Sam Bankman-Fried Charged With Fraud, Campaign Finance Violations

Nikki McCann Ramirez
·3 min read
Sam Bankman Fried - Credit: Tom Williams/CQ-Roll Call, Inc/Getty Images
Sam Bankman Fried - Credit: Tom Williams/CQ-Roll Call, Inc/Getty Images

The Southern District of New York has charged disgraced former crypto billionaire Sam Bankman-Fried with conspiracy to commit wire fraud, securities fraud, money laundering, and violations of campaign finance law via a grand jury indictment that was unsealed on Tuesday. The founder of the now-collapsed FTX cryptocurrency exchange was arrested Monday in the Bahamas and is awaiting extradition to the United States.

Bankman-Fried, 30, stands accused of defrauding millions of investors in an elaborate crypto scheme run through FTX. At one point the third-largest crypto exchange in the world, FTX collapsed in a matter of days after balance sheets related to Bankman-Fried’s investment firm Alameda Research were leaked. The fallout revealed the extent of the exchange’s financial insolvency, and led to allegations that Bankman-Fried used investments made by FTX customers to pay off debts and make side investments and contributions, transferring funds without proper disclosure and oversight.

More from Rolling Stone

The indictment, first filed on Dec. 9, alleges that Bankman-Fried and his associates “willfully and knowingly did combine, conspire, confederate, and agree together and with each other to commit wire fraud,” while defrauding customers of FTX by “misappropriating those customers’ deposits and using those deposits to pay expenses and debts of Alameda Research.”

Bankman-Fried, a prolific donor to Democratic politicians, also stands accused of violating campaign finance laws by exceeding the legal campaign contribution limits. The indictment further alleges that Bankman-Fried, his associates, and companies may have been making straw donations to candidates.

Bankman-Fried wasn’t only funneling money to political candidates, apparently. Axios recently reported that he was also secretly funding The Block, a crypto outlet that claims to cover industry news independently. Bankman-Fried even reportedly used $16 million of Alameda money to help finance an apartment in the Bahamas for The Block CEO Michael McCaffrey.

Several separate class action lawsuits have been filed against Bankman-Fried on behalf of investors to his companies. A California-based complaint alleges that Bankman-Fried and several of his business partners engaged in fraud, unlawful enrichment, and conversion in their management of the currency exchange.

A separate lawsuit targets celebrities and brand ambassadors that promoted the platform. Names such as Tom Brady, Larry David, Giselle Bündchen, Naomi Osaki, and Steph Curry have been named as liable parties in suits seeking restitution on behalf of defrauded investors.

Before his arrest, Bankman-Fried had been scheduled to testify before the House Committee on Financial Services. In a draft of his remarks to the committee, Bankman-Fried had planned to open his address to lawmakers with an admission: “I would like to start by formally stating, under oath: I fucked up.”

Bankman-Fried was occupied on Tuesday, but new FTX CEO John Ray III still sat before Congress. “This isn’t sophisticated whatsoever,” he reportedly said of the scheme. “This is just plain old embezzlement.”

Best of Rolling Stone

Click here to read the full article.