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Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, has been charged with conspiring to bribe one or more Chinese officials with a minimum of $40 million. The indictment reveals that Bankman-Fried aimed to persuade a Chinese government official to release over $1 billion frozen in accounts belonging to his trading firm, Alameda Research. Alongside existing charges of fraud, money laundering, and illegal campaign contributions, prosecutors assert that Bankman-Fried utilized FTX customer funds for political donations, self-enrichment, and propping up his trading firm.
In the updated indictment, prosecutors claim that Bankman-Fried devised various strategies, such as hiring attorneys and attempting to transfer the money to unrelated accounts, to retrieve the frozen funds. However, when these methods failed, he allegedly resorted to bribing Chinese officials by directing Alameda employees to deposit $40 million into a private cryptocurrency wallet. Following the release of the frozen accounts, Bankman-Fried authorized the transfer of additional millions in cryptocurrency to complete the bribe, subsequently utilizing the unfrozen funds to continue trading through Alameda.
The charge against Bankman-Fried arises amidst a turbulent period for the crypto industry, as regulators and prosecutors target notable figures within the sector. Binance, the world's largest crypto exchange, and its founder Changpeng Zhao were sued by the Commodity Futures Trading Commission for allegedly evading U.S. regulations and neglecting preventative measures against illegal activities. Despite the mounting legal troubles, Bankman-Fried maintains a diminished fortune and faces extensive allegations, including fraud, conspiracy, and campaign finance law violations.
The expansive criminal case against Bankman-Fried follows the collapse of FTX in November, an exchange he had established as a symbol of reliability within the volatile crypto market. With FTX now navigating Chapter 11 bankruptcy, investors are striving to recover their funds while Bankman-Fried's wealth has drastically diminished. In a ruling by Judge Lewis A. Kaplan, Bankman-Fried is subjected to several restrictions, including the prohibition of encrypted messaging apps and limited contact with current or former FTX employees without the presence of his attorneys. Additionally, he must surrender his old devices and can only access the internet through monitored replacements for legal and personal purposes.