FTX’s Bankman-Fried faces new charges in the updated indictment

NEW YORK (AP) — FTX founder Sam Bankman-Fried faced fresh fraud charges Thursday, with prosecutors accusing him of defrauding thousands of investors of billions of dollars while positioning himself as a “trusted savior of the cryptocurrency industry” — an image bolstered by star-studded Super Bowl ads. And large donations to political figures.

New charges, including securities fraud and conspiracy fraud charges, were unearthed with the updated indictment in Manhattan federal court unsealed.

In a statement, U.S. Attorney Damien Williams hinted, as he has many times previously, that the plaintiffs were not finished building their case.

“We are working hard and will continue to be so until justice is done,” he said.

A spokesperson for Bankman-Fried’s attorney declined to comment.

Authorities said the new charges raised the prison sentence Bankman Fried could face if convicted from 115 to 155 years.

It also boosted the number of counts in the indictment to 12, as prosecutors more comprehensively and eloquently told their story about what happened to FTX, the global cryptocurrency exchange affiliated with Bankman-Fried, and the private cryptocurrency trading hedge fund, Alameda Research.

The description described FTX clients, investors, financial institutions, lenders, and the Federal Election Commission as victims of fraudulent schemes Bankman-Fried allegedly executed from 2019 through last November.

Prosecutors said Bankman-Fried stole billions of dollars in deposits from FTX clients to support the operations and investments of FTX and Alameda and to fund speculative investments, make charitable donations and spend tens of millions of dollars in illegal campaign donations to Democrats and Republicans in an effort to buy influence over cryptocurrency regulation in Washington.

They said Bankman-Fried presented himself as a “figure head of a trustworthy, law-abiding sector of the cryptocurrency industry” who sought to protect investors and customers.

“In late 2022, Bankman-Fried boasted of FTX’s profits and portrayed itself as the savior of the cryptocurrency industry, making venture investments and acquisitions to aid struggling industry participants,” the new indictment reads.

Meanwhile, he spent millions of dollars on celebrity ads during the 2022 Super Bowl that promoted FTX as the “easiest and safest way to buy and sell cryptocurrency” and “the most reliable way to buy and sell digital assets.”

In fact, prosecutors wrote, Bankman-Fried routinely exploited FTX clients’ assets to provide interest-free capital for his and Alameda’s own expenses and in the process “exposed FTX clients to enormous undeclared risks.” They said that Bankman-Fried controlled both companies and “used them to support each other, despite conflicts of interest and outright lies to the contrary.”

It was not known when Bankman Fried would return to Manhattan for his trial. Twice in the past two weeks he has appeared in court after prosecutors expressed concern that he may have been communicating online in ways they could not trace. They also said that his communications indicated that he might be trying to influence a witness with evidence of his conviction.

The judge decides how To tighten Bankman-Fried’s warranty requirements to prevent any inappropriate communications. Last week, he even indicated that Bankman Fried might have to be jailed before trial if his communications could not be monitored to ensure he was not tampering with witnesses.

Bankman-Fried has already pleaded not guilty to charges that it defrauded investors and plundered customers’ deposits at FTX, its cryptocurrency platform. The charges accuse him of diverting money from his investors in part to fund political donations and making risky trades through his cryptocurrency trading hedge fund, Alameda Research.

Bankman-Fried is arrested in the Bahamas in December and was brought to the United States shortly thereafter. FTX filed for bankruptcy on November 11, when the cryptocurrency equivalent of a bank venture ran out of money.

It’s free on a $250 million personal pledge. The foster arrangement allows him to live with electronic monitoring at his parents’ home in Palo Alto, California.