FTX Founder Sam Bankman-Fried Charged with Directing $40 Million in Bribes to Unfreeze Cryptocurrency Assets

Sam Bankman-Fried, co-founder of cryptocurrency exchange FTX, has been charged with bribery by US prosecutors amid a wider crackdown on financial fraud in the digital asset world. Bankman-Fried was accused of paying $40 million to Chinese officials as a bribe to unfreeze accounts belonging to Alameda Research, an affiliate of FTX. The accounts held over $1 billion worth of cryptocurrencies, and the frozen assets needed to be released to retain business.

Bankman-Fried’s Legal Troubles

Bankman-Fried has already faced 13 charges after being arrested in the Bahamas last December and brought to the US. He was charged with conspiracy to violate anti-bribery provisions of the Foreign Corrupt Practices Act. Bankman-Fried has pleaded not guilty to charges that he cheated investors out of billions of dollars before his business collapsed.

Carolyn Ellison and Gary Wang, two other FTX executives, have already pleaded guilty to charges including wire fraud, securities fraud, and commodities fraud. The alleged bribes were related to the operation of Alameda Research, which is affiliated with FTX.

The Collapse of FTX

FTX filed for bankruptcy on November 11 when it ran out of money after experiencing the cryptocurrency equivalent of a bank run. Bankman-Fried’s new CEO John J. Ray III blamed the collapse on a small group of grossly inexperienced and unsophisticated individuals.

Bankman-Fried’s Latest Bail Package

Bankman-Fried’s lawyers submitted a new bail package that would limit his use of electronic devices ahead of trial. Judge Kaplan approved new bail conditions that would restrict Bankman-Fried’s internet access. He will only be allowed access to a monitored laptop and a phone for voice calls and texts and is prohibited from using any other devices.

Bankman-Fried is under house arrest at his parents’ home in Palo Alto, California, where his movements are heavily restricted. If convicted on all counts, Bankman-Fried could face more than 155 years in prison. A trial has been scheduled for October.

Bankman-Fried’s Internet Restrictions

Bankman-Fried has been granted limited cell phone and laptop access with new bail terms. However, Judge Kaplan imposed restrictions on his internet and device usage. He is forbidden from using VPNs, engaging in encrypted messaging, and playing video games including NFL Game Pass.

Prosecutors requested that Bankman-Fried curtail his internet access after allegations that he had inappropriately contacted current and former employees of FTX and Alameda Research. Bankman-Fried launched a Substack newsletter but provided little clarity on his ongoing legal issues.

Conclusions

The US government’s crackdown on Binance, a rival exchange to FTX, has exacerbated tensions within the digital asset world. Bankman-Fried’s legal troubles add to growing concerns about the regulation of cryptocurrencies and their associated businesses. As the industry continues to evolve, regulators will likely face increasing pressure to impose stricter rules.

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