Sam Bankman-Fried, a Founder of FTX, was charged criminally on Thursday in a superseding indictment submitted to a federal court in New York with four new offences, including commodities fraud and making illegal political donations.
According to a person knowledgeable about the new counts, SBF, as he is well known, could spend an additional 40 years behind bars if found guilty in the case where he is charged with “many schemes to defraud.”
Further information about Bankman-allegedly Fried’s fraudulent actions in connection with his cryptocurrency exchange FTX and a linked hedge fund, Alameda Research, both of which failed in late 2022, is provided in the new charge document. Further information on the hundreds of political donations that Bankman-Fried is accused of managing in violation of federal campaign finance rules is also provided by the 12-count indictment.
According to the indictment, Bankman-Fried is accused of stealing the deposits made by FTX customers and utilizing billions of dollars of those assets to support FTX and Alameda’s operations and investments, finance speculative ventures, fund charity donations, and profit himself. The second accusation, which was released in U.S. District Court in Manhattan, claims that he also attempted to “buy influence over cryptocurrency legislation in Washington, D.C., by directing tens of millions of dollars in illicit political contributions to both Democrats and Republicans.”
SBF was recognized as a significant Democratic donor prior to the criminal prosecution.
After being accused for the first time in late 2022, Bankman-Fried is still at large on a $250 million personal recognizance bail. He has pled not guilty. The new indictment puts SBF under more legal strain after two of its close allies, FTX Founder Gary Wang and former Alameda CEO Caroline Ellison, entered pleas of guilty to much fraud and other counts in December. In their defense of Bankman-Fried, Wang and Ellison are both assisting the Manhattan office of the US attorney.
He is charged with securities fraud, wire fraud, and numerous conspiracy counts involving wire fraud against FTX clients and Alameda’s lenders, as well as charges for illegal campaign contributions, money laundering, running unlicensed money transmitting business, and bank fraud in the new indictment. In a statement about the new indictment, Manhattan U.S. Attorney Damian Williams said, “We are hard at work and will do so until justice is done.”
According to the charge sheet, Bankman-Fried is accused of operating an illegal straw donor scheme while seeking to use client funds to fund a multimillion-dollar political influence campaign. Bankman-Fried and other FTX executives gave more than $70 million to the 2022 midterm elections, according to political finance monitor OpenSecrets. According to the indictment, Bankman-Fried and his accomplices “made over 300 political donations totalling tens of millions of dollars that were made in the name of a straw donor or paid for using corporate money, which were unlawful.”
The latest petition alleges that Bankman-Fried “conspired to and did have certain political donations made in the names of two other FTX employees” in order to prevent these contributions from being publicly disclosed in his name. The document claims that in 2022, Bankman-Fried and other people “agreed that he and his co-conspirators should donate at least a million dollars to a super PAC that was supporting a candidate running for a United States House seat and looked to be affiliated with pro-LGBTQ issues.”
According to the paper, the gang of conspirators chose an individual solely designated as “CC-1” or co-conspirator 1 to be the donor. Nevertheless, according to Federal Election Commission reports, then-FTX Director of Engineering Nishad Singh gave $1.1 million to the LGBTQ Victory Fund Federal PAC in 2022. Singh has not been charged with any crimes, but he took a long time to respond to a request for comment. A PAC official named Albert Fujii stated that “we have set aside funds and will take required actions once we get instructions from authorities.”
According to the latest indictment, SBF’s alleged campaign financing scam includes efforts to conceal his payments to Republicans. Also, “via an encrypted, auto-deleting Signal communication branded “Donation Processing,” at least in part, the purported straw donor fraud was carried out,” according to the indictment. Another unidentified co-conspirator, to the paper, “publicly allied himself with conservatives, made contributions to Republican politicians controlled by Bankman-Fried and funded by Alameda,” the crypto tycoon’s hedge fund. Likewise, the document does not identify the accused second FTX co-conspirator who gave money to Republican politicians.
Ryan Salame, co-CEO of FTX Digital Markets, a division of FTX, donated more than $20 million to Republicans during the 2022 election season, according to OpenSecrets. The accusations against Salame have been dropped. Salame could not be reached for comment. A request for comment from Salame’s representative was not met with a response. The outward wire transfers from Alameda to people’s bank accounts for the purpose of making gifts were marked “as Alameda ‘loans’ or ‘expenses,'” the indictment claims, in an effort to “further obscure the plot.”
According to the paper, “although Alameda staff regularly tracked loans to CEOs, transfers to Bankman-Fried, CC-1, and CC-2 in the months leading up to the 2022 midterm elections were not documented on internal Alameda tracking spreadsheets.” Internal Alameda spreadsheets, on the other hand, “noted nearly $100 million in political contributions, even though FEC records show no political contributions by Alameda to politicians or PACs for the 2022 midterm elections.”
An ethics watchdog organization has urged the FEC to investigate Bankman-Fried for suspected “severe breaches” of election law, noting his confessed donations of “dark” money to Republican-aligned entities during the 2022 primary season.
A group of FTX entities seeking to recover efforts made by SBF and others earlier this month said they are requesting the return of that money by “sending highly classified messages to political figures, political advocacy funds, and other recipients of payments or other payouts that were made by or at the path of the FTX Debtors, Sam Bankman-Fried, or other officers or principals of the FTX Debtors.”
edited and proofread by nikita sharma