FirstFT: One of the ‘biggest financial frauds’ in US history

Sam Bankman-Fried has been accused of engineering “one of the biggest financial frauds in American history” as US prosecutors filed criminal charges against the founder of failed cryptocurrency exchange FTX.

In its indictment (which you can read in full here), the US Department of Justice charged Bankman-Fried with eight counts including conspiracy to commit wire fraud on customers and lenders, money laundering and violations of campaign finance laws.

Bankman-Fried, who was arrested in the Bahamas on Monday night, local time, faces many years in prison if convicted. Bahamian attorney-general Ryan Pinder said the country’s police force had taken the 30-year-old into custody after receiving “formal notification” from the US government that it had filed criminal charges and was “likely to request his extradition”.

The charges point to a long-running scheme to misappropriate the deposits of exchange customers to pay debts and expenses of Bankman-Fried’s private trading firm Alameda Research and to make investments.

The failure of Bahamas-based FTX, once valued at $32bn, has resulted in billions of dollars of potential losses for millions of creditors, including retail investors, and sent shockwaves through the crypto industry.

Dig Deeper: the case against Bankman-Fried: A series of overlapping events in the Bahamas, Washington and Manhattan led to the FTX founder’s arrest and offers new insights into how his empire collapsed.

Five more stories in the news

1. Lula looks to reduce role of armed forces in politics Brazil’s president-elect Luiz Inácio Lula da Silva has named a civilian to the post of defence minister. The veteran leftwinger’s appointment of José Múcio Monteiro — the first non-soldier to the post in almost five years — signals an intention by Lula to roll back the political influence the military gained during the tenure of his defeated rival, Jair Bolsonaro.

2. Biden cheers slower increase in inflation US consumer price inflation eased more than expected in November, to its lowest level in almost a year. President Joe Biden commented: “Make no mistake: prices are still too high. We have a lot more work to do, but things are getting better.” Find out the details. Meanwhile, the Fed is set to slow the pace at which it tightens monetary policy and raise its benchmark interest rate by half a percentage point today, ending its months-long string of 0.75 percentage point rate increases.

3. Danske Bank pleads guilty to resolve money-laundering scandal Denmark’s largest bank, Danske Bank, has pleaded guilty to defrauding US lenders and agreed to pay a $2bn penalty. The bank pleaded guilty in the US to one count of conspiracy to commit bank fraud and agreed to pay about $1.2bn in criminal forfeiture to the US — the largest forfeiture imposed by the US Department of Justice on a financial institution compared with its market capitalisation.

4. Messi to get his final shot of glory Argentina are through to the football World Cup final on Sunday, after their captain — and talisman — Lionel Messi led them to victory. Josh Noble in Qatar has the story.

5. China denied access to Arm chip designs Chinese tech giant Alibaba is unable to buy some of Arm’s cutting-edge designs after the British chipmaker determined the US and UK would not approve export licences to China because the technology’s performance was too high. It is the first known time that Arm has decided it cannot export its leading designs to China.

The day ahead

US interest rates: The Federal Reserve will deliver its final interest rate decision of 2022 and, as mentioned above, is expected to raise borrowing costs by half a percentage point.

Earnings: Home construction company Lennar will report earnings against the backdrop of a housing market being cooled by the Federal Reserve’s rising interest rates. Analysts polled by Refinitiv expect the company to post earnings of $4.49 a share on revenue of $10.1bn for the latest quarter, up from $3.91 a share on revenue of $8.4bn during the same period of 2021.

US-Africa: US president Joe Biden will address the US-Africa Business Forum in Washington, where he is expected to announce that he will back a permanent spot for the African Union in the G20. Biden will then host leaders from African nations for dinner at the White House.

World Cup Morocco kicks off against France in today’s World Cup semi-final, a match that casts a spotlight on the two countries’ particular historical relationship. The winner will face Argentina.

Milestones Today marks the 50th anniversary of the Apollo 17 mission and the last Moon landing.

What else we’re reading

The world can be a better place Martin Wolf is veering on the side of optimism in his must-read column, but argues that it’s time we learnt to move faster to deal with all the challenges we face.

Russia’s wartime economy: learning to live without imports When the heaviest sanctions against Russia were introduced in March, some analysts predicted the economy’s rapid collapse, perhaps by as much as 30 per cent. What is actually emerging is not a dramatic decline but a steady degradation of the country’s productive capacity as imports of components, raw materials and technologies have been constrained.

One step closer: US energy secretary Jennifer Granholm has described it as “a landmark achievement”, but how much closer does the latest energy breakthrough take the sector to its dream of fusion power? Tom Wilson explains.

• New hope for green hydrogen: Researchers in China claim to have produced hydrogen by splitting seawater without the need to desalinate or purify it first, according to a report in Chemistry World.

Short sellers enjoy end of ‘fantasy’ stock market Short sellers have had plenty to be grateful for in 2022 — falling stocks, the abrupt end of easy money and a historic energy crisis. But what’s the outlook for 2023? Laurence Fletcher explains.

An artistic renaissance

Artists are returning to the eternal source of inspiration that is the Renaissance, writes Louis Wise. But while a new generation is honouring the styles, subjects and forms of the late 14th, 15th and 16th centuries, they are also modernising them with little twists — as you can see.