Sam Bankman-Fried funneled $100M stolen from customers into US politics to bend crypto legislation: revised indictment

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Ex-crypto executive Sam Bankman-Fried secretly funneled more than $100 million stolen from his customers into the U.S. political system to bend crypto legislation to his will, federal prosecutors said Monday in a revised indictment.

The embattled former billionaire — in custody at Brooklyn’s Metropolitan Detention Center since a judge revoked his $250 million bond Friday for alleged witness tampering — was accused anew of campaign finance corruption in a superseding indictment in his Manhattan case.

Prosecutors dropped a campaign contribution charge against Bankman-Fried to respect an extradition treaty with The Bahamas, where his company FTX was based. The Caribbean government had not agreed to it when it handed Bankman-Fried off to the feds following his stateside indictment in December.

Weaving the scheme into the original money laundering and wire fraud charges that the Bahamas signed off on, the feds said Bankman-Fried donated generously outside legal limits through straw donors to politicians in both parties ahead of the 2022 midterms.

“(The) fact that the defendant engaged not in lawful giving on behalf of FTX but instead used straw donors to hide the true source of funds and deceptively increase his influence on policy making demonstrates the strength of his desire to purchase political clout — a desire so great that he stole customer funds to satisfy it,” prosecutors wrote in pretrial filings.

The 31-year-old from Palo Alto, Calif., has pleaded not guilty to a series of interconnected fraud schemes that allegedly saw him siphon over a billion dollars from his global cryptocurrency exchange, partly to pay off his hedge fund Alameda Research’s debts. He could face over a century in prison if convicted.

Prosecutors on Monday asked U.S. District Judge Lewis Kaplan to bar Bankman-Fried from arguing at his October trial that FTX customers “were negligent, gullible, or insufficiently vigilant.” And they said he shouldn’t be able to convince the jury that he intended to repay his alleged victims.

Prosecutors plan to query three of SBF’s convicted former lieutenants — FTX co-founder Gary Wang, head of engineering Nishad Singh, and Alameda CEO Caroline Ellison — on the witness stand. In addition, they expect to call “multiple former employees of Alameda and FTX, several of the defendant’s customer, lender, and investor victims, and an expert witness whose financial analysis will show the nature and extent of the fraud.”

Bankman-Fried spokesman Mark Botnick declined to comment.

Nick Biase, chief spokesman for U.S. Attorney Damian Williams, declined to comment.