TL;DR:
-
Sam Bankman-Fried, former CEO of crypto exchange FTX, has pleaded not guilty to five additional charges related to the collapse of FTX and hedge fund Alameda Research, including bribing a foreign government to unfreeze trading accounts tied to his hedge fund.
-
Bankman-Fried has been paying his defense costs from a multi-million dollar gift he gave his father, funded by a loan from FTX’s trading firm, Alameda Research.
-
Bankman-Fried faces criminal charges related to bank fraud, money laundering, securities fraud, operating an unlicensed money transmitting business, making unlawful political contributions, and bribery.
Sam Bankman-Fried Pleads Not Guilty to Bribery Charges
Sam Bankman-Fried, former CEO of crypto exchange FTX and hedge fund Alameda Research, pleaded not guilty to five additional charges related to the collapse of his former crypto exchange and hedge fund. The U.S. attorney’s office for the Southern District of New York unveiled its third round of criminal charges against Bankman-Fried in a superseding indictment that was unsealed on Tuesday. This time, the focus was on Bankman-Fried allegedly bribing a foreign government.
There was a time everyone saw Sam as the superstar of crypto
Prosecutors allege that Bankman-Fried directed the payment of at least $40 million in cryptocurrency to one or more Chinese government officials in an attempt to unfreeze trading accounts tied to his crypto hedge fund, Alameda Research. Bankman-Fried and his associates tried various methods to unfreeze the accounts, which contained around $1 billion worth of cryptocurrency. After both legal and personal efforts failed, Bankman-Fried agreed to and directed a multimillion-dollar bribe to have the frozen accounts unlocked, prosecutors alleged.
Bankman-Fried’s hedge fund then allegedly used the unfrozen assets to continue to fund Alameda’s loss-generating trades, continuing on what the government says was a fraud upon customers and investors for another year. The onetime crypto billionaire also pled not guilty to charges related to bank fraud, and money laundering, as well as operating an unlicensed money-transmitting business and making unlawful political contributions in the U.S. The 13-count indictment gives details of hundreds of political donations that Bankman-Fried allegedly directed in violation of federal campaign finance laws. Bankman-Fried already pleaded not guilty to eight other counts.
Bankman-Fried Pays Defense Costs with a Multi-Million Dollar Gift to His Father
Sam Bankman-Fried, the former CEO of FTX, has been paying his defense costs from a multi-million dollar gift he gave his father with money borrowed from FTX’s sister company, according to Forbes. Bankman-Fried is accused of misappropriating FTX customer funds through Alameda Research dating back to the exchange’s founding in 2019. Forbes has learned that Bankman-Fried made a large monetary gift to his father, Stanford Law professor Joseph Bankman, in 2021, which was funded by a loan from the exchange’s trading firm, Alameda Research. Bankman-Fried sent the funds to Bankman using his lifetime estate and gift tax exemption, which essentially makes it a tax-free gift.
The gift and loan occurred in 2021 when Bankman-Fried arranged to give money to his father. After receiving at least $10 million from Alameda, Bankman-Fried sent the funds to Bankman using his lifetime estate and gift tax exemption, which essentially makes it a tax-free gift. He contributed the maximum amount someone is allowed to give in their lifetime, which would have been $11.7 million that year, according to sources familiar with the matter.
Bankman-Fried is being represented by a team of powerful attorneys, including Mark Cohen and Christian Everdell of Cohen & Gresser, both former federal prosecutors who were part of a defense team that advised Jeffrey Epstein associate Ghislaine Maxwell, who was convicted in 2021 of sex trafficking a minor. He is also being advised pro bono by criminal defense attorney David W. Mills, a close family friend and colleague of Bankman’s at Stanford.
Bankman, a clinical psychologist and prominent attorney who specializes in the field of tax law, did not respond to a list of questions from Forbes. The gift required Bankman-Fried to file a return with the IRS, which is not a public document.
Bankman-Fried’s parents have reportedly leveraged their own assets to financially support their son, and his lawyers have petitioned the Delaware bankruptcy court for financial assistance. In a motion filed this month, they asked that he be allowed to use millions of dollars in coverage provided by FTX’s insurance policies to help pay for some of his legal costs.
FTX, which collapsed in November 2022 after concerns about their balance sheet turned into a veritable bank run, is now led by new CEO John J. Ray III, a veteran corporate restructuring expert who reportedly charged the company $690,000 in fees for two months of work. Hundreds of lawyers and advisors working on the bankruptcy proceedings have reportedly billed FTX a combined $38 million in expenses.
Bankman-Fried, who once claimed to have just $100,000 in his bank account, has seen his estimated $26.5 billion net worth all but evaporate since his arrest in the Bahamas last December, as much of his wealth was tied up in FTX and its FTT tokens.
Trial Set to Begin in October
The trial of Sam Bankman-Fried is set to begin in October, and he is facing multiple criminal charges related to the collapse of his former crypto exchange FTX and hedge fund Alameda Research. Prosecutors allege that Bankman-Fried directed the payment of at least $40 million in cryptocurrency to one or more Chinese government officials in an attempt to unfreeze trading accounts tied to Alameda Research.
Bankman-Fried was living high with his scam as he was able to live in luxury in the Bahamas
Bankman-Fried’s hedge fund then allegedly used the unfrozen assets to continue to fund Alameda’s loss-generating trades, continuing on what the government says was a fraud upon customers and investors for another year.
Bankman-Fried also faces charges related to bank fraud, and money laundering, as well as operating an unlicensed money-transmitting business, and making unlawful political contributions in the U.S. The 13-count indictment gives details of hundreds of political donations that Bankman-Fried allegedly directed in violation of federal campaign finance laws.
Thanks for reading Solanews , remember to follow our social media channels for more!