The Tribune

By NEIL HARTNELL

Tribune Business Editor

and ASSOCIATED PRESS

FTX’s founder was yesterday hit with fresh accusations that he sought to pay a $40m bribe to Chinese officials to obtain the release of more than $1bn in crypto assets frozen by that nation’s authorities.

Sam Bankman-Fried now faces additional charges that he “conspired to violate” the anti-bribery provisions of the US Foreign Corrupt Practices Act (FCPA) via a scheme “to bribe one or more Chinese government officials in order to regain access” to accounts held by his private trading vehicle, Alameda Research, which had been frozen by that country’s law enforcement agencies.

This raises to 13 the number of charges that Bankman-Fried faces after he was arrested in The Bahamas last December and brought to the US to stand trial. The bribery allegations related to events that purportedly occurred in 2021, when Alameda’s accounts with two Chinese crypto currency exchanges were frozen as part of an investigation into one of the counterparties it was conducting financial transactions with.

FTX’s co-founder, and others “operating at his direction”, explored multiple ways to unfreeze the accounts or gain access to the $1bn in crypto assets they held. These methods included hiring attorneys; lobbying for the assets’ release in China; and opening new accounts with the Chinese exchanges, using the names of persons not affiliated with FTX or Alameda, and trying to transfer the frozen funds to them “In an effort to circumvent the Chinese authorities’ freeze orders”.

“After months of failed attempts to unfreeze the accounts, Samuel Bankman-Fried discussed with others, and ultimately agreed to and directed a multi-million dollar bribe to seek to unfreeze the accounts,” the US federal authorities alleged in the latest indictment filed in the southern New York district court.

“In particular, Bankman-Fried authorised and directed the illicit transfer of crypto currency intended to induce and influence one or more Chinese government officials to unfreeze the accounts. Following Bankman-Fried’s authorisation and direction, an Alameda employee sent crypto currency payment instructions for at least a portion of the bribe payment to other Alameda employees, including at least one employee located in the US.

“As a result, in or about November 2021, Bankman-Fried caused a bribe payment of crypto currency then worth approximately $40m to be transferred from Alameda’s main trading account to a private crypto currency wallet. At or around the time of the $40m bribe payment, the accounts were unfrozen. After confirmation that the accounts were unfrozen, Bankman-Fried authorised the transfer of additional tens of millions of dollars in crypto currency to complete the bribe.”

The dates allege that the $40m bribe payment took place some two months after FTX migrated to The Bahamas in September 2021. FTX filed for bankruptcy on November 11 when it ran out of money after the crypto currency equivalent of a bank run. Bankman-Fried has remained free on a $250m personal recognizance bond that lets him stay with his parents in Palo Alto, California.

He has pleaded not guilty to charges that he cheated investors out of billions of dollars before his business collapsed. An arraignment on the rewritten indictment was set for Thursday by US district judge, Lewis A. Kaplan. He also on Tuesday banned Bankman-Fried from communicating with current or former employees of FTX or Alameda Research. The order also limits Bankman-Fried to one laptop and phone and bans him from other cellphones, computers or “smart” devices with Internet access.

Bankman-Fried’s lawyers did not immediately respond to messages seeking comment. Messages for comment were also sent to the Chinese consulate in New York and the Chinese embassy in Washington D.C.