On Tuesday, a Bahamian judge denied bail to FTX founder Sam Bankman-Fried, hours after US prosecutors accused him of misappropriating billions of dollars and violating campaign laws in what has been described as one of America’s biggest financial frauds.

The former CEO of the defunct cryptocurrency exchange, dressed in a blue suit with no tie, lowered his head and hugged his parents after the judge ruled that his risk of flight was too “great” and ordered him to be held in a Bahamas correctional facility until Feb. 8.

The events of the day capped a stunning fall from grace for Bankman-Fried, who amassed a fortune worth more than $20 billion by riding a cryptocurrency boom to build FTX into one of the world’s largest exchanges before it abruptly collapsed this year.

SBF was charged with defrauding FTX customers by misappropriating their deposits to pay for expenses and debts and to make investments on behalf of his crypto hedge fund, Alameda, according to an indictment unsealed on Tuesday morning.

Prosecutors said he also defrauded Alameda’s lenders by providing false and misleading information about the hedge fund’s condition, and he tried to conceal the money he earned from wire fraud.

They accused Bankman-Fried of making “tens of millions of dollars in campaign contributions” with stolen funds.

The investigation, according to US Attorney Damian Williams in New York, is “ongoing” and “moving quickly.”

“Although this is our first public announcement, it will not be our last,” he said.

The collapse was described as one of the “biggest financial frauds in American history” by Williams.

FTX HISTORY

Bankman-Fried, who formed FTX in 2019, was an outspoken character who donned wild hair, t-shirts, and shorts before his imprisonment. He donated $5.2 million to President Joe Biden’s 2020 campaign, making him a major Democratic donor. Forbes assessed his net worth last year at $26.5 billion.

“In the sun, you can commit fraud in shorts and t-shirts. That is conceivable, “Williams informed reporters.

Bankman-Fried has previously apologised to customers and admitted oversight flaws at FTX, but he believes he is not criminally liable.

Prosecutors said he faces up to 115 years in prison if convicted on all eight counts, though any sentence would depend on a number of factors.

Williams would not comment on whether prosecutors would charge other FTX executives or whether any FTX insiders were cooperating with the investigation.

The Securities and Exchange Commission (SEC) of the United States and the Commodity Futures Trading Commission (CFTC) of the United States both filed suits on Tuesday.

The CFTC filed a lawsuit against Bankman-Fried, Alameda, and FTX, alleging digital commodity asset fraud.

According to the SEC, FTX raised more than $1.8 billion from equity investors since at least May 2019 in a years-long “brazen, multi-year scheme” in which Bankman-Fried concealed FTX was diverting customer funds to Alameda Research.

Tuesday’s court appearance in The Bahamas, where FTX is headquartered and where Bankman-Fried was arrested at his gated community in the capital, marked his first in-person public appearance since the cryptocurrency exchange’s demise.

When Bankman-Fried arrived at the heavily guarded Bahamas court, he seemed at ease. He informed the court that he intended to fight extradition to the United States.

If Bankman-Fried fights extradition, Bahamas prosecutors have requested that he be denied bail.

“Mr. Bankman-Fried is reviewing the charges with his legal team and considering all of his legal options,” his lawyer, Mark S. Cohen, stated previously.

Bankman-Fried is scheduled to appear in court in the Bahamas again on February 8.

COLLAPSE

On Nov. 11, FTX declared bankruptcy, leaving an estimated 1 million customers and other investors facing billions of dollars in losses. The crash reverberated throughout the cryptocurrency community, sending bitcoin and other digital assets plummeting.

On the same day that FTX filed for bankruptcy, Bankman-Fried resigned as CEO. According to Reuters, FTX’s liquidity crisis stemmed from his secret use of $10 billion in customer funds to support his proprietary trading firm Alameda. A total of $1 billion in customer funds had gone missing.

The bankruptcy was one of several in the crypto industry this year as digital asset markets fell from their 2021 highs. A cryptocurrency exchange is a website where investors can trade digital tokens like bitcoin.

FTX’s current CEO, John Ray, told lawmakers that the company lost $8 billion in client funds due to “absolute concentration of control in the hands of a small group of grossly inexperienced, unsophisticated individuals.”

As legal challenges mount, the US Congress is considering legislation to rein in the industry’s lax regulation.

FTX has shared its findings with the SEC and federal prosecutors in the United States, and is looking into whether Bankman-parents Fried’s were involved in the scheme.