US charges FTX founder Sam Bankman-Fried with bribing ‘one or more’ Chinese officials
- Bankman-Fried is accused of making the payment to unfreeze accounts belonging to FTX affiliate Alameda, which Chinese authorities had frozen
- Prosecutors say the accounts were unfrozen after the bribe was transferred from Alameda’s main trading account to a private cryptocurrency wallet
US prosecutors on Tuesday charged Sam Bankman-Fried, disgraced founder of the now bankrupt FTX cryptocurrency exchange, of transferring at least US$40 million in bribes to “one or more” Chinese government officials to “influence and induce” them to unfreeze trading accounts belonging to his hedge fund Alameda.
The accounts, which held more than US$1 billion in cryptocurrency, had been frozen by Chinese enforcement authorities “in and around early 2021” as part of an inquiry into “a particular Alameda trading counterparty”, according to a new 13-count indictment against Bankman-Fried.
Federal prosecutors in Manhattan allege that Bankman-Fried tried numerous methods to unfreeze or regain access to the accounts, including “opening new accounts on the Chinese exchanges” using the personal identifying information of “several individuals unaffiliated with FTX or Alameda” in an effort to circumvent the freeze orders.
After months of failed attempts, Bankman-Fried “discussed with others and ultimately agreed to and directed a multimillion-dollar bribe to seek to unfreeze the accounts”, the indictment said, adding that payment instructions for part of the bribe included “at least one employee located in the US”.
According to the prosecutors, the accounts were unfrozen after the bribe payment was transferred around November 2021 from Alameda’s main trading account to a private cryptocurrency wallet.
After the accounts were unfrozen, Bankman-Fried authorised a transfer of tens of millions of dollars in cryptocurrency to complete the bribe and used the unfrozen money to fund additional Alameda trading activity, prosecutors said.
The 31-year-old former billionaire had previously pleaded not guilty to eight counts over the collapse of FTX in November. Prosecutors say Bankman-Fried stole billions of dollars in customer funds to plug losses at Alameda. He has acknowledged inadequate risk management at FTX but denied stealing money.
A spokesman for Bankman-Fried did not respond to a request for comment.
The new charges accuse Bankman-Fried of conspiring to violate the Foreign Corrupt Practices Act, which makes it illegal for US citizens to bribe foreign government officials to win business. Founded in 2017, Alameda moved its headquarters from Berkeley, California, to Hong Kong in 2018.
US District Judge Lewis Kaplan scheduled a court hearing for Thursday after prosecutors asked for Bankman-Fried to be arraigned on the new indictment.
Separately on Tuesday, Kaplan allowed Bankman-Fried – under legal supervision – to use a laptop with access to FTX internal database and websites that show crypto asset prices.
Bankman-Fried is currently confined to his parents’ home in Palo Alto, California, on US$250 million bond before his October 2 trial.
Under new bail conditions, a security guard will be posted outside his residence to screen any arrivals. People visiting Bankman-Fried will not be allowed to carry phones with them.
Last month, prosecutors unveiled four new counts against Bankman-Fried, accusing him of orchestrating an illegal campaign donation scheme to buy influence in Washington. That came after prosecutors raised concerns he may have been tampering with witnesses.
Additional reporting by Reuters
