1

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff, 

v. 

SAMUEL BANKMAN-FRIED, FTX TRADING 

LTD D/B/A FTX.COM, AND ALAMEDA 

RESEARCH LLC, 

Defendants. 

Case No. ___________ 

COMPLAINT FOR INJUNCTIVE 

AND OTHER EQUITABLE RELIEF 

AND FOR CIVIL MONETARY 

PENALTIES UNDER THE 

COMMODITY EXCHANGE ACT 

AND COMMISSION REGULATIONS 

JURY TRIAL DEMANDED

Plaintiff Commodity Futures Trading Commission (“CFTC” or “Commission”), by and 

through its undersigned attorneys, hereby alleges as follows: 

SUMMARY 

1. Samuel Bankman-Fried (“Bankman-Fried”) co-founded Alameda Research LLC 

(“Alameda”), a digital asset trading and investment firm, in Berkeley, California in 2017. In May 

2019, he and others launched FTX Trading Ltd. b/d/a FTX.com (“FTX Trading”) and various 

subsidiaries, affiliates, and related entities, collectively doing business as “FTX.com” or simply 

“FTX,” a centralized digital asset exchange. (These parties are collectively referred to as 

“Defendants”). Alameda and FTX were large and well-known players in the digital asset industry, 

and Bankman-Fried was their young, high-profile leader. 

2. At its peak, the daily trading volume on FTX.com was over $20 billion, and it had 

garnered a $32 billion valuation. FTX had prominent paid sponsorships, including the naming 

rights to a professional sports arena in Miami, celebrity endorsements, and a 2022 Super Bowl 

commercial that touted FTX as “the safest and easiest way to buy and sell crypto.” 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 1 of 40

I. 
2

3. On November 11, 2022, Bankman-Fried’s empire abruptly collapsed. FTX 

customers and the world at large discovered that FTX, through its sister-company Alameda, had 

been surreptitiously siphoning off customer funds for its own use—and over $8 billion in customer 

deposits were now missing. 

4. Beginning no later than May 2019 and continuing through at least November 11, 

2022 (the “Relevant Period”), Bankman-Fried owned, operated, and/or controlled FTX Trading, 

along with its numerous subsidiaries and related entities around the world, all doing business as 

FTX.com. He also owned, operated, and/or controlled Alameda and its various subsidiaries and 

related entities, as well as numerous other related entities in the digital asset industry. Throughout 

the Relevant Period, Alameda operated as a primary “market maker” on FTX.com, providing 

liquidity to its various digital asset markets, and also performed a number of other key functions 

for the exchange. Bankman-Fried operated Defendant entities as a common enterprise. 

5. Throughout the Relevant Period, and unbeknownst to all but a small circle of 

insiders, FTX customers deposits, including fiat currency and digital assets such as bitcoin (BTC) 

and ether (ETH), that were intended to be used for trading or custodies on FTX, were regularly 

accepted, held by, and/or appropriated by Alameda for its own use. 

6. At Bankman-Fried’s direction, FTX executives created features in the underlying 

code for FTX that allowed Alameda to maintain an essentially unlimited line of credit on FTX. 

FTX Trading executives also created other exceptions to FTX’s standard processes that allowed 

Alameda to have an unfair advantage when transacting on the platform, including quicker 

execution times and an exemption from the platform’s distinctive auto-liquidation risk 

management process. 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 2 of 40
3

7. Throughout the Relevant Period, at the direction of Bankman-Fried and at least one 

Alameda executive, Alameda used FTX funds, including customer funds, to trade on other digital 

asset exchanges and to fund a variety of high-risk digital asset industry investments. 

8. Bankman-Fried and other FTX executives also took hundreds of millions of dollars 

in poorly-documented “loans” from Alameda that they used to purchase luxury real estate and 

property, make political donations, and for other unauthorized uses. 

9. Throughout the Relevant Period, Defendants, through a web of subsidiaries, 

affiliates, and other related entities (collectively the “FTX Enterprise”) misappropriated customer 

funds for their own use and benefit. 

10. Despite this, FTX Trading represented, in its Terms of Service and elsewhere, that 

customers were the “owner[s]” of all assets in their accounts, had “control” over the assets at all 

times, and that those assets were “appropriately safeguarded and segregated” from FTX’s own 

funds. 

11. Through this conduct and the conduct further described herein, Defendants violated 

Section 6(c)(1) of the Commodity Exchange Act (the “Act” or “CEA”), 7 U.S.C. § 9(1), and 

Commission Regulation (“Regulation”) 180.1(a), 17 C.F.R. §180.1(a) (2021). Unless restrained 

and enjoined by this Court, Defendants are likely to continue to engage in the acts and practices 

alleged in this complaint and similar acts and practices, as more fully described below. 

12. Accordingly, the CFTC brings this action pursuant to Section 6c of the Act, 7 

U.S.C. § 13a-l, to enjoin Defendants’ unlawful acts and practices and to compel their compliance 

with the Act. In addition, the CFTC seeks civil monetary penalties and remedial ancillary relief, 

including, but not limited to, trading and registration bans, disgorgement, restitution, pre- and postjudgment interest, and such other relief as the Court may deem necessary and appropriate. 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 3 of 40
4

JURISDICTION AND VENUE 

13. This Court has jurisdiction over this action under 28 U.S.C. § 1331 (federal 

question jurisdiction) and 28 U.S.C. § 1345 (district courts have original jurisdiction over civil 

actions commenced by the United States or by any agency expressly authorized to sue by Act of 

Congress). Section 6c of the CEA, 7 U.S.C. § 13a-1(a), authorizes the CFTC to seek injunctive 

relief against any person whenever it shall appear to the CFTC that such person has engaged, is 

engaging, or is about to engage in any act or practice constituting a violation of any provision of 

the CEA or any rule, regulation, or order thereunder. 

14. Venue properly lies with this Court pursuant to Section 6c(e) of the Act, 7 U.S.C. 

§ 13a-1(e), because Defendants transacted business in the Southern District of New York and 

engaged in acts and practices in violation of the Act and Regulations within this District. 

PARTIES 

A. The CFTC 

15. Plaintiff Commodity Futures Trading Commission is the independent federal 

regulatory agency charged by Congress with the administration and enforcement of the 

Commodity Exchange Act (“CEA”) and Regulations promulgated thereunder. 

B. Defendants 

16. Samuel Bankman-Fried (“Bankman-Fried”) is a United States citizen who has 

resided in various locations during the Relevant Period, most recently in the Bahamas. BankmanFried is the founder and majority owner of FTX Trading, Alameda, and FTX US. Bankman-Fried 

resided in and performed work for FTX Trading and Alameda in various locations during the 

Relevant Period, including in the United States. He has never been registered with the Commission 

in any capacity. 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 4 of 40

TT. 

III. 
5

17. FTX Trading Ltd. (“FTX Trading”) is a corporation registered in Antigua and 

Barbuda. FTX Trading Ltd. along with its subsidiaries and affiliate entities, including without 

limitation FTX Digital Markets Ltd. (“FTXDM”), located in the Bahamas, collectively did 

business as “FTX.com” or “FTX” and operated the digital asset trading exchange during the 

Relevant Period. FTX Trading had numerous employees, including key personnel, that were based 

in and perform work from the United States, including in this District. FTX Trading had regularly 

engaged in advertising and promotional activities in the United States. None of the FTX Trading 

entities has ever been registered with the Commission in any capacity. FTX Trading is currently 

in Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Delaware. 

18. Alameda Research LLC (“Alameda”) is a Delaware limited liability company. 

Alameda, along with its parent, subsidiary, and affiliate entities collectively operated and did 

business as the digital asset trading and investment firm “Alameda.” Alameda was founded in, 

maintained offices in, and had numerous employees, including key personnel, that were based in 

and perform work from the United States during the Relevant Period. None of the Alameda entities 

has been registered with the Commission in any capacity. Alameda is currently in Chapter 11 

bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Delaware. 

19. During the Relevant Period, FTX Trading, Alameda Research, together with other 

entities under the majority ownership and control of Bankman-Fried operated as a single, 

integrated common enterprise under the sole ultimate authority of Bankman-Fried as their mutual 

owner. They are referred to collectively in this complaint as the “FTX Enterprise.” BankmanFried regularly exercised control over each of the component entities of the FTX Enterprise 

throughout the Relevant Period, including regularly serving as signatory on core corporate 

agreements, as well as corporate bank accounts and trading accounts, many of which were held in 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 5 of 40
6

the U.S. The FTX Enterprise failed to observe corporate formalities, including failure to segregate 

funds, operations, resources, and personnel, or to properly document intercompany transfers or 

funds and other resources. The entities regularly shared office space, systems, accounts, and 

communications channels. On information and belief, assets flowed freely between the FTX 

Enterprise entities, often without documentation or effective tracking. 

STATUTORY BACKGROUND AND LEGAL FRAMEWORK 

20. The purpose of the CEA is to “serve the public interests . . . through a system of 

effective self-regulation of trading facilities, clearing systems, market participants and market 

professionals under the oversight of the Commission,” as well as “to deter and prevent price 

manipulation or any other disruptions to market integrity; to ensure the financial integrity of all 

transactions subject to [the] Act and the avoidance of systemic risk; to protect all market 

participants from fraudulent or other abusive sales practices and misuses of customer assets; and 

to promote responsible innovation and fair competition among boards of trade, other markets and 

market participants.” Section 3 of the Act, 7 U.S.C. § 5. 

21. A digital asset is anything that can be stored and transmitted electronically and has 

associated ownership or use rights. Digital assets include virtual currencies, such as bitcoin (BTC), 

ether (ETH), and tether (USDT), which are digital representations of value that function as 

mediums of exchange, units of account, and/or stores of value. Certain digital assets are 

“commodities,” including bitcoin (BTC), ether (ETH), tether (USDT) and others, as defined under 

Section 1a(9) of the Act, 7 U.S.C. § 1a(9). 

22. In recent years, as digital asset markets have evolved, the CFTC has approved the 

offer of futures contracts on digital assets, including bitcoin and ether futures and options, by 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 6 of 40

TV. 
7

boards of trade registered with the Commission, including the Chicago Mercantile Exchange 

(“CME”) and Chicago Board Options Exchange (“CBOE”). 

23. Section 6c(1) of the CEA, 7 U.S.C. § 9(1), in relevant part, makes it unlawful for 

any person, directly or indirectly, to: 

use or employ, or attempt to use or employ, in connection with any swap, 

or a contract of sale of any commodity in interstate commerce, or for future 

delivery on or subject to the rules of any registered entity, any manipulative 

or deceptive device or contrivance, in contravention of such rules and 

regulations as the Commission shall promulgate . . . 

24. CFTC Regulation 180.1(a), 17 C.F.R. § 180.1(a), promulgated pursuant to the 

authority in CEA Section 6(c)(1), makes it unlawful for any person, directly or indirectly, in 

connection with any swap, or contract of sale of any commodity in interstate commerce, or contract 

for future delivery on or subject to the rules of any registered entity, to intentionally or recklessly: 

(1) Use or employ, or attempt to use or employ, any manipulative device, 

scheme, or artifice to defraud; 

(2) Make, or attempt to make, any untrue or misleading statement of a 

material fact or to omit to state a material fact necessary in order to make 

the statements made not untrue or misleading; or 

(3) Engage, or attempt to engage, in any act, practice, or course of business, 

which operates or would operate as a fraud or deceit upon any person. 

25. Section 13c(b) of the Act, 7 U.S.C. § 13c(b) provides that “any person who, directly 

or indirectly, controls any person who has violated any provision of this chapter or any of the rules, 

regulations or orders issued pursuant to this Act may be held liable for such violation in any action 

brought by the Commission to the same extent as such controlled person. In such action, the 

Commission has the burden of proving that the controlling person did not act in good faith or 

knowingly induced, directly or indirectly, the acts constituting the violation.” 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 7 of 40
8

FACTS 

A. Founding of Alameda and the FTX Trading Exchange 

26. Bankman-Fried co-founded Alameda in November 2017 in Berkeley, California. 

Initially, Alameda primarily engaged in high-frequency digital asset arbitrage trading. This 

practice consisted of using proprietary algorithmic quantitative computer programs, commonly 

known as “bots,” to identity arbitrage opportunities due to price differentials between various 

digital asset platforms. Alameda engaged in high-frequency arbitrage trading across a large variety 

of digital asset exchanges, including certain exchanges operating in the United States. 

27. In a June 29, 2019 “white paper” Alameda represented that within a year of its 

inception, it had “become the largest liquidity provider and market maker in the [digital asset] 

space,” trading “$600 million to 1 billion a day” and accounting for “roughly 5% of global volume 

in digital asset trading.” 

28. Throughout the Relevant Period, Bankman-Fried has owned 90% of Alameda. 

Bankman-Fried was CEO of Alameda until October 2021, at which time he selected and appointed 

two co-CEOs to replace him. 

29. Even after stepping down as CEO of Alameda, Bankman-Fried continued to 

maintain control over Alameda. For example, Bankman-Fried remained a signatory on Alameda 

Research’s bank accounts and an authorized trader for Alameda’s accounts with CFTC registered 

futures commission merchants. Bankman-Fried also maintained direct decision-making authority 

over all of Alameda’s major trading, investment, and financial decisions. This authority was 

exercised at least in part through Bankman-Fried’s regular, often daily participation in various inperson and mobile chat communications with senior personnel at Alameda. 

30. Over time, Alameda expanded its activities into a number of new digital asset 

business models, including making large equity investments in various companies in the digital 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 8 of 40

V. 
9

asset industry, including by securing large loans from digital asset lending platforms to enable it 

to increase the size and variety of its digital asset industry investments. 

31. By late 2018, Bankman-Fried and others employed at Alameda’s offices in 

Berkeley, California had begun building the centralized digital asset derivatives exchange, whcih 

would ultimately become FTX. The platform development was funded, in part, by another digital 

asset exchange, Binance, which, upon information and belief, had acquired an approximately 20% 

stake in FTX in or before November 2019. 

32. In early 2019, Bankman-Fried and others moved to Hong Kong to finalize and 

launch the FTX Trading platform to the public. The FTX.com website was launched and made 

available to the public by no later than May 2019. Bankman-Fried was at all times during the 

Relevant Period the majority shareholder of FTX trading and related entities. 

33. FTX offered trading in a large variety of digital assets, including digital 

commodities such as bitcoin, ether, tether, and others. FTX operated primarily as a derivatives 

exchange and offered trading in various types of options, futures, swaps, perpetual swaps, and 

other digital commodity derivative products. FTX allowed customers to place buy (long) and sell 

(short) orders in an electronic order book, and matched customer orders via its “trading engine” or 

“matching engine.” FTX also offered a number of additional services related to the trading of 

digital asset products. For example, FTX operated a peer-to-peer (P2P) margin lending program 

where customers could offer margined and leveraged offerings to one another. 

34. Customers could access the FTX platform through the FTX.com website, through 

a mobile application, and through an Application Programming Interface (API). FTX also offered 

an off-exchange “over the counter” (OTC) portal that enabled customers to connect and request 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 9 of 40
10

quotes for spot digital assets and trade directly, rather than placing resting orders on a central limit 

order book. 

35. In marketing materials and in communications with federal regulators and others, 

FTX touted its auto-liquidation risk management engine, cross-margin functionality, and backstop 

liquidity provider (“BLP”) programs as unique features that limited risk. Alameda was a leading 

participant in the BLP program. 

36. FTX relied on Alameda resources, funds, and personnel to carry out a number of 

core functions for the FTX.com platform, including creating liquid submarkets for all of the 

products offered on FTX Trading, maintaining an appropriate balance of various digital assets on 

the exchange, and supporting the “peer to peer” margin lending program. 

37. FTX grew quickly. By June 2019, for example, just months after its launch, 

according to FTX, the daily volume of futures trading on FTX often exceeded $100 million. 

Beginning no later than 2020, FTX Trading was consistently ranked as one of largest digital asset 

exchanges in the world by trading volume. In 2021, according to FTX, FTX entities held 

approximately $15 billion in assets on their platforms, FTX entities accounted for approximately 

10% of global digital asset volumes, and they transacted $16 billion of volume per day. 

38. Because of the perception of potential conflicts of interest between FTX and 

Alameda, Defendants and their employees understood that it was important to present a public 

perception that there was strong separation between Alameda and FTX. On information and belief, 

this was one key motivation for Bankman-Fried’s resignation as CEO of Alameda. BankmanFried and others also reinforced a separate spheres narrative in their public statements. For 

example, in August 2022, during a media appearance, Alameda’s CEO said the following with 

respect to the nature of the relationship between FTX and Alameda: 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 10 of 40
11

They’re both owned by Sam [Bankman-Fried], obviously. So ultimately, 

sort of aligned incentives in that way. We keep them quite separate in terms 

of day-to-day operations. We definitely have a Chinese wall in terms of 

information sharing to ensure that no one in Alameda would get customer 

information from FTX or anything like that, or any sort of special treatment 

from FTX. They really take that pretty seriously. 

39. Such public representations by and on behalf of Defendants did not reflect reality. 

Throughout the Relevant Period, Alameda and FTX continued to share office space, first in 

Berkeley, California and later in Hong Kong and the Bahamas. They also shared key personnel, 

technology and hardware, intellectual property, and other resources. Bankman-Fried and other 

senior management at Alameda and FTX also had widespread access to each other’s systems and 

accounts. 

40. In January 2020, Bankman-Fried and others established a separate group of 

operating entities operating a digital asset exchange specifically for U.S. persons. These entities 

collectively did business as “FTX US” and were incorporated primarily in the State of Delaware. 

The FTX US entities also held various registrations, including as a licensed Money Transmitter 

under the laws of the State of South Dakota. FTX US offered trading to U.S. persons in a large 

number of digital assets, including but not limited to spot digital commodities. 

41. In October 2021, FTX US acquired a commodity derivatives company called 

LedgerX LLC, which then began doing business as “FTX US Derivatives.” FTX US Derivatives 

operated as a CFTC-registered Designated Contract Market (“DCM”), Derivatives Clearing 

Organization (“DCO”), and Swap Execution Facility (“SEF”). FTX US Derivatives maintained 

separate bank accounts and, upon information and belief, appropriately segregated and accounted 

for customer funds at all relevant times. 

42. During the Relevant Period, FTX Trading purported to block U.S.-based customers 

from using its exchange to transact in digital asset products, and to instead direct those U.S. 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 11 of 40
12

customers to transact exclusively through the FTX US and FTX US Derivatives entities. On 

information and belief, some U.S. persons and entities were able to use FTX Trading to transact 

in digital assets, including digital commodity products, futures, options, swaps, and derivatives. 

C. FTX and Alameda Comingled, Mishandled, and Misappropriated 

FTX Trading Customer Funds From the Moment of FTX’s Launch 

43. At the time Bankman-Fried and others launched FTX, FTX have the requisite bank 

accounts to accept and hold customer funds. Instead, customers seeking to deposit “fiat” currency 

(i.e. traditional government-issued currency) into their FTX accounts were directed to wire their 

funds to bank accounts that were owned and controlled by Alameda. Some or all of those bank 

accounts were opened in the name of an entity called North Dimension, a Delaware-registered 

wholly-owned subsidiary of Alameda that, on information and belief, deliberately did not have a 

name that was readily-identifiable with Alameda. Certain of these bank accounts were located and 

based in the U.S. 

44. Once received, FTX customer funds were not segregated from Alameda funds or 

placed into accounts designated as being “for the benefit of” (FBO) FTX customers. When FTX 

customer funds were deposited into Alameda bank accounts, Alameda personnel manually 

credited FTX customer accounts with the corresponding amount of fiat currency on FTX internal 

ledger system. Customers accessing their FTX accounts would be able to observe on the 

exchange’s website (and later mobile application) that their funds had been posted to their FTX 

accounts, even though the funds actually remained in Alameda-controlled bank accounts. 

45. For a small subset of customer deposits, Alameda exchanged customer deposit 

funds to fiat-backed stablecoins such as USDC and USDT (which are generally understood to be 

pegged 1:1 and backed 1:1 by U.S. Dollars) and then transferred an equivalent amount of such 

stablecoins to FTX’s digital asset wallets. Alameda treated fiat currency and stablecoins as 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 12 of 40
13

fungible and this was the designated method for crediting customer accounts for fiat bank deposits. 

While this happened occasionally, customer funds typically remained solely in bank accounts in 

the name of Alameda, where they continued to be comingled with Alameda’s own funds. 

46. The Alameda-owned bank accounts holding FTX customer fiat funds were 

collectively reflected on FTX’s internal ledger systems as the “fiat@ftx” account. During the 

Relevant Period, this account held a balance of as much as $8 billion in customer funds. 

47. By approximately August 2020, FTX had opened its own FBO fiat bank accounts. 

However, FTX Trading customer funds that had previously been wired to Alameda and reflected 

in the “fiat@ftx” group of Alameda bank accounts were not transferred to FTX’s bank accounts. 

Furthermore, even after August 2020, at least some FTX customers continued to send fiat deposits 

to Alameda-owned accounts. 

48. Consistently from the launch of FTX and throughout the Relevant Period, Alameda 

accessed and used FTX customer funds for Alameda’s own operations and activities, including to 

fund its trading, investment, and borrowing/lending activities. Alameda’s use of FTX customer 

funds included both customer fiat deposits that were sent to Alameda-owned bank accounts and 

customer digital asset deposits and holdings that Alameda accessed via the unbounded withdrawal 

capabilities of its FTX Trading account. 

D. Misrepresentations Related to the Operations of FTX and Alameda 

49. The use of customer funds by Alameda was not authorized by FTX customers, and 

FTX customers were not made aware that their funds were being used by Alameda. To the 

contrary, FTX’s Terms of Service expressly prohibited such use of customer funds. Specifically, 

Section 8.2.6 of the FTX Trading Terms of Service states: 

All Digital Assets are held in your Account on the following basis: 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 13 of 40
14

(A) Title to your Digital Assets shall at all times remain with you and 

shall not transfer to FTX Trading. As the owner of Digital Assets in your 

Account, you shall bear all risk of loss of such Digital Assets. FTX Trading 

shall have no liability for fluctuations in the fiat currency value of Digital 

Assets held in your Account. 

(B) None of the Digital Assets in your Account are the property of, or 

shall or may be loaned to, FTX Trading; FTX Trading does not represent or 

treat Digital Assets in User’s Accounts as belonging to FTX Trading. 

(C) You control the Digital Assets held in your Account. At any time, 

subject to outages, downtime, and other applicable policies (including the 

Terms), you may withdraw your Digital Assets by sending them to a 

different blockchain address controlled by you or a third party. 

50. Defendants were aware of the need to segregate and protect customer assets. In 

fact, FTX developed internal policy documents relating to the protection of customer assets. For 

example, in an FTXDM policy document entitled “Safeguarding of Assets & Digital Token 

Management Policy” dated August 2021, this affiliated entity of FTX Trading indicated that: 

FDM has a responsibility to ensure that customer assets are appropriately 

safeguarded and segregated from its own funds. This includes customer 

assets that may be held by third party service providers. FDM will ensure 

that: 

● Customer assets (both fiat and virtual assets) are segregated from its own 

assets; 

● Customer assets (both fiat and virtual assets) will be clearly designated 

and easily identifiable; 

● All third-party service providers are aware that customer funds do not 

represent property of FDM and are therefore protected from third-party 

creditors; and 

● All third-party providers are aware that customer assets are held in trust. 

Regarding customer fiat assets, FDM will maintain customer accounts with 

a regulated credit, e-money or payment institution that is acceptable to the 

Securities Commission of The Bahamas (SCB). Customer accounts will be 

designated as such, and the monies contained therein will be appropriately 

ring-fenced and protected from claims against FDM. 

Customer monies will be appropriately ring-fenced to protect from: 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 14 of 40
15

● The unlikely event FDM becomes insolvent; 

● The use of customer monies being used to benefit others; and 

● FDM using customer monies to finance its own operations. 

Written notice will be provided to the relevant regulated credit, e-money, or 

payment institution to clarify that the assets contained are held by us on trust 

for our customers and they are not entitled to combine the account any other 

account, or to exercise any right of set-off or counterclaim against the 

money in those accounts, in respect of any debt owed by us. 

All customer accounts will be under the dual signatory of two directors or 

of one director, together with a senior member of the management team. 

51. Throughout the Relevant Period, Bankman-Fried and other representatives of FTX 

consistently and repeatedly reiterated, in a variety of contexts, that customer assets were properly 

segregated and custodied by FTX at all times, in conformance with both FTX’s Terms of Service 

and generally understood best practices for derivatives exchanges, which presume a requirement 

for customer disclosure and consent in order to engage in rehypothecation of customer assets (i.e. 

re-use of deposited assets). 

52. Such statements about the treatment and custody of customer assets include 

misstatements that Bankman-Fried and others made and/or caused to be made to the U.S. 

Congress, the CFTC, and/or other federal and state government agencies, investors, and in public 

venues such as Twitter. 

53. For example, during February 9, 2022 testimony before the U.S. Senate Committee 

on Agriculture, Nutrition and Forestry, Bankman-Fried, while advocating for the implementation 

of legislation regarding digital assets and the extension of certain legal protections to digital asset 

exchanges, testified as follows with respect to FTX’s treatment of customer funds: 

FTX has policies and procedures for its platforms today that reflect this 

basic principle by maintaining liquid assets for customers withdrawals, 

including a sufficient balance of digital assets funded by the company for 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 15 of 40
16

its non-U.S. platform. The resources are funded to provide sufficient cover 

against user losses under certain events and extreme scenarios in order to, 

among other purposes, ensure a customer without losses can redeem its 

assets from the platform on demand. 

[...] 

In keeping with this principle, FTX provides a user experience that enables 

any user to easily view account balances for all assets, for all of its 

platforms, in real time. By logging in to the customer’s account at FTX, the 

customer can immediately view the types of assets they own held in custody 

by FTX. The assets are ledgered and easily identifiable to the user (but held 

in an omnibus wallet in the case of the customer’s tokens in order to better 

promote liquidity on the platform) pursuant to internal policies and 

procedures, and FTX regularly reconciles customers’ trading balances 

against cash and digital assets held by FTX. Additionally, as a general 

principle FTX segregates customer assets from its own assets across our 

platforms. 

54. Contrary to such representations and without disclosure to FTX customers, 

Alameda and FTX comingled funds and freely used FTX customer funds as if they were their 

own, including as capital to deploy in their own trading and investment activities. On information 

and belief, Bankman-Fried, his parents, and other FTX and Alameda employees used FTX 

customer funds for a variety of personal expenditures, including luxury real estate purchases, 

private jets, documented and undocumented personal loans, and personal political donations. 

55. On information and belief, comingled funds, including FTX customer funds, were 

also furtively used by Bankman-Fried and FTX for extensive marketing and promotional expenses 

in the U.S., including a Super Bowl commercial and the sponsorship of a sports stadium in Miami, 

Florida. Many of these advertisements, including the Super Bowl commercial, touted FTX as “the 

safest and easiest way to buy and sell crypto.” These promotional activities were carried out in 

the U.S. to generally promote “FTX” rather than specifically “FTX US.” On information and 

belief, some of these promotional activities were paid for or guaranteed by FTX Trading entities. 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 16 of 40
17

E. Alameda’s Relationship with and Special Privileges on FTX 

56. From the launch of FTX, Alameda operated as a primary market maker on FTX 

Trading. In that capacity, Alameda acted as an always-available buyer and seller of digital assets 

in order to provide sufficient liquidity and an available trading counterparty to FTX customers. 

Over time, FTX acquired additional institutional market makers, but Alameda remained a highvolume market maker throughout the Relevant Period. 

57. Alameda also performed a number of other functions for FTX. For example, 

Alameda helped FTX maintain an acceptable balance of various digital assets, and particularly 

stablecoins, in its wallets. To do so, Alameda was authorized to make large exchanges of various 

stablecoins on behalf of FTX Trading, using FTX Trading’s assets rather than its own. 

58. Alameda enjoyed certain essential and undisclosed benefits and privileges on FTX. 

These advantages were programmed into the code for FTX Trading at the direction of BankmanFried. For one, Alameda was exempt from FTX’s “auto-liquidation” risk engine functions, which 

would automatically liquidate (sell) a customer’s open position when their “Maintenance Margin 

Fraction” fell below a certain determined level. All customers who took on too much leverage or 

risk on FTX would thus be auto-liquidated by the exchange. Alameda was exempt from this—it 

could not be liquidated on FTX Trading under any conditions. This exception was hard coded into 

FTX’s system. This advantage was not publicly disclosed during the Relevant Period. The 

existence of this and other advantages directly contradicted public statements made by and on 

behalf of Defendants.

59. Alameda’s account on FTX also had a special designation in the FTX Trading code, 

labeled as an “allow negative flag,” which allowed Alameda to execute a transaction even if it did 

not have the funds available in its account to do so. Alameda also had an essentially unbounded 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 17 of 40
18

credit limit in the FTX database. On at least one occasion during the Relevant Period, Alameda 

had reached a previously-set borrowing limit for its FTX account. In response, Bankman-Fried 

directed FTX personnel to raise the borrowing limit to a level that would be unlikely to ever be 

exceeded. On information and belief, FTX personnel ultimately raised Alameda’s borrowing limit 

to be many tens of billions of dollars. Alameda’s borrowed funds could also be withdrawn from 

FTX. These features, in combination, allowed Alameda unlimited ability to borrow and withdraw 

and digital assets directly from FTX Trading to put towards its off-platform activities. This 

functionality existed separate and apart from Alameda’s more limited participation in FTX 

Trading’s P2P margin lending program. 

60. Alameda’s ability to withdraw unlimited funds from FTX Trading was not publicly 

disclosed during the Relevant Period. On information and belief, Defendants were aware of and 

responsible for these functionalities throughout the Relevant Period. 

61. Alameda also enjoyed order execution timing privileges for its transactions on FTX 

Trading. Alameda, like many other institutional customers, transacted on FTX through the API 

rather than the standard front-end website or mobile application. However, while most or all other 

customers of API had their transaction orders routed through the FTX system, Alameda was able 

to bypass certain portions of the system and gain faster access to the API. As a result, Alameda’s 

transaction orders were received several milliseconds faster than those of other API users. In the 

high-frequency trading sector, this is a significant time advantage. This was not publicly disclosed 

during the Relevant Period. On information and belief, Defendants were aware of and responsible 

for these functionalities throughout the Relevant Period.

62. Alameda also enjoyed an additional execution time privilege as a result of not being 

subject to certain automated verification processes, because the above features of its account made 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 18 of 40
19

it unnecessary to carry out certain automated steps like verifying available funds before executing 

a transaction. Other FTX Trading customers, in contrast, were subject to an automated review 

process when placing orders to ensure that they had sufficient funds in their accounts to execute 

the requested transaction. By avoiding this “account API lock” process, Alameda gained another 

significant speed advantage. Similarly, if other customer placed several orders at once, these 

checks occurred in sequential order, so that each transaction could be confirmed as viable. This 

did not apply to the Alameda account. These advantages were not publicly disclosed during the 

Relevant Period. On information and belief, Defendants were aware of and responsible for these 

functionalities throughout the Relevant Period.

63. Defendants were aware of and participated in facilitating the foregoing privileges 

afforded to Alameda, both with respect to Alameda’s advantages on FTX and with respect to 

Alameda’s ability to misappropriate FTX customer funds. 

64. At the direction and under the control of Bankman-Fried, Alameda used large 

amounts of capital, including capital derived from FTX customer funds, to undertake significant 

illiquid investments and transactions, including long-term equity holdings in a variety of digital 

asset companies and large acquisitions of relatively illiquid digital assets. 

65. One of Alameda’s most significant holdings was the FTT digital asset. FTT was 

the FTX “exchange token” and could be used to obtain discounted trading fees for transactions on 

FTX Trading. On information and belief, Alameda did not pay to acquire its FTT holdings.

66. FTX consistently used one third of the trading revenues it collected to buy FTT 

tokens in the marketplace and “burn” them—a mechanism to permanently take the tokens out of 

circulation by sending them to a smart wallet from which they could never be withdrawn. On a 

weekly basis, FTX Trading announced on Twitter the quantity of FTT it had bought and burned 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 19 of 40
20

that week. On information and belief, this was intended to raise the value of the FTT tokens that 

remained in circulation, and thereby the value of the FTT that Alameda held.

67. Alameda’s FTT holdings were a significant portion of its balance sheet and a 

significant portion of all FTT in circulation. Alameda valued its FTT holdings on its balance sheet 

at the market price at which FTT was traded, without applying any discount to reflect that it could 

not have sold its significant FTT holdings into the marketplace without causing a sharp reduction 

in its trading price. 

68. Alameda also held extremely large quantities of several other illiquid digital assets 

relative to their circulation volumes, and likewise did not apply a discount to the value of those 

holdings on its balance sheet. 

69. Alameda relied on its significant holdings of FTT and similar illiquid tokens, valued 

at the market value of the asset without discount, as collateral to support a number of large loans 

from various digital asset lending platforms. During the Relevant Period, Alameda took out a 

large number loans, at times totaling as much as $10 billion in notional value during the Relevant 

Period. 

F. Misappropriation of Customer Funds 

70. By early 2022, Alameda had invested several billion dollars in directional, 

unhedged, illiquid, and/or long-term investments. To fund these investment activities, Alameda 

had relied on billions of dollars of loans from digital asset lending platforms, traditional bank lines 

of credit, and its unlimited borrowing abilities on the FTX, including its access to customer funds. 

71. In approximately spring 2022, the digital asset markets as a whole experienced a 

significant downturn. This downturn came to a head in May 2022 with the crash of two significant 

and widely-traded digital assets, whose value crashed essentially to zero. There was significant 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 20 of 40
21

contagion from this event, including a major decline in the value of bitcoin, ether and other digital 

assets. The devaluation of such central and high-volume digital assets resulted in major credit 

defaults throughout the digital asset industry, as the value of collateral guaranteeing various loans 

declined. As a result, a number of digital asset lenders and market participants made margin calls 

on borrowers, liquidated open positions, recalled loans, and/or collapsed entirely, including into 

bankruptcy.

72. In approximately May and/or June 2022, Alameda was subject to a large number 

of such margin calls and loan recalls. It did not have sufficient liquid assets to service its loans. 

Instead, at the direction of Bankman-Fried, Alameda greatly increased its usage of FTX customer 

funds to meet its external debt obligations. Alameda was able to rely on its undisclosed ordinarycourse access to FTX credit and customer funds to facilitate these large withdrawals, which were 

several billion dollars in notional value. Defendants were aware of and responsible for this 

misappropriation of FTX customer funds. 

73. By approximately mid-2022, FTX’s internal ledgers reflected that the balance of 

Alameda’s fiat liability to FTX totaled approximately $8 billion, a staggering amount that 

exceeded FTX total lifetime revenue. 

74. Publicly during this time, Defendants portrayed that they remained highly 

profitable and liquid. Following the market crash of May 2022, Bankman-Fried, through Alameda 

and other entities, bailed out several digital asset companies with loans or acquisitions. BankmanFried portrayed these activities as being benevolent and for the benefit of the digital asset industry. 

In connection with the acquisition of one such digital asset lending platform from a bankruptcy 

sale, on October 2, 2022 Bankman-Fried tweeted that “our bids are generally determined by fair 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 21 of 40
22

market price, no discounts; goal isn’t to make money buying assets at cents on the dollar, it’s to 

pay $1 on the $1 and get the $1 back to customers.” 

75. On information and belief, Bankman-Fried stated privately that he was pursuing an 

aggressive acquisition strategy during this time at least in part to gain access to additional sources 

of capital that could be used to support his existing businesses and fill the hole in customer funds 

that had been created.

76. Bankman-Fried had acknowledged this large outstanding balance to a small group 

of key personnel of FTX and Alameda throughout the Relevant Period. In one such conversation, 

Bankman-Fried indicated to an FTX executive that he was not concerned with Alameda’s liability 

on FTX because it was sufficiently collateralized by Alameda’s holdings of FTT tokens—the same 

tokens whose market price Alameda’s trading desk was actively trying to control. 

77. At least in part to remediate the risk that Alameda’s large liability would be 

discovered, at Bankman-Fried’s direction, FTX executives reallocated Alameda’s approximately 

$8 billion in liabilities to a customer account on FTX’s systems that Bankman-Fried would later 

refer to as “our Korean friend’s account” and/or “the weird Korean account.” This was technically 

a sub-account of Alameda, but unlike other Alameda sub-accounts on FTX, it was not opened 

under an “@alameda-research.com” identifier and was not otherwise readily identifiable as being 

an Alameda-associated account. The system notes associated with the account described it as 

“FTX fiat old.” As a result, it was no longer apparent on FTX’s ledgers that Alameda had an $8 

billion negative balance on its FTX account. 

78. The same type of “allow negative flag” and exemption from liquidation 

characteristics were applied to the so-called Korean account as was applicable to the Alameda 

main account and other sub-accounts. 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 22 of 40
23

G. Contemplated Shutdown of Alameda 

79. In or around September 2022, Bankman-Fried drafted and shared a document that 

questioned whether Alameda should be permanently shut down. The document, titled “We came, 

we saw, we researched” began: “I only started thinking about this today, and so haven’t vetted it 

much yet. But: I think it might be time for Alameda Research to shut down. Honestly, it was 

probably time to do that a year ago.” 

80. Bankman-Fried went on to lay out a number of reasons for the suggestion to shut 

down Alameda, including “[t]he fact that we didn’t hedge as much as we should have alone cost 

more in EV [expected value] than all the money Alameda has ever made or ever will make”; “[i]n 

the current environment, capital is really expensive, and Alameda doesn’t justify it”; and “Alameda 

is making some money trading, but not enough to justify its existence[.]” These admissions were 

directly contrary to contemporaneous public statements that Bankman-Fried and Alameda were 

making regarding Alameda’s profitability. 

81. Bankman-Fried also laid out a number of “large downsides” to shutting down 

Alameda, including those that reflected the interconnectedness between Alameda and FTX 

Trading’s operations such as “[l]ess liquidity on FTX” and the observation that “given the amount 

that Alameda is doing, we can’t really shut it down.” (emphasis in original). 

82. Bankman-Fried also drafted a contemplated Twitter thread to announce the 

shutdown of Alameda, and concluded: “I feel really uncertain what’s right! So I guess my plan is 

that, this coming weekend, we should just make a call, and enact it before next Monday, one way 

or another. Thoughts?” 

83. Alameda was not shut down at this time or at any point during the Relevant Period.

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 23 of 40
24

H. November 2022 Collapse of FTX Trading and Alameda 

84. On November 2, 2022, the online digital asset news publication Coindesk.com 

published an article titled “Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading 

Titan Alameda’s Balance Sheet,” and subtitled: “Alameda had $14.6 billion of assets as of June 

30, according to a private document CoinDesk reviewed. Much of it is the FTT token issued by 

FTX, another Bankman-Fried company.” This article reported on a purported leaked Alameda 

balance sheet that showed that, at least as of June 30, 2022, an extremely high portion of Alameda’s 

$14.6 billion in assets consisted of the FTT token. 

85. On November 6, 2022, in response to this article, the CEO of Binance tweeted that, 

“[d]ue to recent revelations that have came [sic.] to light,” he would be selling the remainder of 

his significant FTT holdings, which he acquired during the buyout from FTX seed investment. 

86. In consultation with Bankman-Fried and others, the CEO of Alameda responded on 

Twitter that Alameda would be willing to buy back all of Binance and Zhao’s FTT holdings at $22 

per token. At the direction of Bankman-Fried and the Alameda CEO, FTX personnel began 

liquidating Alameda’s investments and trade positions to rapidly free up capital for FTT buybacks. 

Nevertheless, the market value of FTT steadily declined. 

87. On the evening of November 6, as they monitored and reacted to the movements in 

FTT prices and the contagion effects on the digital asset market more broadly, Bankman-Fried, 

and Alameda executives expressed surprise that these events had not had a larger negative impact 

on the prices of bitcoin, saying in a chat message:

[former Alameda executive 1]: “I'm surprised BTC isnt down more” 

[former Alameda executive 2]: “me too” 

Bankman-Fried: “yea me 3” 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 24 of 40
25

88. At this time, bitcoin market prices, including on U.S. exchanges, had indeed begun 

to decline, likely as a direct or indirect result of the events described herein. 

89. At the same time, an increasing number of FTX customers began requesting to 

withdraw their funds from the exchange. FTX personnel initially managed to keep FTX’s systems 

operating quickly enough to keep up with withdrawals, but soon fell behind.

90. By late in the day on November 7, it was apparent to Defendants that FTX did not 

have sufficient funds to cover all customer withdrawals, and that there were not sufficient funds 

held in various FTX accounts to cover all customer deposit obligations. 

91. Bankman-Fried and other key personnel of FTX and Alameda acknowledged 

internally that this shortfall was not merely a matter of having sufficient liquid funds on hand to 

cover customer withdrawals in the short term; rather, FTX customer funds were irrevocably lost 

because Alameda had misappropriated them. 

92. That same day, the Alameda traders who had been liquidating Alameda’s open 

positions to free up capital for FTT buybacks were directed to instead sell everything that could 

be sold quickly from Alameda’s holdings, to maximize open lines of credit or any other available 

sources of capital, and generally do anything possible to quickly obtain billions of dollars in capital 

to send to FTX. 

93. Bankman-Fried, reinforcing this instruction, confirmed a trader’s summation of the 

directive as “close everything down to generate capital, maximally aggressive” to “liquidate all 

positions.” Bankman-Fried responded that “there is definitely a fair bit of urgency” and asked for 

the “ETA on getting at least $2b of USD.”

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 25 of 40
26

94. On or about November 7, FTX executives were also asked to evaluate the solvency 

of FTX US. They were readily able to carry out this request because FTX personnel had access to 

and oversight of the FTX US (but not FTX US Derivatives) code, database, and ledgers in the 

ordinary course of their duties. The FTX executives ultimately identified a shortfall they did not 

understand and were unable to quantify on FTX US. 

95. Bankman-Fried quickly indicated that he would fill the hole at FTX US from 

liquidation of Alameda assets. On November 8, Bankman-Fried directed Alameda traders to 

prioritize meeting FTX US capital requirements and to send excess capital to FTX US. On 

information and belief, Alameda sent in excess of $185 million to FTX US to fill its shortfall. 

96. Later that same day on November 8, an Alameda executive indicated in a chat 

message that “apparently part of what's going on is that alameda actually has a long USDT/short 

USD margin position on FTX US that we aren't tracking?” and said “which is why FTX US has 

less USD than we thought it should.” 

97. In direct contradiction of this internal series of events, on November 7, in public 

statements and various Twitter messages, Bankman-Fried and others acting on behalf of FTX 

continued to portray the shortfall that was causing customers to be unable to withdraw their funds 

as merely a liquidity problem. They affirmatively (and falsely) stated that FTX continued to be 

solvent and that all customer deposits were safe. For example, Bankman Fried tweeted: 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 26 of 40

SBF O 

@SBF_FTX 

1) A competitor is trying to go after us with false 

rumors. 

FTX is fine. Assets are fine. 

Details: 

12:38 PM · Nov 7, 2022 · Twitter Web App 

611 Retweets 407 Quote Tweets 2,599 Likes 
27

98. On information and belief, this and other tweets posted by Bankman-Fried on 

November 7-8, 2022 were intended to dissuade FTX customers from requesting to withdraw their 

funds from Defendants’ exchanges. 

99. This and other iterations of proposed tweets by Bankman-Fried were debated and 

rewritten among a small group of Defendants’ key employees and other of Bankman-Fried’s 

confidants. On information and belief, several individuals expressed concerns that BankmanFried’s tweet was inaccurate and/or misleading.

100. At the same time as Bankman-Fried was making these public assurances, he and 

numerous others acting on behalf of FTX Trading were also reaching out to as many sources of 

funding as possible in an attempt to quickly raise several billion dollars to cover the shortfall in 

customer funds. As their calculation of the amount of the shortfall grew from $1-2 billion, to $2-

4 billion, to as much as $8 billion, the number of viable potential rescue options diminished. 

Numerous parties declined to bail out FTX regardless of the favorable terms being offered. 

101. At approximately this same time, Bankman-Fried prepared or caused to be prepared 

a balance sheet to be shared with prospective investors showing the assets and liabilities of the 

companies. That balance sheet was unorthodox in a number of respects. Most notably, the balance 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 27 of 40

SBF 

SBF _FTX 

0 l#i@E 

2) 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. Some details on 

withdrawal speed: 

twitter.com/FTX_ Official/s ... (banks 

and nodes can be slow) 

12 18 PM 7 Nov 2022 
28

sheet included an $8 billion negative balance from a “hidden, poorly internally labeled ‘fiat@’ 

account.” 

102. Upon information and belief, the “fiat@” account was in fact well-known to and 

understood by Bankman-Fried, who had previously directly managed and directed its use and 

characterization on the FTX systems. 

103. On November 8, Bankman-Fried called the CEO of Binance CEO to offer to sell 

FTX Trading to him in its entirety. Binance initially accepted the offer and announced the news 

on Twitter, saying: “[t]his afternoon, FTX asked for our help. There is a significant liquidity 

crunch. To protect users, we signed a non-binding LOI [Letter of Intent], intending to fully acquire 

FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming 

days.” Defendants thereafter provided Binance with various information in response to their due 

diligence inquiries in furtherance of the LOI.

104. On the morning of November 9 at approximately 10 AM ET, after the 

announcement of the Binance acquisition, the CEO of Alameda held and “all-hands” meeting with 

Alameda’s staff. In that meeting, the CEO stated that earlier that year, in response to an accounting 

or book-keeping problem, Bankman-Fried and other individuals had decided to use FTX customer 

funds for Alameda. The CEO indicated that FTX had always allowed Alameda to borrow customer 

funds, and that FTX did not require collateral from Alameda, though in practice the collateral was 

Alameda’s FTT. Shortly after this meeting, most of Alameda’s staff resigned. 

105. On November 9, just one day after announcing the deal, Binance announced it 

would not be able to move forward with the deal to acquire FTX, saying: “[a]s a result of corporate 

due diligence, as well as the latest news reports regarding mishandled customer funds and alleged 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 28 of 40
29

US agency investigations, we have decided that we will not pursue the potential acquisition of 

FTX.com.”

106. With the prospects of acquisition or bailout investment being unlikely, executives 

of Defendant entities and FTX US began advocating strongly for Bankman-Fried to move the 

companies towards bankruptcy and halt all remaining customer withdrawals from the platforms. 

107. On November 10, FTX and FTX US halted all trading and withdrawals, and 

Bankman-Fried announced that Alameda was being wound down. Bankman-Fried also posted a 

lengthy Twitter thread purporting to explain how he “f[***]ed up.” 

108. On November 10, at approximately 4:00 am ET, Bankman-Fried signed a document 

resigning his position as CEO of FTX Trading and, as majority owner of all the FTX Trading and 

Alameda companies, authorizing the appointment of an independent CEO and the filing of Chapter 

11 bankruptcy proceedings. 

109. The next day, on November 11, 134 separate companies simultaneously filed for 

Bankruptcy as part of those proceedings, which are ongoing and being jointly administered in the 

U.S. Bankruptcy Court for the District of Delaware. 

110. In his initial declaration submitted shortly after the filing of the Bankruptcy petition, 

the FTX Enterprise’s newly-appointed CEO said the following of the situation he encountered at 

the FTX Enterprise entities: 

I have over 40 years of legal and restructuring experience. I have been the Chief 

Restructuring Officer or Chief Executive Officer in several of the largest 

corporate failures in history. I have supervised situations involving allegations 

of criminal activity and malfeasance (Enron). I have supervised situations 

involving novel financial structures (Enron and Residential Capital) and crossborder asset recovery and maximization (Nortel and Overseas Shipholding). 

Nearly every situation in which I have been involved has been characterized by 

defects of some sort in internal controls, regulatory compliance, human 

resources and systems integrity. 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 29 of 40
30

Never in my career have I seen such a complete failure of corporate controls and 

such a complete absence of trustworthy financial information as occurred here. 

From compromised systems integrity and faulty regulatory oversight abroad, to 

the concentration of control in the hands of a very small group of inexperienced, 

unsophisticated and potentially compromised individuals, this situation is 

unprecedented. 

111. In the days and weeks since Bankman-Fried resigned from the companies, he has 

continued to make widespread public statements, provide explanations, and make admissions, 

including in live interviews. Several of his statements admit key facts pled herein. For example, 

in a November 15 chat message interview with a Vox publication reporter, which Bankman-Fried 

has confirmed he participated in, he characterized the course of relevant events as follows: 

like, ‘oh FTX doesn’t have a bank account, I guess people can wire to 

Alameda’s to get money on FTX’ ... 3 years later ... ‘oh f**** it looks like 

people wired $8b to Alameda and oh god we basically forgot about the stub 

account that corresponded to that and so it was never delivered to FTX’ 

I. Impact of These Events on Digital Commodity Futures Markets 

112. The foregoing series of events had a significant, observable negative impact on 

digital commodity markets. For example, between the release of the November 2 Coindesk article 

and the November 9 announcement that Binance declined to acquire FTX Trading, the price of 

bitcoin futures fell more than 23%, to two-year low prices. 

113. Various data visualizations demonstrate a clear connection between the foregoing 

events and the price movement of digital commodities, including bitcoin and ether. 

114. The foregoing conduct by Defendants caused, directly or in directly, significant 

negative price impact on the value of commodities in interstate commerce in the U.S., including 

bitcoin and ether spot and futures prices, as illustrated in the following three market data charts. 

115. The following chart is a visualization of the price movement of bitcoin and ether 

digital commodity spot and futures prices on various major exchanges at the time of the foregoing 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 30 of 40
31

events. On information and belief, the significant price movement demonstrated in this chart is a 

result of the conduct described herein.

116. The following chart is a visualization of the impact of various of the foregoing 

market events on bitcoin futures prices on the U.S. CME exchange, with several of the key 

foregoing events identified on the price and time line. On information and belief, the significant 

price movement demonstrated in this chart is a result of the conduct described herein: 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 31 of 40

105 

100 

95 

90 

"' <1> 

u 

t: 85 a. 

80 

75 

70 

65 

Nov 2 

2022 

How Prices Reacted to FTX Events (using Nov 1 as base) 

Nov 4 Nov 6 Nov 8 Nov 10 Nov 12 

Time in EST 

-- Binance BTC usdt 

-- Coinbase BTC usd 

-- Binance ETH usdt 

-- Coinbase ETH usd 

BTC Futures 

-- ETH Futures 
32

117. The following chart is a visualization of the impact of various of the foregoing 

market events on ether futures prices on the U.S. CME exchange, with several of the key foregoing 

events identified on the price and time line. On information and belief, the significant price 

movement demonstrated in this chart is a result of the conduct described herein: 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 32 of 40

22k 

21k 

20k 

19k 

18k 

17k 

16k 

15k 

14k 

Wednesday 11AM: Alamed a 

balance sheet leaked 

Nov 2 

2022 

How CME Bitcoin Futures (Nov Expiry) Reacted to FTX Events 

Nov 4 

Monday 7AM: SBF tweets, 

"FTX is fin e. Assets are 

fine. FTX has enough to 

cover a ll clie nt holdings.• 

Sunday 10AM: CZ tweets 

decision to sell FTT (FTX 

token) 

Tuesday 11AM: CZ tweets 

that FTX asked for help and 

Tuesday 4PM: FTX halts 

withdrawa ls 

Tuesday 5PM: SBF deletes 

prior day's tweet that "FTX 

is fine .· 

Tuesday 2PM: BTC/USO drops 

more than 12% over 3 hours 

Nov 6 

Time in EST 

Wednesday 4PM: Binance 

tv,eet:s they will no longer 

acquire FTX.com 

Wednesday 4PM: BTC/USO 

bottoms more than 23% down 

since the Alameda leak Thursday 6AM: FTX suspends 

on-boarding and withdrawals 

Nov 8 Nov 10 Nov 12 
33

VIOLATIONS OF THE COMMODITY EXCHANGE ACT AND REGULATIONS 

COUNT I: FRAUD 

AGAINST ALL DEFENDANTS 

Violations of Section 6c(1) of the Act, 7 U.S.C. § 9(1), and 

Regulation 180.1(a)(1),(3), 17 C.F.R. 180.1(a)(1),(3) (2021) 

118. The allegations set forth in paragraphs 1 through 117 are re-alleged and 

incorporated herein by reference. 

119. During the Relevant Period, Defendants intentionally or recklessly, in connection 

with contracts of sale of commodities in interstate commerce, directly or indirectly: used or 

employed, or attempted to use or employ, a scheme or artifice to defraud; and/or engaged in, or 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 33 of 40

1700 

1600 

1500 

1400 

1300 

1200 

1100 

1000 

Nov 2 

2022 

VI. 

How CM E Ethereum Futures ( Nov Expiry) Reacted to FTX Events 

Monday 7AM: SBF tw eets, 

Sunday 10AM: CZ tweets 

decision to sell FTT (FTX 

to en) 

Tuesda y 11AM: CZ h-1eets 

that FTX asked for help and 

Binance intends to acquire 

FTX,com 

more than 12°/o over 3 hours 

Wednesday 4PM: Bina nee 

tweets they will no longer 

acquire FTX.com 

Wednesday 4PM: BTC/USO 

bottoms more than 23% down 

since the Alameda leak 

Friday 10AM: SBF h-,eets 

that he filed bankruptcy 

for FTX, FTX US, and 

Alameda 

Thursday 6AM : FTX suspends 

on-boarding and withd rawals 

Nov 4 Nov 6 Nov 8 Nov 10 Nov 12 

Time in EST 
34

attempted to engage in, acts, practices, or a course of business that operated or would operate as a 

fraud or deceit on customers of FTX Trading. 

120. As a result of the foregoing conduct, Defendants’ fraudulent conduct violated 

Section 6(c)(1) of the CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(1),(3), 17 C.F.R. 

§ 180.1(a)(1),(3). 

121. Defendants are directly liable for their actions in violation of Section 6(c)(1) of the 

CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(1),(3), 17 C.F.R. § 180.1(a)(1)-(3). 

122. Defendant Bankman-Fried directly or indirectly controlled the FTX Trading and 

Alameda entities and did not act in good faith, or knowingly induced, directly or indirectly, the 

acts constituting the violations of 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(1)(3) committed by 

FTX Trading and Alameda. Therefore, pursuant to 7 U.S.C. § 13c(b), Defendant Bankman-Fried 

is also liable as control person for each of FTX Trading and Alameda’s violations of Section 

6(c)(1) of the CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(1),(3), 17 C.F.R. § 180.1(a)(1),(3). 

123. The acts and omissions of Bankman-Fried and other officers, employees, or agents 

acting for FTX Trading and/or Alameda described in this Complaint were done within the scope 

of their office, employment, or agency with FTX Trading and/or Alameda. Therefore, pursuant to 

7 U.S.C. § 2(a)(1)(B) and 17 C.F.R. § 1.2 (2021), FTX Trading and/or Alameda are liable as 

principals for each act, omission, or failure of Bankman-Fried and the other officers, employees, 

or agents acting for FTX Trading and/or Alameda, constituting violations of 7 U.S.C. § 9(1) and 

17 C.F.R. § 180.1(a)(1),(3). 

124. Each and every use or employment or attempted use or employment of any 

manipulative device, scheme, or artifice to defraud; or act of engaging, or attempting to engage, in 

acts, practices or courses of business that operated or would have operated as a fraud or deceit on 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 34 of 40
35

FTX Trading customers is alleged as a separate and distinct violation of Section 6(c)(1) of the 

CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(1),(3), 17 C.F.R. § 180.1(a)(1)-(3). 

COUNT II: FRAUDULENT MISSTATEMENTS OF MATERIAL FACT AND 

MATERIAL OMISSIONS 

AGAINST ALL DEFENDANTS 

Violations of Section 6c(1) of the Act, 7 U.S.C. § 9(1), and 

Regulation 180.1(a)(2), 17 C.F.R. 180.1(a)(2) (2021) 

125. The allegations set forth in paragraphs 1 through 129 are re-alleged and 

incorporated herein by reference. 

126. During the Relevant Period, Defendants intentionally or recklessly, directly or 

indirectly made, or attempted to make, in connection with contracts of sale of commodities in 

interstate commerce, untrue or misleading statements of material fact, or omitted to state material 

facts necessary to make the statements made not untrue or misleading. 

127. As a result of the foregoing conduct, Defendants’ fraudulent conduct violated 

Section 6(c)(1) of the CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(2), 17 C.F.R. § 180.1(a)(2). 

128. Defendants are directly liable for their actions in violation of Section 6(c)(1) of the 

CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(2), 17 C.F.R. § 180.1(a)(2). 

129. Defendant Bankman-Fried directly or indirectly controlled the FTX Trading and 

Alameda entities and did not act in good faith, or knowingly induced, directly or indirectly, the 

acts constituting the violations of 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(2) committed by FTX 

Trading and Alameda. Therefore, pursuant to 7 U.S.C. § 13c(b), Defendant Bankman-Fried is 

also liable as control person for each of FTX Trading and Alameda’s violations of Section 6(c)(1) 

of the CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(1)-(3), 17 C.F.R. § 180.1(a)(1)-(3). 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 35 of 40
36

130. The acts and omissions of Bankman-Fried and other officers, employees, or agents 

acting for FTX Trading and/or Alameda described in this Complaint were done within the scope 

of their office, employment, or agency with FTX Trading and/or Alameda. Therefore, pursuant to 

7 U.S.C. § 2(a)(1)(B) and 17 C.F.R. § 1.2, FTX Trading and/or Alameda are liable as principals 

for each act, omission, or failure of the other officers, employees, or agents acting for FTX Trading 

and/or Alameda, constituting violations of 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(1),(3). 

131. Each and every untrue or misleading statement of fact, omission of material fact 

necessary to make statements not untrue or misleading is alleged as a separate and distinct violation 

of Section 6(c)(1) of the CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a)(2), 17 C.F.R. 

§ 180.1(a)(2). 

RELIEF REQUESTED 

WHEREFORE, the Commission respectfully requests that the Court, as authorized by 

Section 6c of the Act, 7 U.S.C. § 13a-l, and pursuant to the Court’s own equitable powers, enter: 

A. An order finding that Defendants Samuel Bankman-Fried, FTX Trading Ltd. b/d/a 

FTX.com, and Alameda Research LLC (collectively, “Defendants”), collectively and through their 

officers, employees, and agents, violated Section 6c(1) of the CEA, 7 U.S.C. § 9(1), and Regulation 

180.1(a), 17 C.F.R. § 180.1(a) (2021). 

B. An order of permanent injunction prohibiting Defendants and any other person or 

entity associated with them, from engaging in conduct described above, in violation of Section 

6c(1) of the CEA, 7 U.S.C. § 9(1), and Regulation 180.1(a), 17 C.F.R. § 180.1(a) (2021). 

C. An order of permanent injunction prohibiting Defendants and any of their affiliates, 

agents, servants, employees, successors, assigns, attorneys, and persons in active concert or 

participation with Defendants, from directly or indirectly: 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 36 of 40

VII. 
37

(i) trading on or subject to the rules of any registered entity (as that term is 

defined in Section la of the Act, 7 U.S.C. § la(40)); 

(ii) entering into any transactions involving “commodity interests” (as that term 

is defined in Commission Regulation 1.3, 17 C.F.R. § 1.3 (2021)), or digital assets 

that are commodities, as that term is described herein, for Defendants’ own 

accounts or for any account in which they have a direct or indirect interest; 

(iii)having any commodity interests or digital assets that are commodities, as 

that term is described herein, traded on Defendants’ behalf; 

(iv) controlling or directing the trading for or on behalf of any other person or 

entity, whether by power of attorney or otherwise, in any account involving 

commodity interests or digital assets that are commodities, as that term is described 

herein; 

(v) soliciting, receiving, or accepting any funds from any person for the purpose 

of purchasing or selling any commodity interests or digital assets that are 

commodities, as that term is described herein; 

(vi) applying for registration or claiming exemption from registration with the 

Commission in any capacity, and engaging in any activity requiring such 

registration or exemption from registration with the Commission, except as 

provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2021); 

(vii) acting as a principal (as that term is defined in Commission 

Regulation 3.1(a), 17 C.F.R. § 3.1(a) (2021)), agent or any other officer or 

employee of any person registered, exempted from registration or required to be 

registered with the Commission except as provided for in Regulation 4.14(a)(9); 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 37 of 40
38

D. An order directing Defendants and any third-party transferee and/or successors 

thereof, to disgorge to any officer appointed or directed by the Court all benefits received 

including, but not limited to, trading profits, revenues, salaries, commissions, loans, or fees 

derived, directly or indirectly, from acts or practices which constitute violations of the Act as 

described herein, including pre-judgment and post-judgment interest; 

E. An order directing Defendants and any successors thereof, to rescind, pursuant to 

such procedures as the Court may order, all contracts and agreements, whether implied or express, 

entered into between, with, or amount Defendants and any customer or investor whose funds were 

received by Defendants a result of the acts and practices that constituted violations of the Act, as 

described herein; 

F. An order requiring Defendants to make full restitution by making whole each and 

every customer or investor whose funds were received or utilized by them in violation of the 

provisions of the Act as described herein, including pre-judgment interest; 

G. An order directing Defendants to pay civil monetary penalties, to be assessed by the 

Court, in an amount not more than the penalty prescribed by Section 6c(d)(1) of the Act, 7 U.S.C. 

§ 13a-1(d)(1), as adjusted for inflation pursuant to the Federal Civil Penalties Inflation Adjustment 

Act Improvements Act of 2015, Pub. L. 114–74, 129 Stat. 584, title VII, Section 701, see

Commission Regulation 143.8, 17 C.F.R. § 143.8 (2021), for each violation of the Act, as 

described herein; 

H. An order requiring Defendants to pay costs and fees as permitted by 28 U.S.C. 

§§ 1920 and 2412(a)(2); and 

I. Such other and further relief as the Court deems proper. 

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 38 of 40
39

DEMAND FOR JURY TRIAL

Plaintiff CFTC hereby demands a jury trial. 

Dated: December 13, 2022 Commodity Futures Trading Commission 

By its attorneys: 

/s/ Jack Murphy

 

Nina Ruvinsky (Pro Hac Vice Forthcoming) 

Trial Attorney 

nruvinsky@cftc.gov

Carlin Metzger (Pro Hac Vice Forthcoming) 

Senior Trial Attorney 

cmetzger@cftc.gov 

312-596-0536 

Elizabeth N. Pendleton (Pro Hac Vice 

Forthcoming) 

Chief Trial Attorney 

ependleton@cftc.gov 

Robert T. Howell (Pro Hac Vice Forthcoming) 

Deputy Director 

rhowell@cftc.gov 

 

Commodity Futures Trading Commission 

Ralph Metcalfe Federal Office Building 

77 W. Jackson, Suite 800 

Chicago, Illinois 60604 

(312) 596-0700 

(312) 596-0714 (fax) 

John C. Murphy (Local Counsel) 

Trial Attorney 

jmurphy@cftc.gov 

290 Broadway, 6th Floor 

New York, NY 10007 

646-746-9700 

646-746-9888 (fax) 

Attorneys for Plaintiff

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 39 of 40

VIII. 
40

Commodity Futures Trading Commission

Case 1:22-cv-10503 Document 1 Filed 12/13/22 Page 40 of 40