Prosecutors filed a new indictment against FTX cofounder Sam Bankman-Fried on Monday, charging him with fraud for allegedly stealing US$100 million dollars of customer funds to make campaign donations ahead of the 2022 midterm elections, making good on prosecutors’ promises to press charges over the disgraced crypto billionaire’s alleged illegal campaign finance scheme.
FTX Founder Sam Bankman-Fried arrives at a Manhattan Federal Court in New York City Friday. (Photo by Fatih Aktas/Anadolu Agency via Getty Images)
Anadolu Agency via Getty Images
Key Takeaways
- Monday’s charges include seven counts of conspiracy and fraud, alleging that Bankman-Fried secretly directed customers’ money from FTX’s sister trading firm, Alameda Research, to company executives’ personal bank accounts where those executives made political contributions in their own names in an effort to “maximize FTX’s political influence.”
- Bankman-Fried then “leveraged this influence, in turn, to lobby Congress and regulatory agencies to support legislation and regulation he believed would make it easier for FTX to continue to accept customer deposits and grow,” the indictment alleges.
- Prosecutors had previously charged him with campaign finance law violation charges, but dropped those charges after The Bahamas told the U.S. that the charge was not part of the agreement under which the country extradited Bankman-Fried in December—this indictment marks a workaround of that diplomacy issue.
Key Background
This indictment represents the latest chapter in the legal fallout of FTX. FTX, a massive cryptocurrency exchange that made Bankman-Fried a billionaire worth over $20 billion, collapsed and filed for bankruptcy in November after a liquidity crisis triggered by a selloff of its own FTT tokens. Allegations quickly emerged about illegal business dealings between the company and Alameda.
In December, Bankman-Fried was arrested in The Bahamas and indicted on charges including wire fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud and conspiracy to violate U.S. campaign finance laws. He has pleaded not guilty.
The charges centred around allegations he was taking customer money and putting it into Alameda for the purpose of paying off the company’s debts and making political donations. He was also accused of misleading customers about the financial condition of FTX. In June, and then in July, The Bahamas requested that the U.S. government not charge Bankman-Fried with some of the charges from that indictment, including campaign finance violations, on the basis that it was not part of the extradition agreement.
Tangent
Meanwhile, Bankman-Fried is in Brooklyn’s Metropolitan Detention Center after a judge ruled Friday that he violated his bail conditions by allegedly tampering with witnesses. Bankman-Fried allegedly fed information to the New York Times about his ex-girlfriend and former Alameda CEO Caroline Ellison.
The court determined this was an attempt to discredit Ellison, who is expected to testify against him in the eventual trial. This means Bankman-Fried will have to await trial in a jail cell rather than his family’s multi-million-dollar home in Palo Alto, California.
This article was first published on forbes.com and all figures are in USD.
