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A major Democratic donor whose financial empire crashed and burned earlier this year — and who was already facing a slew of charges — is now in even bigger trouble.
According to a recently disclosed indictment, Sam Bankman-Fried is accused of orchestrating a bribe of approximately $40 million to at least one Chinese government official. This was done in an attempt to release the frozen cryptocurrency assets belonging to his Alameda Research hedge fund in China, Forbes reported.
Bankman-Fried pleaded not guilty on Thursday to the allegations.
“Bankman-Fried is charged for conspiring to violate the anti-bribery section of the U.S. Foreign Corrupt Practices Act by overseeing the movement of $40 million from an Alameda account to a private account believed to belong to Chinese officials in November 2021,” the outlet noted further. “The former billionaire CEO of cryptocurrency exchange FTX now faces 13 criminal counts for illicit business practices in his one-time crypto empire, up from the eight charges he faced upon his December arrest.”
Prosecutors state that Bankman-Fried directed the payment of an overseas bribe after Chinese authorities prevented access to approximately $1 billion worth of cryptocurrency assets owned by Alameda, the report added, noting further that a spokesperson for Bankman-Fried did not respond to a request for comment.
The charge of bribery has a maximum prison term of five years, which is relatively short compared to the other charges Bankman-Fried is facing, many of which carry sentences of over 100 years. The recent allegation against Bankman-Fried was made just hours after his defense and prosecutors proposed modifying his bail terms, which would prohibit the 31-year-old from using a smartphone or accessing most websites.
Sam Bankman-Fried pleads not guilty to paying $40 mil bribe to Chinese officials https://t.co/iNwxCCfV2j pic.twitter.com/g9Gx6Wga9Z
— New York Post (@nypost) March 30, 2023
Bankman-Fried’s multibillion-dollar business collapsed suddenly last November following reports of dubious financial practices at FTX and Alameda by CoinDesk. Bankman-Fried resigned from FTX two weeks after the report, and the company filed for bankruptcy. He and several other top executives from both firms were subsequently arrested.
Bankman-Fried is a former Wall Street quant trader who founded the crypto derivatives exchange FTX in 2019. FTX quickly grew in popularity, and in just two years, it became one of the largest crypto exchanges in the world, with a daily trading volume of around $10 billion.
In September 2021, the company’s Solana-based decentralized exchange, Serum, experienced a sudden and significant outage. The outage lasted for several hours, preventing users from accessing the platform and causing frustration among traders. While the cause of the outage is still unknown, it was a significant blow to FTX’s reputation. Many traders lost money during the outage, and Bankman-Fried was forced to apologize publicly for the incident.
But the real collapse came following the Coindesk reports. In the wake of the collapse, it was revealed that Bankman-Fried was one of the Democratic Party’s largest donors during the most recent election cycle. He also had a series of meetings with Biden White House officials ahead of the 2022 midterm elections that were previously undisclosed.
According to Bloomberg News, Bankman-Fried, who was the second-largest donor to the Democratic Party during the recently concluded election cycle, met with Biden officials on four different occasions, the last of which took place in September.
“The Democratic donor, 30, awaiting trial for what prosecutors say is one of the biggest financial frauds in U.S. history held talks with senior White House advisor Steve Ricchetti on September 8,” the UK’s Daily Mail noted, citing the Bloomberg report.
“He has had at least two other meetings with Ricchetti on April 22 and May 12 and another with top aide Bruce Reed,” the DM report noted further, adding that Bankman-Fried’s brother, Gabriel, also took part in a White House meeting on his own in May.
The outlet noted further:
Bankman-Fried is now under house arrest at his parent’s $4 million home in Palo Alto, California, after he was freed in a Manhattan court on a $250 million bond. The former CEO, 30, is facing securities and wire fraud charges related to his collapsed crypto exchange FTX.
Bloomberg reported that the meetings focused on the crypto industry and exchanges, and did not involve politics.
The outlet noted that several Democrats who received donations from Bankman-Fried have since donated them to various charities, returned the money, or was waiting for the Justice Department to determine the best move.