CRIMINAL CAPITALI$M
Bankman-Fried charged with using stolen customer funds for $100 million in US political donations

Luc Cohen
Mon, August 14, 2023

Former FTX Chief Executive Bankman-Fried at a courthouse in New York

(Reuters) - Sam Bankman-Fried used stolen customer funds to make more than $100 million in political campaign contributions ahead of the 2022 U.S. midterm elections, federal prosecutors said on Monday in a new indictment filed against the FTX cryptocurrency exchange's founder.

The new indictment charges the 31-year-old former billionaire with seven counts of conspiracy and fraud over the collapse of the exchange.

He has previously pleaded not guilty to charges of stealing billions in FTX customer funds to plug losses at Alameda Research, his crypto-focused hedge fund.

Mark Botnick, a spokesman for Bankman-Fried, declined to comment.

Bankman-Fried rode a boom in cryptocurrency values to amass a net worth estimated at $26 billion, and became an influential donor to mostly Democratic candidates and causes. But the November 2022 collapse of FTX - after a flurry of customer withdrawals due to concerns about commingling of FTX and Alameda funds - decimated both his wealth and his reputation.

In the superseding indictment filed on Monday, the U.S. Attorney's Office in Manhattan said Bankman-Fried directed other FTX executives to make donations in order to evade contribution limits, as part of a push for crypto-friendly regulation.

"He leveraged this influence, in turn, to lobby Congress and regulatory agencies to support legislation and regulation he believed would make it easier for FTX to continue to accept customer deposits and grow," the indictment read.

Prosecutors had initially charged him with violating U.S. campaign finance laws, but dropped that charge in late July after the Bahamas said it had never intended to extradite Bankman-Fried to the United States on that charge. FTX was based in the Bahamas, and he was arrested there last December.

In a letter last week to U.S. District Judge Lewis Kaplan in Manhattan, prosecutors indicated they would soon file a new indictment that "will make clear that Mr. Bankman-Fried remains charged with conducting an illegal campaign finance scheme as part of the fraud and money laundering schemes originally charged."

Kaplan on Friday ordered Bankman-Fried jailed ahead of his Oct. 2 trial, after finding probable cause to believe he had tampered with witnesses twice. He had previously been largely confined to his parents' Palo Alto, California, home on $250 million bond since his extradition.

(Reporting by Luc Cohen in San Jose, California; Editing by Chris Reese, David Gregorio and Jonathan Oatis)