FTX co-founder Sam Bankman-Fried was hit Thursday with 4 recent criminal charges, including ones related to commodities fraud and making illegal political contributions, in a superseding indictment filed in Latest York federal court.
A source acquainted with the brand new counts said that SBF, as he’s popularly known, could face an extra 40 years in prison if convicted within the case, where he’s accused of “multiple schemes to defraud.”
The brand new charging document lays out in greater detail Bankman-Fried’s allegedly fraudulent conduct related to his cryptocurrency exchange FTX and an associated hedge fund, Alameda Research, each of which went bust in late 2022.
The 12-count indictment also provides recent details of lots of of political donations that Bankman-Fried allegedly directed in violation of federal campaign finance laws.
Bankman-Fried is accused of stealing FTX customer deposits and using billions of dollars of those stolen funds to support FTX’s and Alameda’s operations and investments, to fund speculative investments, to make charitable contributions, and to counterpoint himself, the indictment notes.
He also tried “to buy influence over cryptocurrency regulation in Washington, D.C., by steering tens of hundreds of thousands of dollars in illegal campaign contributions to each Democrats and Republicans,” based on the brand new indictment, which was was unsealed in U.S. District Court in Manhattan.
Before the criminal case, SBF was often known as a serious donor to Democrats.
Bankman-Fried, who stays free on a $250 million personal recognizance bond after being first charged in late 2022, has pleaded not guilty within the case.
The brand new indictment adds yet more legal pressure on SBF, whose close associates, FTX co-founder Gary Wang and ex-Alameda CEO Caroline Ellison, pleaded guilty in December to multiple fraud and other charges. Each Wang and Ellison are cooperating with the U.S. attorney’s office in Manhattan against Bankman-Fried.
The brand new indictment accuses him of securities fraud, wire fraud, and multiple conspiracy counts related to wire fraud on FTX customers and Alameda’s lenders; illegal campaign contributions; money laundering; operating an unlicensed money transmitting business; and bank fraud.
Manhattan U.S. Attorney Damian Williams, in an announcement on the brand new indictment said, “We’re hard at work and can remain so until justice is completed.”
The charging document lays out how Bankman-Fried allegedly operated an illegal straw donor scheme as he moved to make use of customers funds to run a multimillion-dollar political influence campaign.
Bankman-Fried and fellow FTX executives combined to contribute greater than $70 million toward the 2022 midterm elections, based on campaign finance watchdog OpenSecrets.
The indictment claims that Bankman-Fried and his co-conspirators “remodeled 300 political contributions, totaling tens of hundreds of thousands of dollars, that were illegal because they were made within the name of a straw donor or paid for with corporate funds.”
“To avoid certain contributions being publicly reported in his name, Bankman-Fried conspired to and did have certain political contributions made within the names of two other FTX executives,” the brand new filing claims.
Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, exits the Manhattan federal court in Latest York City, February 16, 2023.
Eduardo Munoz | Reuters
The document refers to at least one such example, in 2022, when Bankman-Fried and “others agreed that he and his co-conspirators should contribute at the least 1,000,000 dollars to a brilliant PAC that was supporting a candidate running for a United States Congressional seat and seemed to be affiliated with pro-LGBTQ issues.”Â
The group of conspirators, based on the document, chosen a person only identified within the document as “CC-1” or co-conspirator 1, to be the donor.
Nonetheless, in 2022, then-FTX Director of Engineering Nishad Singh contributed $1.1 million to the LGBTQ Victory Fund Federal PAC, based on Federal Election Commission filings.
Singh, who didn’t immediately reply to a request for comment, has not been charged with any wrongdoing. Albert Fujii, a spokesman for the PAC, told CNBC “we’ve put aside funds and can take appropriate motion once we receive guidance from authorities.”
SBF’s alleged campaign finance scheme included efforts to maintain his contributions to Republicans “dark,” based on the brand new indictment.
And, the alleged straw donor scheme was coordinated, at the least partly, “through an encrypted, auto-deleting Signal chat called ‘Donation Processing,'” based on the indictment.
The document says one other unnamed co-conspirator “who publicly aligned himself with conservatives, made contributions to Republican candidates that were directed by Bankman-Fried and funded by Alameda,” the crypto tycoon’s hedge fund.
Again, the document does don’t name the alleged second FTX co-conspirator who contributed to Republican candidates.
Ryan Salame, the co-CEO of FTX Digital Markets, a subsidiary of FTX, donated greater than $20 million to Republicans through the 2022 election cycle, based on OpenSecrets. Salame has not been charged with any wrongdoing.
Salame couldn’t be reached for comment. A spokeswoman for Salame didn’t return a request for comment.
The indictment alleges that Bankman-Fried and his allies allegedly tried to “further conceal the scheme” by recording “the outgoing wire transfers from Alameda to individuals’ bank accounts for purposes of creating contributions as Alameda ‘loans’ or ‘expenses.'”
The document says that “while employees at Alameda generally tracked loans to executives, the transfers to Bankman-Fried, CC-1, and CC-2 within the months before the 2022 midterm elections weren’t recorded on internal Alameda tracking spreadsheets.” Â
The interior Alameda spreadsheets, nonetheless, “noted over $100 million in political contributions, regardless that FEC records reflect no political contributions by Alameda for the 2022 midterm elections to candidates or PACs.”
An ethics watchdog group has asked the Federal Election Commission to research Bankman-Fried for alleged “serious violations” of election law, citing his admitted contributions of “dark” money to Republican-aligned groups through the 2022 primary season.
A gaggle of FTX entities that’s attempting to claw back contributions made by SBF and others earlier this month announced they’re asking for the return of that cash by “sending confidential messages to political figures, political motion funds, and other recipients of contributions or other payments that were made by or on the direction of the FTX Debtors, Samuel Bankman-Fried or other officers or principals of the FTX Debtors.”
— Additional reporting by CNBC’s Jim Forkin.
