U.S. prosecutors on Tuesday revealed a new indictment against Sam Bankman-Fried, accusing the founder of the now-bankrupt FTX cryptocurrency exchange of conspiring to bribe Chinese government officials with $40 million in payments.
Bankman-Fried directed the payment to unfreeze accounts belonging to his hedge fund, Alameda Research, which held over $1 billion of cryptocurrency that Chinese authorities had frozen, according to federal prosecutors in Manhattan.
The accounts were unfrozen after the bribe payment was transferred around November 2021 from Alameda’s main trading account to a private cryptocurrency wallet, per the new indictment.
Bankman-Fried then authorized the transfer of tens of millions of dollars of additional cryptocurrency to complete the bribe, prosecutors said.
Carolyn Ellison, who lead Alameda Research, and Gary Wang, co-founder of FTX, already pleaded guilty to the charges that included wire, commodities, and securities fraud.
In the court documents, the bribes came in connection to Alameda Research.
The disgraced former FTX CEO is now limited to access to phone and laptop under the bailout terms. Bankman-Fried’s legal team is current in the custody of his personal laptop.
The new charge is a serious blow to the former billionaire, who is already facing eight criminal counts over the collapse of FTX.
Prosecutors allege that Bankman-Fried stole billions in customer funds to cover losses at Alameda.
While he has acknowledged inadequate risk management at FTX, he has denied stealing money.
The new count accuses Bankman-Fried of “conspiring to violate the Foreign Corrupt Practices Act (FCPA), which makes it illegal for U.S. citizens to bribe foreign government officials to win business.”
Bankman-Fried is confined to his parents’ home in Palo Alto, California, on a $250-million bond ahead of his Oct. 2 trial.
His lawyers and prosecutors reached a new agreement on revised bail conditions on Monday after prosecutors raised concerns he may have been tampering with witnesses.
Bankruptcy lawyers said that Alameda Research used a $65 million credit line on parties, planes, political donations, and houses.
“After the accounts were frozen, Samuel Bankman-Fried, the defendant, and others operating at his direction, considered and tried numerous methods to unfreeze the accounts,” the indictment said. “After months of failed attempts to unfreeze the accounts, Samuel Bankman-Fried, the defendant, discussed with others and ultimately agreed to and directed a multi-million dollar bribe to seek to unfreeze the accounts.”
U.S. District Judge Lewis Kaplan scheduled a court hearing for Thursday after prosecutors asked for Bankman-Fried to be arraigned on the new 15-count indictment.
If convicted on 15-counts, Bankman-Fried could face up to 155 years in prison. A trial has been set for October.
In the wake of the FTX collapse, are currently probing the rival exchange, Binance, that is currently owned by Changpeng Zhao in concern defying the anti-money laundering and sanction laws.
“Binance.com does not operate in the U.S., nor do we have U.S.-based customers, however, we appreciate the senators’ request and will provide information to help them better understand why we remain the most trusted platform with users across the globe,” the DOJ spokesperson said in a statement.
Binance has become the leading Crypto exchange since the fall of FTX. Zhao had used Binance.US to distract regulators at the Securities and Exchange Commission from all illegal activities.
“Mr. Zhao’s assertion that Binance.US is fully independent is eerily similar to claims Sam Bankman-Fried made regarding the distinction between FTX US and FTX – claims that appear to be false, given that FTX US has filed for bankruptcy, its users have lost access to their funds, and its new CEO has declared that it is, in fact, insolvent,” the letter said from the SEC to the Senate.
Investors had stated concern about transparency from Crypto exchange platforms that included Binance and FTX
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