US prosecutors have widened their criminal case against Sam Bankman-Fried, adding new charges and detailing a “series of systems and schemes” through which they allege the FTX founder siphoned off billions of dollars from customer deposits.
The updated indictment, released on Thursday morning, added charges including securities fraud and conspiracy to commit bank fraud. That brought the total number of criminal counts against the former billionaire to 12.
Bankman-Fried was originally charged with eight criminal counts in December 2022 and was extradited from his home in the Bahamas soon afterwards. He has pleaded not guilty to all of the original charges.
The 39-page document details how Bankman-Fried posted “a series of false and misleading tweets” in the days following revelations about a hole in the cryptocurrency exchange’s balance sheet in November. It also claims Bankman-Fried sought to influence politicians of both major US political parties by donating tens of millions of dollars to campaigns.
Some of the more than 300 donations made to Democrats and Republicans were “made in the names of others in order to obscure the true source of the money and evade federal election law”, which allowed Bankman-Fried to “evade contribution limits on individual donations to candidates to whom he had already donated”, the prosecutors alleged.
In one example, Bankman-Fried allegedly authorised a donation of at least $1mn to a congressional candidate running in the 2022 election, who “appeared to be affiliated with pro-LGBTQ issues”.
A political consultant working for Bankman-Fried asked a third party to make the contribution and said: “In general, you being the centre-left face of our spending will mean you giving to a lot of woke shit for transactional purposes,” the prosecutors alleged.
Before FTX’s collapse last year, Bankman-Fried became the de facto face of the crypto industry and had testified before powerful congressional committees. The former FTX chief executive was vocal in his support for crypto-focused legislation in the US and became the second-largest contributor to the Democrats before last year’s midterm elections.
A representative for Bankman-Fried declined to comment.
The new charge sheet includes evidence that appears to come from two of Bankman-Fried’s closest former colleagues — the head of FTX’s trading affiliate Alameda, Caroline Ellison, and FTX co-founder Gary Wang. Ellison and Wang pleaded guilty to criminal charges in December and agreed to co-operate with US prosecutors.
As FTX was collapsing, Bankman-Fried “doubled down on his fraudulent schemes by soliciting billions of dollars in additional capital investments from existing and potential investors in FTX, many of whom he had previously defrauded”, the indictment alleged.
Bankman-Fried sent a falsely labelled balance sheet to investors in November to assure them FTX had the funds to meet withdrawal demands, but which in fact obscured an $8bn hole, the prosecutors said. He had previously devised ways of disguising how FTX money was being used to make investments via Alameda, they alleged.
“Despite representations [Bankman-Fried] made and caused to be made to the contrary, FTX never held customer funds in dedicated accounts for the benefit of customers or segregated from Alameda’s assets,” the indictment alleged.
A trial date has been set for October 2023.
