US securities regulators have charged Sam Bankman-Fried with defrauding investors in his bankrupt cryptocurrency exchange FTX following his arrest in the Bahamas.

The Securities and Exchange Commission said on Tuesday it had charged Bankman-Fried with defrauding venture capitalists and other equity investors who pumped $1.8bn into Nassau-based FTX, the majority of whom are based in the US, since May 2019.

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said SEC chair Gary Gensler.

Bankman-Fried was arrested at his luxury penthouse in the Bahamas late on Monday after US prosecutors filed criminal charges. Federal prosecutors in the Southern District of New York said the case against the 30-year-old would be unveiled later on Tuesday morning.

The Wall Street regulator alleged that Bankman-Fried promoted his company to potential equity investors as a safe and reliable player in the wild west of digital assets, focusing on touting the company’s sophisticated risk management. In reality, regulators said, Bankman-Fried “orchestrated a years-long fraud” to conceal “diversion of FTX customers’ funds to Alameda Research”, his private trading firm.

Before its collapse into bankruptcy last month, FTX had been valued at $32bn and had won the backing of several of the world’s best-known investors including BlackRock, Temasek and the Ontario Teachers’ Pension Plan.

“The alleged fraud committed by Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws,” Gensler said. The SEC said its investigation into FTX was ongoing.