FTX founder Sam Bankman-Fried is facing new criminal charges for violating the Foreign Corrupt Practices Act. The U.S. Justice Department has accused him of directing $40 million worth of bribes to Chinese officials to unfreeze assets relating to his cryptocurrency business.
Bankman-Fried’s Charged History
This new charge adds to a total of 13 criminal counts that Bankman-Fried faces since his arrest in December 2020 in the Bahamas and was brought to the United States. He pleaded not guilty to charges that he cheated investors out of billions of dollars before his business collapsed.
FTX filed for bankruptcy on November 11, 2020, after experiencing the cryptocurrency equivalent of a bank run. Carolyn Ellison and Gary Wang, who were part of FTX, have already pleaded guilty to charges including wire fraud, securities fraud, and commodities fraud.
John J. Ray III, FTX’s new CEO, testified to federal lawmakers that the collapse was due to a “very small group of grossly inexperienced and unsophisticated individuals” who were running the company.
The Bribery Scheme
According to federal prosecutors, Bankman-Fried authorized and directed a bribe payment worth at least $40 million in cryptocurrency to certain Chinese officials in early 2021. This was to assist him and Alameda Research in obtaining and retaining business by unfreezing specific Alameda trading accounts containing over $1 billion in cryptocurrency.
Chinese law enforcement officials had frozen these accounts on two of China’s largest cryptocurrency exchanges earlier. Before resorting to bribery, Bankman-Fried and others tried several methods to unfreeze the accounts, including retaining attorneys and opening new accounts.
The alleged bribe apparently achieved its purpose as the accounts were unfrozen. Bankman-Fried authorized the transfer of additional tens of millions of dollars in cryptocurrency to complete the bribe after that.
The money from the unfrozen accounts was used to fund additional Alameda trading activity, and several Alameda employees were allegedly involved in the bribery scheme.
New Bail Package and Online Activities under Legal Duress
Bankman-Fried’s lawyers have submitted a new bail package that limits him to a laptop and a phone and blocks him from using any other cellphones, tablets, computers, video games, or “smart” devices with internet access other than electronic devices owned by his lawyers that he might need to prepare for trial. He can only access digital apps and websites approved by his lawyers.
The U.S. attorney for the Southern District of New York has presented a new bail proposal for Bankman-Fried that added extra restrictions, including no contacting FTX or Alameda associates.
Bankman-Fried has been forbidden by Judge Lewis Kaplan from using encrypted texting tools like Signal but is still allowed to access apps like FaceTime, iMessage, email, and Facebook Messenger, as long as all communications are archived. His parents have agreed to restrict his use of their electronic devices and have signed affidavits stating they won’t bring prohibited electronic devices into their home.
Despite these restrictions, Bankman-Fried launched a newsletter called SBF’s Substack. But he hasn’t written much on it yet, and his newsletters lack clarity on the main accusations against him.
He used a virtual private network to gain access to his international NFL Game Pass account and watch the Super Bowl earlier this year, which got him summoned back to New York.
Conclusion
Bankman-Fried’s legal troubles are far from over as he faces new criminal charges on top of previous ones from December 2020. It remains to be seen how these charges will affect his business interests in the future.
Image Source: Wikimedia Commons
