New Allegations Surface against FTX's Sam Bankman-Fried
Today, the United States Attorney’s Office for the Southern District of New York filed a superseding indictment charging Sam Bankman-Fried with allegedly used investor funds to make campaign contributions in excess of $100 million to Democrats and Republicans in an effort to seek to influence cryptocurrency regulation.
Notably, while these charges closely mirror the charges previously brought against SBF back in December 2022 after his return from the Bahamas, the government has now added a fresh twist. After his extradition to the United States, SBF's defense claimed that campaign finance law violations were not part of his initial extradition agreement. Prosecutors made the decision to abandon those charges. And now the DOJ has revived those alleged campaign finance claims in the latest superseding indictment.
The government charges:
1. Misappropriation and Fraud: From 2019 to November 2022, Samuel Bankman-Fried, founder and controller of cryptocurrency exchange FTX and trading firm Alameda Research, allegedly defrauded FTX customers, investors, and Alameda lenders. He is accused of misappropriating and embezzling FTX customer deposits, totaling billions, for personal enrichment, FTX operations, political contributions, and Alameda's operational costs, among other uses.
2. Deceptive Practices During Withdrawal Surge: In early November 2022, as numerous FTX customers tried to withdraw their funds, Bankman-Fried allegedly misled them about their funds' safety and made false statements to Alameda's lenders to prevent loan recalls.
3. Public Image Versus Reality: Bankman-Fried portrayed himself and FTX as focusing on consumer protection, with assurances of segregating customer assets. Despite public claims, he allegedly misappropriated and misused FTX customer deposits.
4. Campaign Contributions and Concealment: Bankman-Fried is accused of using stolen customer funds for political contributions—using straw donors to hide the funds' origins. This was purportedly done to influence cryptocurrency regulation in favor of his interests.
5. Manipulation of FTX's Computer Code: It’s further alleged that there were secret features added to FTX's computer code, enabling Alameda to withdraw unlimited money from FTX. This preferential treatment is said to have harmed FTX customers.
6. Extravagant Personal and Business Spending: Billions in misappropriated FTX customer funds were allegedly used for personal expenses, Bahamas real estate, venture investments, and repaying Alameda's lenders. Bankman-Fried is said to have taken steps to hide the funds' origins.
7. Cryptocurrency Market Downturn: In June 2022, a downturn in the cryptocurrency market led to repayment demands on Alameda from third-party lenders. Lacking funds for repayment, Bankman-Fried allegedly authorized drawing down billions from FTX customer assets to repay the lenders. This was purportedly concealed using manipulations in FTX's software that he had directed.
8. Continuous Misuse of Customer Funds: Even after using billions to repay lenders, Bankman-Fried is accused of further misappropriating FTX customer funds for investments, donations, and other purposes.