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Sam Bankman-Fried charged with paying $40M bribe to China

The embattled FTX founder is accused of paying "one or more" Chinese officials to unfreeze assets linked to his hedge fund, Alameda Research.
Sam Bankman-Fried charged with paying $40M bribe to China
Posted at 5:53 PM, Mar 28, 2023

Federal prosecutors added a 13th criminal charge Tuesday against embattled FTX founder Sam Bankman-Fried.

newly unsealed indictment accuses Bankman-Fried of bribing "one or more Chinese government officials" with $40 million in an effort to unfreeze assets belonging to his failed cryptocurrency hedge fund, Alameda Research. 

The two accounts he was attempting to recover contained a combined $1 billion in cryptocurrency, according to the indictment.

In 2021, Chinese law enforcement froze certain Alameda trading accounts as part of an ongoing investigation into a particular Alameda trading counterparty, the indictment said. 

After multiple failed attempts to fraudulently recover the accounts, Bankman-Fried allegedly directed $40 million be transferred from Alameda's main trading account to a private cryptocurrency wallet. Around the time of the transfer, the two accounts were unfrozen and Alameda used the freshly released cryptocurrency to fund additional trades, the indictment said.

Bankman-Fried was arrested in the Bahamas in December of last year and extradited to the U.S., where he pleaded not guilty to numerous charges, including fraud, money laundering, and campaign finance violations. 

SEE MORE: FTX founder Sam Bankman-Fried pleads not guilty to fraud

He's accused of diverting billions of dollars from FTX investors to Alameda, where he placed risky bets on the markets, made private investments, bought lavish real estate, and donated millions to politicians, among other things. 

In November 2022, the equivalent of a bank run pushed FTX — the world's third-largest cryptocurrency exchange — and its affiliated hedge fund Alameda into bankruptcy.

Bankman-Fried stepped down from FTX and John Ray was appointed as the new CEO.

During a hearing before the House Financial Services Committee in December, Ray described Bankman-Fried's actions as "plain old embezzlement" and said FTX was doomed to fail.

Bankman-Fried was released from federal custody on a $250 million bond in December, allowing him to live at his parents' home in California and be monitored electronically until his scheduled criminal trial in October.

An arraignment on the newly unsealed indictment was scheduled for Thursday. 

U.S. District Judge Lewis A. Kaplan, who's overseeing the case, banned Bankman-Fried from communicating with any current or former employees of FTX and Alameda Research. The order also forbids him from using more than one laptop and cell phone as the case proceeds.


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