FTX founder Sam Bankman Fred has been charged with new criminal charges

New York (CNN) Federal prosecutors announced four new criminal charges against Sam Bankman Friedfounder of cryptocurrency trading platform FTX, has expanded his potential liability in what authorities allege is a multibillion-dollar scam.

The new charges, which were revealed in a quashed indictment Thursday, add to the already serious charges the so-called Crypto King faces.

“We are working hard and we will continue to be so until justice is done,” said Damien Williams, US Attorney for the Southern District of New York, whose office is investigating FTX’s collapse.

Bankman-Fried was indicted in December on an eight-count indictment. The 12-count indictment Thursday added four new counts, including conspiracy to operate an unlicensed money transfer business, conspiracy to commit bank fraud, securities fraud, and fraud with respect to the purpose or sale of derivatives.

Prosecutors alleged that Bankman-Fried and others misused customer accounts on the FTX trading platform to support the business operations of sister hedge fund Alameda Research, enrich itself, make venture investments, and try to gain influence with US politicians. Prosecutors say Bankman-Fried raised at least $1.8 billion from investors.

“Defendant, knowing full well FTX — which by early 2022 claimed to be handling approximately $15 billion in daily trading volume on its platforms — was not focused on investor or client protection, nor was it the legitimate business that Bankman-Fried claimed to be.” indictment.

Bankman Fried, which is It was issued on a $250 million bond Under house arrest at his parents’ home in Palo Alto, California, he pleaded not guilty to the charges, which were announced in December. At the time, he was charged with multiple counts of conspiracy, fraud, and conspiracy to violate US campaign finance laws by making illegal political donations.

Bankman-Fried will be arraigned on the new charges at a later date. He now faces a maximum sentence of 155 years in prison, if convicted of all charges against him. Two of his top aides, Gary Wang and Carolyn Ellison, have pleaded guilty to several charges and are cooperating with investigators.

The 39-page indictment lays out the alleged fraud in greater detail than the 14-page indictment unsealed in December when Bankman Fried was arrested in the Bahamas where he was living.

Among the new details is how FTX insiders have reacted after a news organization reported on what appears to be Alameda’s balance sheet, suggesting billions of dollars in assets are concentrated in FTT’s FTX digital token, raising concerns about the stability of FTX and Alameda.

Bankman-Fried and Ellison, at his direction, tweeted allegedly false statements to prevent the collapse of FTT and to try to stop customer withdrawals from FTX.

These efforts failed and FTX faced a bank run. As customers were withdrawing money from their FTX accounts, Ellison messaged Bankman-Fried, “I’ve been in increasing dread of this day that’s been weighing on me for so long, and now that it’s already happened, I feel good about getting it. One way or another.”

“I want to know the truth about the king.”

On November 8, three days before FTX filed for bankruptcy, the General Counsel demanded, in a letter via Signal, the encrypted messaging platform, to Bankman-Fried and other partners, “I need to know the f**king truth about FTX US right now.” On that day, prosecutors claim, FTX suspended customer withdrawals. Despite the suspension, prosecutors allege, Bankman-Fried allowed customers in the Bahamas, where he lived, to withdraw sums amounting to millions of dollars.

Prosecutors allege that Bankman-Fried sought to conceal his activities as FTX was falling apart by communicating with his employees via Signal. Instruct employees to use Signal and set it to automatically delete messages after a period of time.

FTX’s general counsel warned employees to keep records and post them to the company’s Slack channel that FTX would need to shut down. Prosecutors allege that Bankman-Fried deleted the Slack message from the general counsel, continued to use Signal, and deleted some of the tweets.

In the firm’s final days, Bankman-Fried discussed with an in-house attorney a possible legal explanation for the use of client funds. They considered the allegation that Alameda borrowed money from customers who chose FTX’s peer-to-peer borrowing program. The idea was rejected, according to the indictment, because Alameda’s borrowing exceeded the amount of money loaned through the program. Prosecutors allege that Bankman-Fried later publicly adopted this explanation despite admitting privately that it was not supported by the facts.

political donations

The indictment also sheds more light on political donations Made on behalf of FTX employees.

Bankman-Fried made more than 300 illegal political contributions totaling tens of millions of dollars through straw donors using corporate funds, according to prosecutors. The donations were made in the names of two FTX employees identified in the indictments as CC-1 and CC-2. Based on federal and state election files and sources familiar with the matter, CNN has learned that CC-1 is Nishad Singh and CC-2 is Ryan Salame. Lawyers for Singh and Salama could not be reached for comment. Neither Singh nor Salameh have been charged with any wrongdoing.

The personnel were used to give Bankman-Fried a “cover” from appearing too left-leaning or too Republican, and to conceal that the donations were coming from Alameda and FTX, the indictment alleged. It also allowed Bankman-Fried to evade contribution restrictions on individual donations previously made to candidates.

Bankman-Fried wanted to keep Republican contributions “in the dark,” according to the indictment, so those donations were made via an FTX executive identified in the complaint as CC-2, which CNN has learned is Salameh. Salameh has made more than $24 million in political donations to mostly conservative candidates, according to FEC filings.

Prosecutors allege that Singh was chosen as the face of the left-wing donations. Bankman-Fried conspired to contribute “at least $1 million” to a super PAC that was supporting a candidate running for a congressional seat in the United States and appeared to be connected to pro-LGBT issues, the indictment says.

A political consultant working for Bankman-Fried allegedly asked Singh to make the contribution, telling him, “Generally speaking, being the middle left face of our spending means you’re going to give a lot of wake for transactional purposes.”

Prosecutors said Singh expressed unease, but agreed that there was no one “trusted” in FTX. [who was] Bi/gay” is in a position to make the contribution, the new indictment states.

In another case shortly before the 2022 midterm elections, an FTX employee was instructed to send $107,000 from a Bankman-Fried account to the New York State Democratic Committee, but asked to update it to say it was coming from a CC-1, the indictment alleges.

New York state election records show Singh donated $107,000 to the committee on October 28, 2022.

The CEO eventually became one of the top Democratic donors in the 2022 midterm elections, furthering the Bankman-Fried agenda with donations that executives wouldn’t have made on their own, the filing says.

To conceal the donations, the indictment alleged, money was transferred from Alameda to the accounts of FTX employees and then paid out in the form of political donations.

In November 2022, when FTX was experiencing customer withdrawals, Singh allegedly expressed concern to Bankman-Fried in chat messages about “maybe 80 million” in “donations/personal/etc” that had passed through his bank account in his name. The two discussed plans to hide wire transfers, but ultimately did not make the deals that would have hidden the campaign finance scheme, the indictment said.

FTX declared bankruptcy on November 11th.