［Nassau, Bahamas/NEW YORK, Jan. 13 (Reuters) - U.S. prosecutors on Thursday charged Sam Bankmanfried, 30, the founder of failed crypto asset (virtual currency) exchange FTX, with fraud and violating campaign finance laws by misappropriating customer funds. Meanwhile, a court in the Central American country of the Bahamas rejected a bail application by the suspect, who was arrested in that country on December 12. Citing a significant risk of flight, it ordered that he be sent to correctional authorities in the country until February 8 next year. U.S. District Attorney Damian Williams of New York said that the defendant Bankmanfried made illegal campaign contributions to the Democratic and Republican parties with "stolen customer funds" and that this is part of the "biggest financial fraud in U.S. history. He did not say whether prosecutors would indict other FTX executives. He also declined to say whether FTX insiders are cooperating with the investigation. According to prosecutors, the defendant could face up to 115 years in prison if convicted on all eight counts. On April 13, defendant Bankmanfried appeared in a Bahamian court and appeared ready to resist extradition to the United States. Bahamian prosecutors had asked that bail be denied if the defendant contests the transfer. Mark S. Cohen, the defendant's attorney, said in a statement that "Mr. Bankmanfried is reviewing the indictment with his legal team and considering all legal options. According to the indictment unsealed by U.S. prosecutors on March 13, the defendant diverted customer funds to pay expenses, pay debts, and invest in Alameda Research, an FTX-affiliated crypto asset investment company. We allege that the defendants conspired to misappropriate customer funds, defraud lenders, commit securities fraud and money laundering, and violate campaign finance laws," U.S. Attorney Garland said in a statement. The U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) filed suit against Bankmanfried on March 13, alleging that he committed fraud. The CFTC also filed a complaint against Bankmanfried, Alameda Research, and FTX for their involvement in a fraud involving digital commodity assets. The SEC alleges that Mr. Bankmanfried concealed that FTX had been diverting client funds to Alameda Research since at least May 2019, and that FTX defrauded investors out of over $1.8 billion over several years. Mr. Bankmanfried apologized to clients and admitted to mismanagement at FTX, but he personally does not believe he is criminally liable. FTX's new CEO, John Lay, testified at a hearing before the U.S. House Financial Services Committee on March 13, saying that FTX lost $8 billion in customer funds and that sloppy management practices and inexperienced executives contributed to FTX's collapse. *Resent for systemic reasons.

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