New York (CNN) Federal prosecutors announced four new criminal charges Sam Bankman-RoastThe founder of crypto trading platform FTX is expanding his potential liability in what authorities allege is a billion-dollar fraud.
The new charges, unsealed in a retrial indictment on Thursday, add to the already serious charges facing the so-called crypto king.
“We are working hard and will remain so until justice is served,” said Damian Williams, the U.S. attorney for the Southern District of New York, whose office is investigating FTX’s collapse.
Bankman-Fried was indicted in December on an eight-count indictment. Thursday’s 12-count indictment added four new charges, conspiracy to operate an unlicensed money laundering business, bank fraud, securities fraud and forgery in connection with the intent or sale of a derivative.
Prosecutors say Bankman-Fried and others misused client accounts at FTX to improve the business operations of sister hedge fund Alameda Research, enrich itself, make venture investments and buy influence with U.S. politicians. Prosecutors say Bankman-Fried raised at least $1.8 billion from investors.
“Defendant, well aware of FTX — which by early 2022 said it handled approximately $15 billion in daily trades on its platforms — was not focused on investor or customer protection, nor was Bankman-Fried a legitimate business,” the indictment states.
Bankman-Fried, who Issued in $250 million bond and under house arrest at his parents’ Palo Alto, Calif. home, pleaded not guilty to the charges announced in December. At the time he was charged with conspiracy, wire fraud and conspiracy to violate US campaign finance laws through illegal political donations.
Bankman-Fried will be heard on the new charges at a future date. He now faces a maximum sentence of 155 years in prison if convicted on all counts. Two of his top lieutenants, Gary Wang and Carolyn Ellison, have pleaded guilty to multiple charges and are cooperating with investigators.
The 39-page superseded indictment details the alleged fraud in more detail than the 14-page indictment unsealed in December when Bankman-Fried was arrested in the Bahamas, where she lived.
Among the new details is how FTX’s insiders reacted after a news agency appeared to index Alameda’s balance sheet, indicating that billions of dollars in assets are amassed in FTX’s digital token, FTT.
Bankman-Fried and Ellison, at her direction, tweeted false statements to prevent FTT’s collapse and customer withdrawal from FTX.
Those efforts failed and FTX faced a run on the bank. As clients withdraw money from their FTX accounts, Ellison texted Bankman-Fried, “I’ve been dreading this day for a long time, and now it’s actually happening, and it’s great to get it over with. One way or another.”
‘I want to know the f**king truth’
On Nov. 8, three days before FTX filed for bankruptcy, the general counsel said in a message to Signal, an encrypted messaging platform, Bankman-Fried and other associates, “I need to know the f**king truth about FTX US right now.” Prosecutors allege that on that day, FTX stopped receiving customer withdrawals. Despite the suspension, prosecutors allege, Bankman-Fried allowed millions of dollars in withdrawals from clients in the Bahamas, where she lived.
Prosecutors allege that Bankman-Fried tried to cover up her activities as FTX was unraveling by communicating with her employees via signal. He advised employees to use Signal and set it to automatically delete messages after a certain period of time.
FTX’s general counsel posted on a company’s Slack channel that FTX should be shut down, warning employees to protect records. Bankman-Fried, prosecutors allege, deleted that Slack message from the general counsel, continued to use the signal, and deleted some tweets.
In the company’s waning days, Bankman-Fried discussed a possible legal explanation for the use of client funds with an in-house attorney. They considered Alameda’s claims to have taken loans from customers who chose FTX’s peer-to-peer lending program. According to the indictment, the idea was rejected because Alameda’s loan exceeded the amount of money provided through the program. Prosecutors allege that Bankman-Fried later publicly accepted that explanation, despite privately admitting the facts did not support it.
Political donations
The charge sheet sheds more light Political donations Created in the name of FTX employees.
According to prosecutors, Banker-Fried made more than 300 illegal political contributions. The donations were made in the names of two FTX employees identified in the chargesheet as CC-1 and CC-2. Individuals were used to “cover” Bankman-Fried, appearing too left-leaning or aligning herself with Republicans, and concealing that the donations were coming from Alameda and FTX, the indictment alleges. This allowed Bankman-Fried to avoid contribution limits on personal donations she already made to candidates.
SBF wanted to keep Republican contributions “dark,” according to the indictment, so those donations were made through an FTX executive identified in the indictment as CC-2, who publicly aligned himself with conservatives.
CC-1 was chosen to be the face of left-leaning donations, the indictment alleges. Bankman-Fried conspired to contribute “at least one million dollars” to a super PAC supporting a candidate running for United States Congress and appearing to be associated with pro-LGBTQ issues, the indictment states.
A political consultant working at Bankman-Fried asked CC-1 to make a contribution, telling him, “Generally, because you’re the center-left face of our spending, that means you’re giving a lot of awareness for transactional purposes.”
CC-1 expressed discomfort, the indictment alleges, but admitted that “there was no one trustworthy at FTX.” [who was] Bi/homosexual” while contributing, the new indictment says.
On another occasion, shortly before the 2022 midterm elections, an FTX employee was directed to wire $107,000 from Bankman-Fried’s account to the New York State Democratic Committee, but was asked to update it to say it was coming from CC-1.
The executive eventually became one of the largest Democratic donors in the 2022 midterm elections, promoting Bankman-Fried’s agenda with donations the executive would not have made on their own, the filing says.
To hide the donations, the indictment alleges that money was transferred from Almeida to FTX employees’ accounts and then funneled into political donations.
In November 2022, CC-1 expressed concern in chat messages to SBF about “donations/personal/etc” 80m in his name due to FTX customer withdrawal. The two discussed plans to cover up the wire transfers, but ultimately did not make the transactions to further cover up the campaign finance scheme, the indictment says.
FTX filed for bankruptcy on November 11.
