The disgraced crypto king faces four new criminal charges from prosecutors.
The legal problems of Sam Bankman-Fried, the fallen crypto king, are piling up and getting heavier.
The founder of cryptocurrency exchange FTX, which crashed overnight on November 11, now faces four new criminal charges, according to court documents published on February 23.
In all, SBF, as it is known in the crypto space, now faces multiple criminal charges of fraud and conspiracy to steal money from clients of FTX and its sister company Alameda Research, a trading platform and hedge fund, which also filed for to Chapter 11. bankruptcy last November.
The former trader faces nearly 155 years in jail
Bankman-Fried, who was potentially facing 115 years in prison for the first eight criminal charges against him in December, sees this potential sentence increase to nearly 155 years because of the four new charges, experts say.
The new criminal charges center on how the former merchant, who is under house arrest after posting $250 million bail, used funds from FTX and Alameda to build his reputation as “the figurehead of a trusted and law-abiding segment of the cryptocurrency industry” and a “savior” of the cryptocurrency industry.
Federal prosecutors charge him with securities fraud, wire fraud and multiple counts of conspiracy related to the wire fraud of FTX customers and Alameda lenders; illegal campaign contributions; money laundering; operating a money transmission business without a license; and bank fraud.
“We are working hard and we will continue to do so until justice is served,” said Damian Williams, US Attorney for the Southern District of New York, whose office is investigating the FTX collapse.
The new charges, revealed in a substitute accusation, details the rise of Bankman-Fried and his influence by reason of his political donations. Prosecutors detail an alleged illegal party financing scheme set up by SBF inside FTX and Alameda.
“From at least about 2019, up to and including November 2022, Samuel Bankman-Fried a/k/a ‘SBF’, the defendant, corrupted the operations of the cryptocurrency companies he founded and controlled, including FTX.com (“FTX “) and Alameda Research (“Alameda”), through a pattern of fraudulent schemes that victimized FTX’s customers, investors, financial institutions, lenders and the Federal Election Commission (“FEC”),” prosecutors said in The superseding charge signed by Williams.
“Leveraging the trust that FTX clients placed in him and his exchange, Bankman-Fried stole FTX client deposits and used billions of dollars in stolen funds for a variety of purposes, including, but not limited to , to support the operations and investments of FTX and Alameda; to finance speculative venture investments; to make charitable contributions; to enrich themselves; and to try to buy influence over cryptocurrency regulation in Washington, DC, directing tens of millions of dollars into illegal campaign contributions for both Democrats and Republicans.”
‘Straw donors’
Bankman-Fried spokesman Mark Botnick declined to comment. The former king of cryptocurrencies has pleaded not guilty.
Bankman-Fried allegedly used FTX client funds to finance its “illegal political influence campaign, which involved flooding the political system with tens of millions of dollars in illegal contributions to both Democrats and Republicans made on behalf of others to obscure the true source of the money and evading federal election law,” the Justice Department said.
He allegedly used two former FTX executives to make the donations. The names of the two executives are not given. The document identifies them as “CC-1” or “co-conspirator 1” and “CC-2” or “co-conspirator 2.”
But Federal Election Commission (FEC) data allows us to identify Nishad Singh, former FTX engineering director, as “CC-1,” while campaign finance watchdog OpenSecrets documents show Ryan Salame, Co-CEO of FTX Digital Markets, he is the “CC-2”.
The contributions were made directly to the candidates on behalf of those FTX executives, but with funds from FTX and Alameda, prosecutors said.
In all, between or around the fall of 2021 and the November 2022 election, Bankman-Fried and the two FTX executives, “who served as fictitious donors as part of their plan, CC-I and CC-2 , collectively earned millions of dollars in contributions, including ‘hard money’ contributions to federal candidates from both major political parties,” prosecutors stated.
The money used to make these political donations originated from Alameda bank accounts and included funds that had been deposited by FTX clients, they added.
Bankman-Fried and other FTX executives have combined to contribute more than $70 million for the 2022 midterm elections, according to campaign finance watchdog OpenSecrets.
Prosecutors were able to obtain the cooperation of two Bankman-Fried lieutenants in their investigation. Former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty in December to fraud charges and agreed to cooperate.
Singh and Salame have yet to be charged with any crimes.
