Bankman-Fried faces further criminal charges, and is alleged to have hidden political donations

NEW YORK (Reuters) – Sam Bankman Fried was indicted on Thursday with new criminal charges in a broad indictment accusing the founder of bankrupt cryptocurrency exchange FTX of conspiring to make more than 300 illegal political donations.

Bankman Fried now faces 12 criminal charges, including 4 of fraud and eight of conspiracy, down from eight in a previous indictment, in which he pleaded not guilty.

Prosecutors have accused Bankman-Fried of stealing billions of dollars from FTX clients’ funds to plug losses at Alameda Research, a cryptocurrency-focused hedge fund.

And the new charges add to the pressure on the 30-year-old former billionaire, who has seen two of his former top aides plead guilty.

Bankman-Fried is also trying to stay out of jail, after his online activity since his arrest prompted a federal judge to indicate he was willing to cancel his $250 million bail package. His trial is scheduled for October.

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A Bankman-Fried spokesperson declined to comment.

The new indictment said Bankman-Fried conspired with two former FTX executives to donate tens of millions of dollars in order to influence lawmakers to pass legislation in the company’s favor.

Prosecutors said those donations were illegal because they were made from “straw” donors or corporate money, enabling Bankman-Fried — one of the largest donors to the Democrats in the 2022 midterm elections — to evade the contribution restrictions.

Gay donation

Prosecutors said Bankman-Fried directed one executive to donate primarily to left-leaning candidates and organizations and another to Republicans, with many of the Alameda-funded donations including money from FTX clients.

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The indictment said a political consultant working for Bankman-Fried told one of the executives, identified as CC-1, that “being the central left face of our spending means you get up a lot for transactional purposes.”

The indictment states that this manager gave more than $1 million to a LGBTQ+ group at the direction of Bankman Fried.

Federal Election Commission records show that Nishad Singh, former head of engineering for FTX, contributed $1.1 million on July 7, 2022 to the LGBTQ Victory Fund, a national organization dedicated to electing openly LGBTQ people.

The group said in a statement that it had “allocated funds and will take appropriate action as soon as we receive directions from the authorities”.

Singh’s lawyer did not immediately respond to a request for comment.

dream this day

After founding FTX in 2019, Bankman-Fried skyrocketed the value of Bitcoin and other digital assets to realize an estimated fortune of $26 billion.

The exchange collapsed in November amid a wave of customer withdrawals over concerns that the exchange was mixing assets with Alameda.

Prosecutors said that when it became clear that FTX could not honor withdrawal requests, Bankman-Fried directed Alameda to sell the assets to pay clients of the exchange.

The indictment states that on November 6, five days before FTX filed for bankruptcy, Bankman-Fried sent a CC-1 message from Caroline Ellison, then-CEO of Alameda.

“I’ve had a growing dread of the day that’s been weighing on me for so long, and now that it’s already happened, I’m relieved to get through it somehow,” Ellison writes.

Ellison and former FTX technology chief Gary Wang pleaded guilty to fraud charges in December and agreed to cooperate with prosecutors.

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The new charges against Bankman-Fried include conspiracy to commit bank fraud and running an unlicensed money transfer business.

Prosecutors said Bankman-Fried told an unnamed California bank that it wanted to open an account for a trading company, but intended the account to process deposits and withdrawals for FTX customers.

The indictment said the bank had previously told Bankman-Fried that it was unwilling to process such transactions.

Additional reporting by Luke Cohen and Jonathan Stempel in New York; Editing by Mark Porter and Anna Driver

Our standards: Thomson Reuters Trust Principles.

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