Bankman-Fried accused of offering $40 million in bribes to Chinese officials

FTX founder Sam Bankman-Fried leaves the courthouse. (Photo by Ed JONES / AFP)

FTX founder Sam Bankman-Fried leaves the courthouse. (Photo by Ed JONES / AFP)

Published Mar 29, 2023


Sam Bankman-Fried, the disgraced founder of the collapsed crypto exchange FTX, has been accused of conspiring to bribe "one or more" Chinese officials with at least $40 million in payments, according to an indictment unsealed Tuesday morning.

Prosecutors allege the purpose of the bribes was to persuade at least one Chinese government official to unfreeze accounts that held more than $1 billion in funds from his trading firm, Alameda Research.

Prosecutors in the Southern District of New York on Tuesday unsealed an indictment that adds the bribery conspiracy charge to a dozen others already leveled against Bankman-Fried, including fraud, money laundering and making illegal campaign contributions. Prosecutors have alleged that Bankman-Fried led an effort to use millions of dollars in FTX customer money to make political donations, prop up his trading firm, and enrich himself.

Since his arrest, Bankman-Fried has fiercely denied the allegations. He declined to comment through his spokesman, Mark Botnick.

In the updated indictment unsealed on Tuesday, prosecutors say Bankman-Fried initiated a campaign to access Alameda accounts frozen in early 2021 on two China-based crypto exchanges during a Chinese government investigation into an entity on the other side of some Alameda trades.

Prosecutors allege that Bankman-Fried tried several different methods to retrieve the more than $1 billion, including hiring attorneys to lobby Chinese authorities to return the funds and trying to transfer the money into accounts that appeared to be unassociated with his companies. When that didn't work, prosecutors allege, Bankman-Fried in November 2021 sought to bribe at least one Chinese official, directing Alameda employees to place some $40 million to a private cryptocurrency wallet.

After the accounts were unfrozen, Bankman-Fried authorized the transfer of "additional tens of millions of dollars in cryptocurrency to complete the bribe," according to the indictment. It also alleges that Bankman-Fried used the unfrozen funds to continue trading through Alameda.

The new charge against Bankman-Fried comes during a tumultuous month for the crypto industry, as prosecutors and regulators have targeted some of the industry's biggest names. On Monday, the Commodity Futures Trading Commission sued Binance, the world's largest crypto exchange, along with its founder Changpeng Zhao, a rival of Bankman-Fried. The agency alleges, among other things, that Binance circumvented U.S. regulations and failed to implement measures meant to curb illegal activity like terrorist financing and money laundering. Binance and Zhao denied the allegations.

Last week, prosecutors unsealed fraud charges against Do Kwon, the founder of Terraform Labs, shortly after his arrest in Montenegro.

In December, Bankman-Fried was arrested in the Bahamas and accused of multiple crimes including fraud, conspiracy and violations of campaign finance laws. He was hit with four more charges in February, as prosecutors detailed how they believe Bankman-Fried misused customer funds and funneled millions of dollars in contributions to certain Democrats and Republicans.

The sweeping criminal case against Bankman-Fried followed the November collapse of FTX, the crypto exchange he founded and cast as a beacon of reliability in the emerging and volatile crypto market. Once estimated to be worth $16 billion, Bankman-Fried has said his wealth has all but vanished, while the scores of investors who had held money on the exchange are trying to claw back their funds as FTX wades through Chapter 11 bankruptcy.

Released from prison after posting a $250 million secured bond, Bankman-Fried is confined to his parents' home on the Stanford University campus as he awaits his trial. Prosecutors and Bankman-Fried's lawyers have debated to what extent the former crypto executive should access the internet, as prosecutors in January alleged that Bankman-Fried had contacted a current FTX employee via an encrypted messaging app, which they said may "constitute witness tampering."

On Tuesday, Judge Lewis A. Kaplan ruled that Bankman-Fried will be restricted from using encrypted messaging apps and is barred from contacting current or former FTX employees unless his attorneys are present. He must also give up his old laptop and phone, and can only access the internet through a new laptop and phone, which will be monitored. Bankman-Fried will be able to access certain websites to assist with his defense, as well as a variety of news and sports websites for his personal use.