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Sam Bankman-Fried, founder of the now-bankrupt cryptocurrency exchange FTX, is alleged to have bribed Chinese officials with tens of millions of dollars in order to regain access to assets, according to a 13-count federal indictment filed Tuesday.
Prosecutors from the Southern District of New York accuse Bankman-Fried, known as "SBF," of authorizing and directing a bribe of at least $40 million to one or more Chinese officials "in or about 2021." It was allegedly done to influence and induce one or multiple Chinese officials to unfreeze his hedge fund Alameda Research's accounts, which contained more than $1 billion in cryptocurrency. The accounts were unfrozen after payment was transferred.
"Bankman-Fried and others sought to regain access to the assets to fund additional Alameda trading activity, in order to assist Bankman-Fried and Alameda in obtaining and retaining business," the indictment states.
The accounts were released after the payment was transferred from Alameda's main trading account to a private cryptocurrency wallet, according to the indictment.
Things began to unravel for Bankman-Fried in November when Alameda's balance sheet was leaked and revealed that solvency was dependent on FTX's digital currency, FTT, "which was illiquid and difficult to value," prosecutors said.
When "substantial numbers" of FTX customers began seeking withdrawals, Bankman-Fried allegedly tried to reassure them and slowed the withdrawal process "with what he knew were false public claims about the ability of FTX to repay customer deposits, the security of FTX's assets, and the status of Alameda's balance sheet."
"In a last-ditch effort to secure sufficient liquid capital to satisfy FTX customer withdrawals, SBF 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 states.
The 31-year-old was arrested in December in the Bahamas after U.S. prosecutors filed criminal charges. He pleaded not guilty to eight counts related to FTX's collapse.
Over 150 members of Congress who had received funds from FTX began to return them after Bankman-Fried's arrest and the downfall of the company. He had donated about $45.6 million to various political causes across Washington, D.C., including nearly $150,000 to individual candidates.
As of late February of this year, a few bipartisan House lawmakers and nearly two dozen senators had not refunded donations from top figures connected to the FTX scandal. It was unclear whether that was due to instruction from the Department of Justice on how to proceed.
FTX executive Nishad Singh, who pleaded guilty to federal charges February 28, made several financial contributions to multiple Democratic House and Senate candidates in the 2022 midterm cycle, including many in contested races including Arizona's Mark Kelly, Pennsylvania's John Fetterman, Washington's Patty Murray, Nevada's Catherine Cortez-Masto and New Hampshire's Maggie Hassan.
Two other former SBF business partners, Gary Wang and Caroline Ellison, have also pleaded guilty.
Judge Lewis A. Kaplan on Tuesday approved a modification to Bankman-Fried's bail terms, restricting internet access and only allowing the use of a virtual private network for the purpose of preparing his defense via a laptop provided by his lawyers, CNN reported.
He is currently under strict house arrest at his parents' residence in Palo Alto, California.
A court hearing is scheduled for 11 a.m. Thursday.
Newsweek reached out to Bankman-Fried's attorneys and the Chinese government for comment.
Update 03/28/23 12:57 p.m. ET: This article was updated with additional information.
About the writer
Nick Mordowanec is a Newsweek investigative reporter based in Michigan. His focus includes U.S. and international politics and policies, immigration, ... Read more