According to a new indictment released by US prosecutors on Tuesday, Sam Bankman-Fried the creator of the now-bankrupt FTX crypto exchange paid a $40 million bribe to Chinese authorities in order for them to unfreeze the accounts of his hedge fund. SBF is expected to be arraigned on Thursday before U.S. District Judge Lewis Kaplan in Manhattan federal court.
Bankman-Fried was previously accused by the prosecutors of organizing an unlawful campaign donation scheme to buy influence in Washington, D.C., as well as taking billions of dollars in customer cash to patch losses at his Alameda Research hedge fund.
After being detained in the Bahamas in December and transferred to the US soon after, Bankman-Fried now faces a total of 13 accusations, including one for conspiring to break the Foreign Corrupt Practices Act’s anti-bribery provisions.
A fifth arrest was about to be made in what U.S. Attorney Damian Williams has frequently described as a continuous investigation, according to language in the charge. The indictment claims that there is an unnamed person who collaborated on the bribery scheme with Bankman-Fried and “will be apprehended in the Southern District of New York.”
U.S. District Judge Lewis A. Kaplan banned Bankman-Fried on Tuesday from getting in touch with any current or former workers of FTX or Alameda Research, the company’s linked cryptocurrency hedge fund trading firm. The order further forbids Bankman-Fried from using any other cellphones, laptops, or “smart” gadgets that have internet access as well as restricts him to using only one laptop and phone.
SBF plan to unfreeze accounts
The alleged bribes came from the way Alameda Research was run. According to the accusation, two of China’s top cryptocurrency exchanges had roughly $1 billion in cryptocurrencies in particular Alameda cryptocurrency trading accounts that Chinese law enforcement officials had frozen in early 2021.
According to the accusation, SBF was aware that the accounts had been frozen by Chinese authorities as part of an ongoing investigation of a specific trading counterparty in Alameda.
The accusation stated that Bankman-Fried ultimately consented to direct a multimillion-dollar bribe to try to unfreeze the accounts after numerous attempts over several months, including using lawyers to push, to no avail.
In an attempt to evade freeze orders and transfer cryptocurrency from frozen accounts to fraudulent accounts, the indictment claims that SBF and those under his direction opened new fraudulent accounts on Chinese exchanges using the personal information of several people who were not connected to FTX or Alameda.
In November 2021, a portion of the $40 million cryptocurrency bribe money was transferred from Alameda’s primary trading account to a personal cryptocurrency wallet, and the frozen accounts were unfrozen at the same time, according to the indictment.
In addition, the indictment added that SBF allowed the transfer of further tens of millions of dollars in cryptocurrency to complete the bribe after being informed that the accounts had been unfrozen.
Former Alameda CEO Carolyn Ellison is one among the individuals already accused in the lawsuit. She, along with two former FTX executives who entered into cooperation agreements with the authorities and pled guilty, have consented to testify against SBF.
FTX filed for bankruptcy on Nov. 11, when it ran out of money after the equivalent of a bank run on the global cryptocurrency exchange. SBF has remained free on a $250 million personal recognizance bond that lets him stay with his parents in Palo Alto, California.
He has pleaded not guilty to charges that he cheated investors out of billions of dollars before his business collapsed.