The indictment of Sam Bankman-Fried, the disgraced founder of the now-bankrupt FTX cryptocurrency exchange, expanded on Tuesday when U.S. prosecutors accused him of bribing Chinese officials to unfreeze his company’s accounts in China. The alleged $40 million payment in cryptocurrency occurred in November 2021 after prior, allegedly above-board lobbying efforts failed. Prosecutors claim the bribe resulted in the reinstatement of Alameda Research’s trading accounts, which had been shuttered earlier that year during an investigation into one of the firm’s trading partners.
Bankman-Fried, who now faces a 13-count indictment, is expected to plead not guilty during his arraignment on the new charge on Thursday. He has also been charged with money laundering, fraud, illegal campaign donations, and conspiracy to violate anti-bribery statutes.
Bankman-Fried had previously been accused of stealing billions in customer funds and orchestrating an unlawful campaign donation scheme to buy influence in Washington, D.C.
Sam Bankman-Fried, who gave $5 million to a Biden super PAC to gain access to the White House, paid a $40 million bribe to Chinese authorities. https://t.co/9boG0J7Y91
— Chuck Ross (@ChuckRossDC) March 28, 2023
The indictment highlights Bankman-Fried’s history of using his companies to influence regulators and gain favor with political candidates. He donated tens of millions of dollars to Democratic candidates. He employed other executives to contribute millions more to Republican candidates to build bipartisan support in Washington. Bankman-Fried’s donations provided him access to the White House, where he met with top White House aides to Joe Biden to discuss the regulation of the crypto industry.
He also donated heavily to Senate and House members who oversee the crypto industry, giving more than $300,000 in donations to House Financial Services Committee members. In addition, Bankman-Fried donated $5 million to a pro-Biden political action committee in 2020 and said in June 2022 that he might give another $1 billion to support Democrats in the midterms.
U.S. District Judge Lewis Kaplan approved modifications to Bankman-Fried’s $250 million bail package on Tuesday to prevent him from tampering with witnesses. He remains confined to his parents’ home in Palo Alto, California, before his scheduled trial on October 2. His bail conditions restrict his use of electronics, allowing only a phone without internet capability and a basic laptop with limited functions and monitoring software to track user activity.
Bankman-Fried’s case is part of U.S. prosecutors and regulators’ broader crackdown on alleged malpractice in digital asset exchanges. This follows last year’s decline in the value of Bitcoin and other tokens as central banks raised interest rates. Other recent cases include Do Kwon, the developer of TerraUSD and Luna coins, who was arrested in Montenegro and indicted on fraud charges, and the Commodity Futures Trading Commission’s lawsuit against Binance, the world’s largest crypto exchange, and its founder Changpeng Zhao for executing unauthorized transactions.
As Bankman-Fried’s trial approaches, his case serves as a stark reminder of the escalating regulatory scrutiny faced by the cryptocurrency industry, particularly in the United States. The future of the industry and its key players remains uncertain as the government continues to clamp down on alleged abuses.
