ii) made untrue 

statements of a material fact or omitted to state a material fact necessary in order to make the 

statements made, in the light of the circumstances under which they were made, not misleading; 

and (iii) engaged in acts, practices, or courses of business which operated or would operate as a 

fraud or deceit upon any persons, including purchasers of the securities. 

92. By reason of the conduct described above, Defendant violated Exchange Act 

Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court enter a Final 

Judgment: 

A. Permanently restraining and enjoining Defendant, his officers, agents, servants, 

employees and attorneys, and those persons in active concert or participation with them who 

receive actual notice of the injunction by personal service or otherwise, and each of them, from 

violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and Section 10(b) of the 

Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]; 

B. Ordering Defendant pay disgorgement plus prejudgment interest of all ill-gotten 

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27 

gains obtained by reason of the unlawful conduct alleged in this Complaint, pursuant to 

Exchange Act Sections 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(5) and 78u(d)(7)]; 

C. Ordering Defendant to pay civil monetary penalties pursuant to Section 20(d) of 

the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 

§ 78u(d)(3)];  

D. Ordering Defendant barred from acting as an officer or director pursuant to 

Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange 

Act [15 U.S.C. § 78u(d)(2)];  

E. Prohibiting Bankman-Fried from participating, directly or indirectly, including, 

but not limited to, through any entity controlled by him, in the issuance, purchase, offer, or sale 

of any securities, including crypto asset securities, provided, however, that such injunction shall 

not prevent Bankman-Fried from purchasing or selling securities, including crypto asset 

securities, for his own personal account; and 

F. Granting such other and further relief as this Court may deem just and proper. 

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JURY DEMAND 

The Commission demands trial by jury. 

DATED:  New York, New York 
December 13, 2022 

       Respectfully submitted, 

 
       _________________________________  

Jorge G. Tenreiro 
David L. Hirsch (not admitted in SDNY)  
Ladan F. Stewart 
Amy Harman Burkart 
David J. D’Addio 
SECURITIES AND EXCHANGE  
  COMMISSION 

      100 Pearl Street, Suite 20-100 
New York, New York 10004 
(212) 336-0153 (Stewart) 
Email: [email protected] 

 
Attorneys for the Plaintiff 

 

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