The founder of FTX, Sam Bankman-Fried, is facing additional charges of fraud and conspiracy related to the collapse of his former digital asset exchange and hedge fund, Alameda Research. Bankman-Fried, who had already pleaded not guilty to eight other counts, was charged with five new federal charges on Wednesday, including one count of conspiring to bribe Chinese government officials.
Alleged Bribery of Chinese Officials
Prosecutors now accuse Bankman-Fried of bribing “one or more” Chinese officials with $40 million worth of cryptocurrency. The alleged bribery took place in response to frozen accounts belonging to Alameda Research, which held over $1 billion in digital assets. Bankman-Fried is accused of using various methods to unfreeze the accounts but ultimately resorted to a multimillion-dollar bribe.
Misappropriation of Customer Deposits
In addition to bribery charges, Bankman-Fried is also accused of stealing FTX customer deposits to finance risky bets at his hedge fund and funnel contributions to American politicians. Federal prosecutors have charged Bankman-Fried with using “billions of dollars” in company funds to “enrich himself.”
Bankman-Fried’s Denial and Trialing
Bankman-Fried has acknowledged mishandling his business but denies engaging in fraud. A trial is set for October, and he could face up to 155 years in prison if convicted on all counts. Three of his former business partners have already pleaded guilty and are cooperating with investigators.
Use of Gift from Father
Meanwhile, it has been reported that Bankman-Fried is using a “multi-million dollar gift” from his father to help cover legal bills. The money for the gift had come through Alameda Research, a company Bankman-Fried had started in 2017 and was its CEO until October 2021. The development is seen as an indication that Bankman-Fried is taking the charges against him seriously.
Restriction from VPNs and Encrypted Apps
However, Judge Kaplan has added new bail restrictions that prohibit Bankman-Fried from using a virtual private network, encrypted texting apps like Signal, and from talking to most “current or former employees of FTX or Alameda,” without lawyers present. The restrictions are meant to prevent the destruction of evidence and interference with witnesses.
FTX and Alameda Research imploded in November, followed by concerns about their balance sheet that turned into a bank run. In addition to this federal indictment, Bankman-Fried also faces civil charges from both the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Conclusion
Sam Bankman-Fried, who was once celebrated as a rising star in cryptocurrency circles, now finds himself at the center of a high-profile criminal case. As more details emerge about the alleged bribery scheme and misappropriation of funds, it remains to be seen whether Bankman-Fried will be able to clear his name in court.
Image Source: Wikimedia Commons
