FTX founder Sam Bankman-Fried gets a dozen charges in unsealed indictment

A new indictment against FTX cryptocurrency exchange founder Sam Bankman-Fried containing 12 charges was unsealed on Thursday in Manhattan federal court.

Bankman-Fried pleaded not guilty to previous charges

A man with curly hair exits a black car.
Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, arrives on the day of a hearing at Manhattan federal court in New York City, U.S. January 3, 2023. (David Dee Delgado/Reuters)

Sam Bankman-Fried was hit with new criminal charges on Thursday, in an expanded indictment accusing the founder of the now-bankrupt FTX cryptocurrency exchange of conspiring to make more than 300 illegal political donations.

Bankman-Fried now faces 12 criminal charges, including four for fraud and eight for conspiracy, up from eight charges in an earlier indictment, to which he has pleaded not guilty.

The new indictment adds to pressure on the 30-year-old former billionaire, who has already seen two of his former top lieutenants plead guilty. He is also trying to convince a judge he should remain free on bail.

A spokesperson for Bankman-Fried declined to comment.

Political donations were unlawful: prosecutors

Sam Bankman-Fried
Bankman-Fried leaves a New York courthouse on Thursday, Dec. 22, 2022. Prosecutors said in an unsealed indictment Thursday that the FTX founder made unlawful political donations through "straw" donors or with corporate funds. (Stephanie Keith/Bloomberg)

Bankman-Fried conspired with two other former FTX executives to donate tens of millions of dollars in order to influence lawmakers to pass legislation favourable to the company, prosecutors said.

The donations were unlawful because they were made through "straw" donors or with corporate funds, often allowing Bankman-Fried to evade contribution limits, prosecutors said.

While Bankman-Fried was one of the largest donors to Democratic campaigns in the 2022 midterms, the indictment said he "did not want to be known as a left-leaning partisan, or to have his name publicly attached to Republican candidates."

Prosecutors said that Bankman-Fried directed one executive to donate primarily to left-leaning candidates and organizations and the other to Republicans, with many donations funded by his Alameda Research hedge fund and including FTX customer funds.

In the last two years, cryptocurrency exchange FTX spent millions on advertisements with the likes of NFL quarterback Tom Brady and Curb Your Enthusiasm’s Larry David. FTX also sponsored the MLB, the Mercedes Formula One racing team and Canadian businessman Kevin O’Leary. Earlier this month, Bloomberg ranked the platform’s founder – Sam Bankman-Fried – as one of the world’s 100 richest people. He was sometimes referred to as the “King of Crypto.” But now, after financial leaks triggered mass withdrawals and a halt in trading, Bankman-Fried is worth effectively nothing. FTX has gone from a recent $32-billion US evaluation to bankruptcy. Today, CBC senior business writer Pete Evans returns to explain how one of the world’s three biggest crypto exchanges was brought down so quickly.

The indictment said a political consultant working for Bankman-Fried told one of the executives, identified as CC-1, that "you being the centre left face of our spending will mean you giving to a lot of woke sh-t for transactional purposes."

"Exploiting the trust that FTX customers placed in him and his exchange, Bankman-Fried stole FTX customer deposits, and used billions of dollars in stolen funds for a variety of purposes," reads the new indictment, which was filed on Wednesday.

Bankman-Fried's new indictment details how he allegedly used stolen FTX customer funds to cover up losses at Alameda Research, his hedge fund.

The additional charges include conspiracy to commit bank fraud and conspiracy to operate an unlicensed money transmitting business.

Prosecutors said Bankman-Fried told a unnamed California bank that he wanted to open an account for a trading company, when in fact he would use the account to process deposits and withdrawals for FTX customers.

The bank had previously told him it was unwilling to process such transactions, prosecutors said.

Alameda's former chief executive, Caroline Ellison, and a former FTX executive, Gary Wang, have both pleaded guilty to fraud charges and agreed to co-operate with the investigation.