FTX founder and former CEO Samuel Bankman-Fried is facing four new criminal charges related to allegedly fraudulent conduct related to his cryptocurrency trading platform and an associated hedge fund, according to a superseding indictment that was made public on Feb. 23.
The superseding 12-count indictment added four new charges, including conspiracy to operate an unlicensed money-transmitting business, conspiracy to commit bank fraud, securities fraud, and fraud in the connection of the purpose or sale of a derivative. He was initially charged in December 2022 with multiple counts of conspiracy, wire fraud, and conspiring to violate U.S. campaign finance laws by making illegal political donations.
He pleaded not guilty to the charges that were announced in December.
FTX was founded in 2019 and was controlled by Bankman-Fried, as were several smaller companies, including FTX.US and Alameda Research. He is accused of misappropriating investor funds, moving them between companies to support venture investments, and using the money for unlawful political influence.
According to the court filing, Bankman-Fried became one of the largest reported individual political donors in the 2022 midterm elections. In addition to his public contributions, however, he’s accused of conspiring to have contributions made in the names of two FTX executives.
The indictment didn’t include the executives’ names but stated that one was used to donate to progressive causes, and the other’s name was used to donate to conservative candidates.
The document states that the contributions were made directly to candidates in the names of the executives and were made using funds from FTX and one of its sister companies.
Bankman-Fried is accused of using the alleged scheme to “improve his personal standing in Washington, D.C., increase FTX’s profile, and curry favor with candidates that could help pass legislation favorable to FTX’s or Bankman-Fried’s personal agenda.”
Specifically, the CEO is accused of attempting to influence lawmakers on legislation concerning regulatory oversight of FTX and the cryptocurrency industry.
In order to achieve his goal, Bankman-Fried reportedly arranged for sizeable contributions to be made in favor of candidates from both main political parties and candidates from a range of political viewpoints.
However, since the FTX executive didn’t want his name to be publicly associated with Republican candidates or to be seen as a left-leaning partisan, at times, he concealed his involvement with certain contributions.
At that time, the donations were made through the FTX executives, who allegedly functioned as straw donors.
Court documents appear to indicate that the executives knew about the scheme, citing conversations between one of the donors and a political consultant working for Bankman-Fried.
The donor making contributions to progressive candidates, identified in the documents as CC-1, was told to make a contribution of at least $1 million to a super PAC supporting LGBT issues.
The document states that although CC-1 showed hesitation about making the donation under his name, he acknowledged that there was no one “trusted at FTX [who was] bi/gay” in a position to make the donation, so he eventually complied.
CC-1 made the contribution to the PAC under the direction of Bankman-Fried and others, and before the end of the midterm elections, CC-1 became one of the largest Democratic donors of the election cycle, at least in name.
Likewise, the other executive, referred to as CC-2, was publicly aligned with conservatives and reportedly made donations at Bankman-Fried’s request.
Bankman-Fried and his accomplices made more than 300 political donations totaling tens of millions of dollars that were illegal because of the use of corporate money or the use of straw donors, according to court documents.
By using straw donors, the defendant avoided contribution caps on individual contributions to candidates he was already supporting. With this fraudulent activity, Bankman-Fried and his accomplices are accused of inducing campaigns and PACs to disclose false information to the FEC, which hindered and hampered the FEC’s reporting and enforcement operations.
One of FTX’s sister companies, Alameda, noted more than $100 million in political contributions, even though FEC records reflect no political contributions by Alameda for the 2022 midterm elections to candidates or PACs.
