FTX founder charged for paying $40 million bribe to Chinese officials

FTX founder charged for paying $40 million bribe to Chinese officials

The charge also contains language that indicates a possibility that a fifth arrest was imminent in what U.S. Attorney Damian Williams has repeatedly described as a continuing investigation.

FPJ Web DeskUpdated: Wednesday, March 29, 2023, 12:26 PM IST
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FTX founder charged for paying $40 million bribe to Chinese officials | Image: Wikipedia

FTX founder Sam Bankman-Fried was charged for directing $40 million in bribes to Chinese officials to unfreeze assets relating to his cryptocurrency business in a newly rewritten indictment unsealed Tuesday.

The number of charges Bankman-Fried faces after he was arrested in the Bahamas in December increased to 13 including the recent charge of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act.

The indictment was returned on Monday.

Possible 5th arrest

The charge also contains language that indicates a possibility that a fifth arrest was imminent in what U.S. Attorney Damian Williams has repeatedly described as a continuing investigation.

According to the indictment, the unidentified individual participated in the bribery conspiracy with Bankman-Fried and is expected to be arrested in the Southern District of New York.

Bankman-Fried has remained free on a $250 million personal recognisance bond that allows him to stay with his parents in Palo Alto, California. He has pleaded not guilty to the charges that he cheated investors out of billions of dollars before his business collapsed.

A spokesperson for Bankman-Fried's lawyers on Tuesday said they had no comment to The Associated Press.

An arraignment on the rewritten indictment was set for Thursday by U.S. District Judge Lewis A. Kaplan. Bankman-Fried has also been banned from communicating with current or ex-employees of FTX or Alameda Research, its affiliated cryptocurrency hedge fund trading firm.

The order also permits Bankman-Fried to access one laptop and phone but it bans him from encrypted communications or other cellphones, computers, or "smart" devices with internet access.

Bribe to Chinese officers

The alleged bribes stemmed from the operation of Alameda Research.

According to the indictment, Chinese law enforcement authorities in 2021 froze Alameda cryptocurrency trading accounts containing about $1 billion in cryptocurrency on two of China's largest cryptocurrency exchanges. The FTX founder understood that the accounts had been frozen by Chinese authorities as part of an ongoing probe of a particular Alameda trading counterparty and after he failed to unfreeze the accounts he ultimately agreed to direct a multimillion dollar bribe to try to unfreeze the accounts.

The indictment also added that Bankman-Fried directed others to open new fraudulent accounts on the Chinese exchanges using personal identifying information of individuals unaffiliated with FTX or Alameda to try and move cryptocurrency from frozen accounts to the fraudulent accounts.

In November 2021 a portion of the bribe payment of cryptocurrency of about $40 million, was moved from Alameda's main trading account to a private cryptocurrency wallet and the frozen accounts were unfrozen at about the same time.

The indictment said that after he received confirmation that the accounts were unfrozen, he authorized the transfer of additional tens of millions of dollars in cryptocurrency to complete the bribe.

FTX executives agree to testify against Bankman-Fried

Carolyn Ellison, Alameda's former chief executive, is already charged in the case and has agreed to testify against Bankman-Fried, as have two former FTX executives who have pleaded guilty in cooperation deals with the government.

Messages for comment were sent to the Chinese consulate in New York and the Chinese embassy in Washington, D.C.

With inputs from PTI

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