The founder of the cryptocurrency exchange FTX, Sam Bankman-Fried, is facing a new 13-count indictment, including charges of bribery related to an alleged $40 million bribe to a Chinese government official. The charges stem from a court filing by United States attorney Damian Williams, which alleges that Bankman-Fried and other parties directed the transfer of at least approximately $40 million in cryptocurrency intended for the benefit of one or more Chinese government officials. The transaction was reportedly made in order to influence and induce Chinese officials to unfreeze cryptocurrency accounts at FTX’s affiliate firm, Alameda Research, which held over $1 billion worth of cryptocurrency.
The court filing alleges that Chinese law enforcement authorities froze certain Alameda accounts on “two of China’s largest crypto exchanges” in early 2021. Bankman-Fried was reportedly aware of the freeze and tried numerous methods to unfreeze the accounts, including attempting to transfer cryptocurrency to fraudulent accounts in an effort to circumvent China’s freeze orders. After months of failed attempts to unfreeze the accounts, Bankman-Fried allegedly directed a multi-million-dollar bribe to seek to unfreeze the accounts. After the accounts were unfrozen, Alameda reportedly used the unfrozen cryptocurrency to fund additional Alameda trading activity.
It is unclear which Chinese cryptocurrency exchanges Alameda was using in early 2021, as China officially banned crypto exchanges from providing services in the country back in 2017. However, the court filing alleges that Bankman-Fried was aware of the freeze and attempted to circumvent it through various means.
Bankman-Fried is already facing criminal charges related to the theft of billions of dollars in FTX customer funds facilitated through Alameda Research, as well as alleged illegal political donations. He has pleaded not guilty to eight criminal counts, which could result in 115 years in prison should he be convicted. Bankman-Fried’s trial is set for October 2, 2023.
FTX is a cryptocurrency exchange that was founded in 2019 by Bankman-Fried and Gary Wang. The exchange has quickly become one of the largest in the world, with a daily trading volume of over $10 billion. In addition to its exchange services, FTX also offers a range of other cryptocurrency-related products, including derivatives and tokenized stocks. Alameda Research is an affiliate firm of FTX that engages in quantitative trading and market making. The firm is known for its involvement in the DeFi (decentralized finance) space and has been an active participant in the development of the Solana blockchain.