Embattled FTX founder and former billionaire Sam Bankman-Fried, who is now being held at a federal detention center in Brooklyn after a judge revoked his $250 million bond last week, has been newly accused through a superseding indictment of funneling more than $100 million into U.S. politics to influence legislation on the cryptocurrency industry.
Bankman-Fried, who founded and controlled the cryptocurrency exchange FTX.com and the quantitative cryptocurrency trading firm Alameda Research, allegedly misappropriated and embezzled FTX customer deposits and used billions of dollars in stolen funds for a variety of purposes, including, among other things, to enrich himself, support the operations of FTX, fund speculative venture investments and "help fund over a hundred million dollars in campaign contributions to Democrats and Republicans to seek to influence cryptocurrency regulation," according to the Monday filing from U.S. Attorney Damian Williams in the Southern District of New York.
The superseding indictment said Bankman-Fried further burnished his image as the "figurehead of a trustworthy and law-abiding segment of the cryptocurrency industry" by spending millions of dollars to promote FTX and its sister company FTX.US as safe places to invest in cryptocurrency through celebrity endorsement deals, television advertisements and other high-profile promotions.
Among other things, federal prosecutors alleged Bankman-Fried used FTX customer funds to pay for his own personal expenses, more than $200 million-worth of real estate in the Bahamas, speculative venture investments, "a wide-ranging political influence operation" and to repay Alameda’s lenders.
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As recently as late 2022, the indictment alleges, Bankman-Fried "boasted of FTX’s profits and portrayed himself as a savior of the cryptocurrency industry, making investments and acquisitions purportedly to assist struggling industry participants, and making lavish federal campaign contributions and lobbying members of Congress and other high-level government officials to promote cryptocurrency regulation that would favor his business and personal interests."
As part of his alleged scheme to promote the interests of FTX and Alameda, and to lobby for favorable government regulation, Bankman-Fried "used stolen customer funds in part to make campaign contributions and made the contributions in the names of straw donors to conceal the source of the funds," the superseding indictment said. He is said to have misappropriated customer money to help fund over $100 million in political contributions in advance of the 2022 election. Prosecutors claim that in order to conceal the source of those funds, some of the contributions were made in the name of FTX executives, including Nisha Singh.
In doing so, Bankman-Fried was able to evade restrictions on certain types of political contributions and thereby "maximize FTX’s political influence," the superseding indictment said.
"He leveraged his 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, which would, in turn, allow the misappropriation scheme to continue," the filing said.
Bankman-Fried is also accused of having "used these connections with politicians and government officials to falsely burnish the public image of FTX as a legitimate exchange."
Before Friday, Bankman-Fried, 31, had been living with his parents in Palo Alto, California, after signing a $250 million personal recognizance bond following his extradition from the Bahamas last December.
Prosecutors recently sought his detention, saying he had tried to intimidate his former girlfriend, Caroline Ellison — the onetime CEO of Alameda Research — by releasing some of her writings to a journalist. Judge Lewis A. Kaplan revoked Bankman-Fried's bond, sending him to the Brooklyn Metropolitan Detention Center.
The judge on Monday also granted the defense's request that Bankman-Fried take Emsam for major depression and Adderall for attention-deficit/hyperactivity disorder while in custody.
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The government said Monday that they would rely on testimony from Ellison, FTX co-founder Gary Wang and Singh, FTX's former engineering chief, to show jurors "the unlawful conduct directed and undertaken by the defendant."
All three have pleaded guilty to criminal charges in cooperation agreements with the government that could earn them leniency at sentencing. Prosecutors said they "formed the defendant's trusted inner circle during the course of the conspiracy" and their testimony will be supplemented by multiple former employees of Alameda and FTX along with several victims, including customers, lenders and investors at October's trial.
FOX Business' Lydia Hu and Eleanor Terrett and The Associated Press contributed to this report.
