U.S. prosecutors have unveiled a new indictment against Sam Bankman-Fried, the founder of the now-bankrupt FTX cryptocurrency exchange. Bankman-Fried now faces a 13-count indictment, including a new bribery conspiracy charge, for the November collapse of FTX. The charge accuses Bankman-Fried of paying a $40 million bribe to Chinese officials to unfreeze his hedge fund’s accounts.
The indictment stated that Bankman-Fried authorized a transfer of tens of millions of dollars of additional cryptocurrency in November 2021 to “complete” the bribe. Prosecutors claim that Bankman-Fried ordered the $40 million cryptocurrency payment to a private wallet from Alameda’s main trading account to persuade Chinese government authorities to unfreeze Alameda accounts with more than $1 billion of cryptocurrency. Alameda accounts had been frozen as part of an investigation into an unnamed Alameda counterparty, and Bankman-Fried’s prior efforts to lobby Chinese officials to lift the freeze were unsuccessful.
Bankman-Fried has denied stealing money but acknowledged inadequate risk management at FTX. He 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. However, three former members of his inner circle have pleaded guilty and agreed to cooperate with prosecutors.
Impact on the Crypto Industry
Bankman-Fried’s case is part of an escalating crackdown on alleged abuses at digital asset exchanges by U.S. prosecutors and regulators, following last year’s plunge in the values of Bitcoin and other tokens as central banks raised interest rates. The crypto industry has faced increasing scrutiny from regulators, and these charges against Bankman-Fried could further damage the industry’s reputation.
Last Thursday, Do Kwon, whose Terraform Labs developed the TerraUSD and Luna coins that crashed last May, was arrested in Montenegro while carrying alleged bogus travel documents, as a Manhattan grand jury indicted him on fraud charges. On Monday, the Commodity Futures Trading Commission sued Binance, the world’s biggest crypto exchange, and its founder Changpeng Zhao for executing unauthorized transactions. These cases indicate a growing trend of regulators and law enforcement cracking down on cryptocurrency-related fraud and illegal activities.
Sam Bankman-Fried, the founder of FTX cryptocurrency exchange, is facing a new bribery conspiracy charge for allegedly paying $40 million to Chinese officials. The charge adds to the pressure on Bankman-Fried, who already faces a 13-count indictment. This case is part of an escalating crackdown on alleged abuses at digital asset exchanges by U.S. prosecutors and regulators, which could further damage the crypto industry’s reputation. The trial is scheduled for October 2, and it remains to be seen how the case will affect the industry and its players.