Former FTX founder Sam Bankman-Fried charged with bribery conspiracy

Former FTX founder Sam Bankman-Fried charged with bribery conspiracy

Sam Bankman-Fried, the disgraced founder of the collapsed crypto exchange FTX, has been accused of conspiring to bribe 'one or more' Chinese officials with at least $40 million in payments, according to an indictment unsealed Tuesday. A curated selection of our best stories is sent to your inbox every weekend. The bribes were to persuade at least one Chinese government official to unfreeze accounts that held more than $1 billion in cash from his trading firm, Alameda Research.

Prosecutors in the Southern District of New York on Tuesday unsealed a conspiracy charge that adds the bribery conspiracy charge to a dozen others already leveled against Bankman-Fried, including fraud, money laundering and making illegal campaign contributions. Prosecutors allege that Bankman-Fried led an effort to use millions of dollars from FTX customer money to make political donations, prop up his trading firm, and enrich himself.

In the latest indictment unsealed Tuesday, prosecutors said Bankman-Fried began a campaign to access Alameda accounts frozen in early 2021 on two China-based crypto exchanges during a Chinese government investigation into an entity on the other side of some Alameda trades.

Prosecutors allege Bankman-Fried tried several different methods to retrieve the money, including hiring lawyers to lobby Chinese authorities to return the money and trying to transfer the money into accounts that appeared to be unassociated with his companies. Bankman-Fried, prosecutors said, tried to bribe at least one Chinese official in November 2021, leading Alameda employees to place some $40 million to a private cryptocurrency wallet.

After the accounts were unfrozen, Bankman-Fried authorized the transfer of additional tens of millions of dollars in cryptocurrency to complete the bribe, according to the indictment. The report alleges that Bankman-Fried employed the unfrozen funds to continue trading through Alameda.

The new charge against Bankman-Fried is in a difficult month for the cryptocurrency industry, with prosecutors and regulators targeting some of the industry's biggest names. The Commodity Futures Trading Commission filed a civil lawsuit Monday against Binance, the world's largest cryptocurrency exchange, as well as its founder, Changpeng Zhao, a rival of Bankman-Fried. Binance's lawyer alleges that the company violated U.S. regulations and failed to implement measures meant to curb illegal activities like terrorist financing and money laundering. Binance and Zhao deny the accusations, saying they are liars.

Bankman-Fried was arrested in the Bahamas on December 31 and charged with numerous crimes including fraud, conspiracy and violations of campaign finance laws. He was hit with four more charges in February, as prosecutors detailed how they believe Bankman-Fried misused customer funds and funneled millions of dollars in contributions to certain Democrats and Republicans.

Bankman-Fried's sweeping criminal case came after FTX's collapse in November, and was viewed as a beacon of reliability in the emerging and unstable crypto market. Bankman-Fried, once valued at $16 billion, has said his fortune has all but vanished, as the hundreds of investors who had held money on the exchange are preparing to claw back their losses as FTX wades through Chapter 11 bankruptcy.

On Tuesday, Judge Lewis A. Kaplan ruled Bankman-Fried will be restricted from using encrypted messaging apps and barred from contacting current or former FTX employees unless his attorneys are present. He must also give up his old laptop and phone and only access the internet through a new laptop and phone, which will be monitored. Bankman-Fried will be able to access certain websites to assist with his defense, as well as a variety of news and sports websites for his personal use.