FTX founder Samuel Bankman-Fried directed payments to Chinese officials of at least $40 million in cryptocurrency bribes for them to unfreeze his accounts, federal prosecutors allege in a new indictment.
“The purpose of the bribe was to influence and induce one or more Chinese government officials to unfreeze certain Alameda trading accounts containing over $1 billion in cryptocurrency, which had been frozen by Chinese authorities,” Bankman-Fried’s latest superseding indictment, his fifth, states.
Alameda Research was the proprietary crypto hedge fund that prosecutors say Bankman-Fried used to “divert billions of dollars in FTX customer funds.”
“Bankman-Fried and others sought to regain access to the assets to fund additional Alameda trading activity, in order to assist Bankman-Fried and Alameda in obtaining and retaining business,” the indictment continues.
In addition to his fraud and campaign finance charges, Bankman-Fried now faces an additional alleged count of conspiring to violate the Foreign Corrupt Practices Act. Prosecutors say that he hasn’t been arraigned on five of the 13 charges of his new indictment. Bankman-Fried’s ballooning criminal liabilities indicates that the government’s investigation isn’t relenting.
Prosecutors say that the conspiracy to bribe the Chinese officials in early 2021, when that government froze his accounts pursuant to an investigation of an Alameda trading counterparty. Bankman-Fried, also known by his initials SBF, tried various methods to thaw the accounts, retaining attorneys for lobbying, communicating with Chinese exchanges and trying to transfer the funds from the frozen accounts to fraudulent accounts, according to the indictment.
After all of those efforts failed, prosecutors say, Bankman-Fried “discussed with others and ultimately agreed to and directed a multi-million-dollar bribe to seek to unfreeze the Accounts.”
“In particular, Bankman-Fried authorized and directed the illicit transfer of cryptocurrency intended to induce and influence one or more Chinese government officials to unfreeze the accounts,” the indictment states. Following Bankman-Fried’s authorization and direction, an Alameda employee sent cryptocurrency payment instructions for at least a portion of the bribe payment to other Alameda employees, including at least one employee located in the United States. As a result, in or about November 2021, Bankman-Fried caused a bribe payment of cryptocurrency then worth approximately $40 million to be transferred from Alameda’s main trading account a private cryptocurrency wallet.”
That method worked, prosecutors say.
“After around the time of the $40 million bribe payment, the accounts were unfrozen,” the indictment states. “After confirmation that the Accounts were unfrozen, Bankman-Fried authorized the transfer of additional tens of millions of dollars in cryptocurrency to complete the bribe.”
Last month, federal prosecutors divulged what they described as Bankman-Fried’s secret campaign donation strategy: “woke s—” for liberals and “dark” money for Republicans, funneled through FTX employees of different perceived political affiliations.
Senior U.S. District Judge Lewis Kaplan has expressed skepticism that Bankman-Fried should remain out of jail on a $250 million pre-trial bond, after the FTX founder sent an encrypted message asking the company’s general counsel to “vet things” with him. The government later informed the judge that Bankman-Fried used a virtual private network (VPN) to surf the web anonymous.
Former federal prosecutor Mitchell Epner said that the bribery allegations make Kaplan “look even more askance at the current bail package.”
“It is rare that a defendant is alleged to have sent well into the eight figures in money to a governmental official in a country that is unlikely to extradite if the defendant were to flee there,” added Epner, a partner at Rottenberg Lipman Rich PC.
Bankman-Fried has another pre-trial hearing slated for Thursday at 11 a.m. ET.
Read the new indictment here.
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