Sam Bankman-Fried is the creator of the now-bankrupt FTX cryptocurrency exchange. According to a new indictment released by US prosecutors on Tuesday, he paid a $40 million bribe to Chinese authorities in order for them to unfreeze the accounts of his hedge fund.
The former billionaire, 31, is now facing a 13-count indictment in connection with the collapse of FTX, which puts even more pressure on him in light of the new bribery conspiracy charge.
Bankman-Fried was previously accused by the prosecution of organizing an unlawful campaign donation scheme to buy influence in Washington, D.C., as well as diverting billions of dollars in customer cash to patch losses at his Alameda Research hedge fund.
A spokesman for Bankman-Fried declined to comment.
Bankman-Fried is expected to be arraigned on Thursday before U.S. District Judge Lewis Kaplan in Manhattan federal court.
Also, on Tuesday, Kaplan authorized alterations to Bankman-$250 Fried’s million bail arrangement that would stop the defendant from influencing witnesses.
According to the indictment, Bankman-Fried directed the $40 million bitcoin transfer from Alameda’s primary trading account to a private wallet in order to convince Chinese government officials to unfreeze Alameda accounts holding more than $1 billion in cryptocurrencies.
The Alameda accounts had been suspended, according to the prosecution, as part of an inquiry into an unnamed Alameda counterparty, and Bankman-previous Fried’s attempts to persuade Chinese officials to lift the freeze had been ineffective.
Additionally, they said Bankman-Fried authorized the transfer of tens of millions of dollars worth of extra bitcoin in November 2021 in order to “finish” the bribe.
China’s foreign ministry could not immediately be reached for comment after business hours in Beijing. The Chinese embassy in Washington, D.C. did not immediately respond to a request for comment.
Bankman-Fried has pleaded not guilty to eight of the 13 counts he faces and has not yet been arraigned on the campaign finance or bribery conspiracy charges.
He has admitted that FTX’s risk management is insufficient, but he denies taking money.
Former Alameda CEO Caroline Ellison, former FTX technology head Zixiao “Gary” Wang, and former FTX engineering director Nishad Singh are three former members of his inner circle who have pled guilty and agreed to cooperate with investigators.
Following the collapse in the value of Bitcoin and other tokens as central banks hiked interest rates last year, U.S. prosecutors and authorities have intensified their assault on alleged abuses at digital asset exchanges. Bankman-case Fried’s is one example of this. Do Kwon, whose Terraform Laboratories created the TerraUSD and Luna coins that crashed in May, was detained in Montenegro on Thursday while allegedly in possession of forged travel documents as a result of a Manhattan grand jury’s fraud indictment.
The largest cryptocurrency exchange in the world, Binance, and its founder Changpeng Zhao were also sued by the Commodities Futures Trading Commission on Monday for carrying out improper trades. The complaint was described by Zhao as “unexpected and disappointing.”
Separately, the US Securities and Exchange Commission threatened to file a lawsuit against Coinbase Global Inc (COIN.O) over the products offered by that cryptocurrency exchange.
Most electronics are off-limits to him due to his new bail conditions, with the exception of a basic laptop and a phone without internet access. The software will be installed on the laptop to track user behavior. Kaplan threatened to put Bankman-Fried in jail unless stricter limits could be arranged because he was worried that he may tamper with witnesses.
Bankman-attorneys Fried claims that although their client reached out to current FTX executives to provide assistance rather than to interfere, he nonetheless consented to limitations on his use of gadgets.
The most recent accusation filed by the prosecution accuses Bankman-Fried of conspiring to break the Foreign Corrupt Practices Act, which makes it unlawful for Americans to bribe foreign officials in order to gain business.
Prior to his scheduled trial on October 2, Bankman-Fried is restricted to his parents’ Palo Alto, California home.