The Tribune

By EARYEL BOWLEG

Tribune Staff Reporter

ebowleg@tribunemedia.net

DAMIAN Williams, US Attorney for the Southern District of New York, said Sam Bankman-Fried’s arrest on Monday was dictated by law enforcement as opposed to any other considerations, including his scheduled testimony in Congress on Tuesday.

Mr Williams explained the issue during a press conference on Tuesday.

“One month ago, FTX, one of the world’s largest cryptocurrency exchanges, collapsed destroying billions of dollars in customer value overnight and for every day of the past month, the dedicated prosecutors of this office and our partners at the FBI, SEC and CFTC have been working around the clock to figure out what happened and to begin the process of seeking justice. This morning we unsealed an eight-count indictment charging Samuel Bankman-Fried, FTX’s founder, with a series of interrelated fraud schemes that contributed to FTX’s collapse,” the US Attorney said.

“I authorised these charges last week Wednesday. A grand jury here in Manhattan indicted Mr Bankman-Fried last week Friday. We obtained a warrant for his arrest, and that arrest was executed yesterday (Monday) in The Bahamas. Let me be clear, my remarks today are going to be limited, that is by design. This investigation is very much ongoing and it is moving very quickly, but I also want to be clear about something else. While this is our first public announcement, it will not be our last.”

He called the FTX saga “one of the biggest financial frauds in American history.”

Some have questioned the timing of Bankman- Fried’s arrest, suggesting it occurred to prevent him from testifying under oath before the US House Committee on Financial Services.

However, the US attorney explained: “On the timing of the arrest, as I mentioned before, I authorised charges last week Wednesday and he was indicted as a defendant in this district as of last week Friday, and we had a warrant for his arrest.

“And so the timing was dictated by law enforcement as opposed to any other considerations, including the timing of his testimony in Congress. He was wanted for arrest and we acted on that.”

He outlined the charges against the former billionaire.

“First (it is alleged) that Bankman-Fried defrauded customers of FTX.com, the cryptocurrency exchange he founded. Second, (he allegedly) defrauded lenders to Alameda Research, his proprietary hedge fund. Third we allege he defrauded investors in FTX and lastly, we allege that he violated campaign finance laws,” he said.

He added: “Let me say a little bit more about what we allege in the indictment. First, we charge up from 2019 until earlier this year, Bankman-Fried and his co-conspirators (allegedly) stole billions of dollars from FTX customers. He used that money for his personal benefit, including to make personal investments and to cover expenses and debts of his hedge fund Alameda Research. Secondly and relatedly, we charge that Bankman-Fried lied to Alameda lenders about the source of the money that he was using to pay those debts.

“Third, we charged that earlier this year in the midst of the crypto crisis, Bankman-Fried lied to investors in FTX about the fact that he had sent billions of dollars in FTX customer money to Alameda and fourth charge that Bankman-Fried violated federal campaign finance laws by causing tens of millions of dollars in illegal campaign contributions to be made to candidates and committees associated with both Democrats and Republicans.”

He said these contributions were allegedly “disguised to look like they were coming from wealthy co-conspirators when in fact the contributions were funded by Alameda Research with stolen customer money and all of this dirty money was used in service of Bankman-Fried’s desire to buy bipartisan influence and impact the direction of public policy in Washington.”

The US Securities Exchange Commission has also filed charges against Bankman-Fried alleging that he “orchestrated” a years-long scheme to defraud equity investors in FTX Trading limited.

The SEC alleges that Bankman-Fried operated FTX “behind a veneer of legitimacy” but instead from FTX’s inception in 2019, “secretly and improperly” diverted FTX customer funds to his crypto hedge fund Alameda Research.