The legal troubles of Sam Bankman-Fried, the fallen crypto king, are piling up and getting heavier.
The founder of cryptocurrency exchange FTX, which imploded overnight on November 11, now faces four new criminal charges, according to court documents released on February 23.
In total, SBF, as he is known in crypto space, now faces multiple criminal charges of fraud and conspiracy to steal money from customers of FTX and its sister company Alameda Research, a trading platform and a hedge fund, which also filed for Chapter 11 bankruptcy last November.
The Former Trader Faces Nearly 155 Years in Jail
Bankman-Fried, who was potentially facing 115 years in prison from the first eight criminal charges against him in December, sees this potential sentence rise to nearly 155 years because the four new charges, according to experts.
The new criminal charges focus on how the former trader, who is under house arrest after posting $250 million bail, used funds from FTX and Alameda to build his reputation as "the figurehead of a trustworthy and law-abiding segment of the cryptocurrency industry" and a "savior" of the cryptocurrency industry.
Federal prosecutors accuse him of securities fraud, wire fraud, and multiple conspiracy counts related to wire fraud on FTX customers and Alameda's lenders; illegal campaign contributions; money laundering; operating an unlicensed money transmitting business; and bank fraud.
"We are hard at work and will remain so until justice is done,” said Damian Williams, the U.S. attorney for the Southern District of New York, whose office is investigating the collapse of FTX.
The new charges, unsealed in a superseding indictment, detail Bankman-Fried's rise and his influence at the rate of his political donations. The prosecutors detail an alleged scheme of illegal financing of the political parties set up by SBF within FTX and Alameda.
"From at least in or about 2019, up to and including in or about November 2022, Samuel Bankman-Fried a/k/a 'SBF,' the defendant, corrupted the operations of the cryptocurrency companies he founded and controlled-including FTX.com ("FTX") and Alameda Research ("Alameda")-through a pattern of fraudulent schemes that victimized FTX customers, investors, financial institutions, lenders, and the Federal Election Commission ("FEC")," the prosecutors said in the superseding indictment signed by Williams.
"Exploiting the trust that FTX customers placed in him and his exchange, Bankman-Fried stole FTX customer deposits, and used billions of dollars in stolen funds for a variety of purposes, including, among other things, to support the operations and investments of FTX and Alameda; to fund speculative venture investments; to make charitable contributions; to enrich himself; and to try to purchase influence over cryptocurrency regulation in Washington, D.C. by steering tens of millions of dollars of illegal campaign contributions to both Democrats and Republicans."
'Straw Donors'
Bankman-Fried spokesman Mark Botnick declined to comment. The former crypto king has pleaded not guilty.
Bankman-Fried allegedly used the FTX customer funds to finance his "unlawful political influence campaign, which involved flooding the political system with tens of millions of dollars in illegal contributions to both Democrats and Republicans made in the names of others in order to obscure the true source of the money and evade federal election law," the Justice department said.
He allegedly used two former FTX executives to make the donations. The names of the two executives are not given. The document identifies them as "CC-1" or "coconspirator 1" and "CC-2" or "coconspirator 2."
But data from the Federal Election Commission (FEC) allow us to identify Nishad Singh, ex-FTX director of engineering, as "CC-1," while documents from campaign finance watchdog OpenSecrets show that Ryan Salame, co-CEO of FTX Digital Markets, is the "CC-2."
The contributions were made directly to candidates in the names of those FTX executives, but with FTX and Alameda funds, prosecutors said.
In total, between in or about the fall of 2021 and the November 2022 election, Bankman-Fried and the two FTX executives, "who served as straw donors as part of his scheme-CC-I and CC-2--collectively made millions of dollars in contributions, including in 'hard money' contributions to federal candidates from both major political parties," prosecutors claimed.
The money used to make these political donations originated from Alameda bank accounts, and included funds that had been deposited by FTX customers, they added.
Bankman-Fried and other FTX executives combined to contribute over $70 million toward the 2022 midterm elections, according to campaign finance watchdog OpenSecrets.
The prosecutors managed to obtain the cooperation of two lieutenants of Bankman-Fried in their investigation. Former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty in December to fraud charges and agreed to cooperate.
Singh and Salame have not yet been charged with any wrongdoing.
