Sam Bankman-Fried, disgraced founder and former CEO of failed cryptocurrency exchange FTX, pleaded not guilty in New York federal court to four new charges added as part of a superseding indictment in February, and one additional charge added on March 28 for conspiring to bribe the Chinese government officials.
FTX Founder Bankman-Fried Pleads Not Guilty to All Criminal Charges
Mark Cohen, the attorney representing Bankman-Fried, said that his client has entered a not-guilty plea and plans to file a motion in the United States District Court for the Southern District of New York to not charge the FTX co-founder on all the counts. Cohen also argued that under the U.S.-Bahamas treaty, a person extradited can only be prosecuted on the charges they were tried for.
Bankman-Fried was arrested by the Bahamas Police at his $40 million penthouse apartment in Nassau on December 13 and was extradited to the United States to face criminal charges on December 21.
SBF Accused of Bribing Chinese Officials to Unfreeze His $1 Billion Crypto Trading Account
The former billionaire had previously pleaded not guilty to eight other charges, including conspiracy to conduct wire fraud and securities fraud, which were done during his time at the helm of FTX, once the world’s third-largest cryptocurrency exchange by trading volume.
On Tuesday, the U.S. Attorney’s office for the Southern District of New York filed a 13th criminal charge against SBF in another superseding indictment, accusing him of bribing foreign government officials.
Federal prosecutors allege that Bankman-Fried made a payment of at least $40 million in cryptocurrency to one or more Chinese government officials in an attempt to unfreeze trading accounts belonging to his hedge fund Alameda Research. It is reported that the account held more than $1 billion worth of digital assets.
According to the prosecution, Chinese law enforcement froze the Alameda accounts on two of China’s largest crypto trading platforms in 2021. Bankman-Fried and his associates were aware of the seizure and tried “numerous methods” to unfreeze the accounts. In one instance, the con man even tried to transfer the crypto funds to fraudulent accounts to go around China’s freeze orders.
It is unclear which crypto exchanges were used by Alameda for the purpose because China had officially banned crypto exchanges from operating in the country back in 2017.
The court filing read that after months of failed attempts to unfreeze the accounts, Bankman-Fried and his partners “agreed to and directed” a multi-million dollar bribe to get access to the locked funds. SBF transferred $40 million in cryptocurrency to the wallets of the Chinese officials, after which the accounts were unfrozen. According to the indictment, the payment was made from Alameda’s main trading account to a private crypto wallet.
The Alameda Research co-founder then directed the company to use the $1 billion to fund its trading activities.
There were also allegations of conspiracy to conduct bank fraud and violations of federal political campaign financing laws. SBF is said to have started a dummy company to acquire loans from a bank to finance his fraudulent activities. When investigated, it was found that the company had no registered employees or businesses.
Bankman-Fried is also well-known to donate to charities and political campaigns. He bribed politicians that were involved in creating regulations for the crypto industry in the United States and also lawmakers that were investigating his firms for wrongdoings.
Until its demise, FTX was one of the most popular crypto exchanges in the world. At its height, the company was valued at $32 billion, helping prop Bankman-Fried as a billionaire and the prodigal son of the crypto industry.
However, things came crashing down in November after it was revealed that SBF was moving customer deposits from the exchange to Alameda Research, a crypto hedge fund and market maker that conducted all trades, to make risky bets outside of his companies and also buy political influence in America.
The platform reportedly mismanaged $10 billion worth of customer and investor funds and defrauded clients by misleading them to purchase a fraudulent crypto token called FTT which had no utility outside of the exchange. FTT, which dominated the $14 billion reserves of Alameda, was propped up by Bankman-Fried and his companies as a valuable and legit security.
Both FTX and Alameda Research filed for Chapter 11 bankruptcy on November 11 after failing to raise capital to save themselves. Crypto exchange Binance had initially reached an agreement to purchase FTX’s U.S. assets before its insolvency but decided against it after reviewing the company’s finances.
Binance CEO Chanpeng ‘CZ’ Zhao ordered his company to sell off its $2 billion FTT holdings which it had received as a goodwill token for being an early investor in FTX back in 2019.
Federal prosecutors had declared that the FTX scandal was the single greatest financial fraud scheme undertaken by any American company in history. Bankman-Fried, who plead not guilty to all 13 criminal charges against him, is currently out on bail and under house arrest at his parent’s home in California. He is set to face trial on October 13, 2023, and if convicted, could face up to 115 years in federal prison.