FTX cryptovillain Sam Bankman-Fried charged with bribing Chinese officials
US authorities have charged FTX co-founder Sam Bankman-Fried (aka SBF) with attempting to bribe Chinese officials with $40 million worth of cryptocurrency in exchange for unfreezing trading accounts.
The indictment [PDF] alleges the Chinese government froze over $1 billion worth of Alameda Research digital assets and that after SBF tried to secure access he broke out the checkbook.
The funds were frozen as part of an investigation into an Alameda counterpart. According to the indictment, SBF and others needed the assets to fund additional Alameda trading activity, to try to keep the business going as the proverbial wheels were coming off the FTX wagon.
SBF had publicly proclaimed Alameda was nothing more than a “liquidity provider” to FTX and a “wholly separate entity,” while privately it was given the ability to maintain a negative balance, a multi-billion-dollar line of credit, and could borrow funds without collateral. Alameda’s credit limit at one point was $65 billion.
By November 2022, efforts to keep capital liquid were outpaced by FTX customer withdrawals, at which point FTX halted trading and filed for bankruptcy. Thousands of customers were officially separated from billions of dollars worth of saving and investment capital.
SBF’s arraignment on his new charge of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act is scheduled for Thursday.
According to Reuters, a “not guilty” plea is expected.
Also on Tuesday – the same day SBF’s lucky 13th indictment was revealed – courts set new bail terms that restrict the defendant’s access to electronic devices. The court hopes to control his use of messaging apps and virtual private networks (VPNs), thereby preventing witness tampering.
The former FTX CEO is allowed a monitored laptop, loaded only with select software, and a phone that can only send and receive voice calls and texts over telco networks. No encrypted or ephemeral calling or messaging is allowed, nor is mobile internet.
Among the selected software is password manager service 1password. A VPN can only be used under supervision to access a database while preparing for his defense.
The laptop’s USB ports are to be rendered inoperable.
According to court documents, SBF is prohibited from using “any other cellphones, tablets, computers, videogames (including video game platforms and hardware) that permit chat or voice communication, or ‘smart’ devices with internet access.”
SBF is allowed to access a list of fairly boring pre-approved websites to prepare his defense, and a few for personal use. Unfortunately The Register did not make the cut.
In addition to misappropriating customer funds to plug multi-billion-dollar holes, SBF is accused of making illegal campaign donations to garner political influence. He has denied stealing money, but acknowledges inadequate risk management.
SBF’s charges could earn him over 155 years in prison if convicted. So far, he’s pleaded not guilty to eight criminal counts of fraud and conspiracy, and awaits arraignment on five other counts. He remains out of jail on a $250 million bond and is currently under house arrest at his parents’ Palo Alto home.
The crypto bro is not allowed to use mom and dad’s devices, which are password protected and equipped with monitoring software that photographs the user’s face every five minutes.
The trial is set for October 2. ®
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