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FTX founder Sam Bankman-Fried indicted on four new charges

By Ben Marquis
|
February 24, 2023

Samuel Bankman-Fried, also known as SBF, the former head of cryptocurrency exchange FTX and other related affiliates, including Alameda Research, was already under federal indictment for an array of criminal charges in a massive fraud scheme.

Bankman-Fried's trouble just grew exponentially worse as a superseding indictment was just issued that added another four criminal charges to the eight counts already against him, according to the Associated Press.

Already facing up to 115 years in prison if convicted on the eight initial counts, he could now be sentenced to up to 155 years behind bars if convicted on the four additional counts as well.

Total of 12 criminal counts ... for now

According to a Department of Justice press release in December 2022, Bankman-Fried was indicted on eight counts that included "conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations."

The new charges include counts of conspiracy and actual fraud committed with regard to derivatives and securities transactions, defrauding lenders and banks, and operating an unlicensed money-transmitting business.

At the time of the initial indictment, the U.S. Attorney for the Southern District of New York, Damian Williams, said in part in a statement, "As today’s charges make clear, this was not a case of mismanagement or poor oversight, but of intentional fraud, plain and simple."

Now, with respect to the additional charges, and perhaps alluding to even more counts in the future, per the AP, Williams said, "We are hard at work and will remain so until justice is done."

Massive fraud and theft scheme

The 39-page superseding indictment laid out in great detail the intricate scheme that Bankman-Fried, along with certain associates and co-conspirators, developed from 2019 to 2022 to defraud customers, investors, banks, lenders, and federal regulatory agencies, among others.

At the center of the fraudulent scheme was the FTX cryptocurrency exchange and its affiliates as well as a supposedly separate hedge fund known as Alameda Research that in reality was also owned and operated by Bankman-Fried and was deeply leveraged and in debt to FTX, as co-mingled and stolen funds were "loaned" back and forth between the two.

Bankman-Fried is alleged to have essentially stolen billions of dollars in FTX customer assets that he then used to finance and support the investments and operations of both FTX and Alameda, fund risky investments, make charitable donations and political contributions, and enrich himself.

A "multimillion-dollar political influence campaign"

Bankman-Fried was denoted as the top political contributor in 2022 and is alleged to have contributed at least $70 million to various political organizations, elected politicians, and candidates as part of a "multimillion-dollar political influence campaign" that involved an "illegal straw donor scheme" designed to conceal that the donations were coming from him, or more accurately, the funds stolen from his customers and investors, per CNBC.

According to the indictment, Bankman-Fried and his co-conspirators "made over 300 political contributions, totaling tens of millions of dollars, that were unlawful because they were made in the name of a straw donor or paid for with corporate funds."

The bulk of those contributions went to Democrat-aligned groups and individuals, but some also went to Republicans as well -- the key connector being the involvement of those politicians in cryptocurrency regulation -- and Bankman-Fried enlisted the help of two co-conspirators to secretly make those "dark" donations to far-left Democrats and Republicans on his behalf.

While the indictment didn't name the two alleged co-conspirators, CNBC reported that their identities have been independently confirmed through reviews of FEC filings and other public information, with the Democratic contributor being then-FTX Director of Engineering Nishad Singh and the Republican donor being the then-co-CEO of FTX Digital Markets Ryan Salame -- neither of whom have been charged with any crime.

Out on bond ... for now

Bankman-Fried had previously pleaded not guilty to the initial eight counts against him and, after being arrested in the Bahamas and extradited back to the U.S., was released on a $250 million personal recognizance bond, according to the AP.

However, the judge in his case has suggested that the bond could be revoked and Bankman-Fried could be jailed ahead of trial over concerns that he may attempt to improperly communicate with associates and co-conspirators or tamper with witnesses.

Meanwhile, according to CNBC, two of Bankman-Fried's closest associates, FTX co-founder Gary Wang and Alameda CEO Caroline Ellison, have already pleaded guilty to multiple counts of fraud and other crimes and have agreed to cooperate with the prosecution against the man behind the entire fraudulent scheme.