Bankman-Fried faces more criminal charges for allegedly concealing political donations

NEW YORK, Feb 23 (Reuters) – Sam Bankman-Fried was indicted on Thursday on new criminal charges in an expanded indictment accusing the founder of the now-bankrupt FTX cryptocurrency exchange of conspiring to make more than 300 illegal political donations.

Bankman-Fried now faces 12 criminal charges, including four counts of racketeering and eight counts of conspiracy, up from eight counts in an earlier indictment to which she pleaded not guilty.

Prosecutors have accused Bankman-Fried of stealing billions of dollars in FTX client funds to offset losses at his crypto-focused hedge fund, Alameda Research.

The new charges add to the pressure on the 30-year-old former billionaire, who has seen two of his former top lieutenants plead guilty.

Bankman-Fried is trying to stay out of jail after her online activism since her arrest, and U.S. District Judge Louis Kaplan, who is overseeing the case, has indicated she wants to revoke her $250 million bail package.

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A spokeswoman for Bankman-Fried declined to comment.

Bankman-Fried’s trial is scheduled for October. Kaplan on Thursday extended the temporary ban on contacting Bankman-Fried FTX and Alameda employees from February 24 to March 3.

The new indictment alleges that Bankman-Fried, along with two former FTX executives, conspired to get lawmakers to pass legislation favorable to the company in exchange for tens of thousands of dollars in donations.

Those donations were illegal because they were made with “straw” donors or corporate funds, like Bankman-Fried — one of the biggest donors to Democrats in the 2022 midterm elections — to avoid contribution limits, prosecutors said.

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LGBTQ donation

Prosecutors said Bankman-Fried directed one executive to donate primarily to left-leaning candidates and organizations and another to Republicans, including several donations funded by Alameda and FTX client funds.

A political consultant working at Bankman-Fried told one of the executives, identified as CC-1, “being the left-of-center face of our spending means you’re giving a lot of awareness for transactional purposes,” the indictment said.

That executive, at Bankman-Fried’s direction, gave more than $1 million to a pro-LGBTQ group, according to the indictment.

Nishad Singh, FTX’s former head of engineering, contributed $1.1 million to the LGBTQ Victory Fund on July 7, 2022, Federal Election Commission records show.

In a statement, the group said it has “allocated funds and will take appropriate action once we get direction from the authorities.”

Singh’s attorney did not immediately respond to a request for comment.

After founding FTX in 2019, Bankman-Fried has seen the rise in the value of Bitcoin and other digital assets, reaching a fortune of $26 billion.

His exchange collapsed in November amid a flurry of customer withdrawals due to concerns that the exchange was conflating assets with Alameda.

‘Fear of the Day’

When it became clear that FTX could not meet withdrawal demands, Banker-Fried instructed Alameda to sell the assets to pay the bank’s customers, prosecutors said.

On Nov. 6, five days before FTX’s bankruptcy filing, Bankman-Fried sent CC-1 a message from Carolyn Ellison, Alameda’s chief executive.

“I’ve been dreading this day for a long time,” Ellison wrote, “and now it’s actually happening, and it’s great to get it one way or another.”

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Ellison and former FTX technology chief Gary Wang pleaded guilty to fraud charges in December and agreed to cooperate with prosecutors.

The new charges against Bankman-Fried include bank fraud and conspiracy to operate an unlicensed money laundering business.

Prosecutors said Bankman-Fried told an unnamed California bank that she wanted to open an account for a trading company, but the account was there to process deposits and withdrawals for FTX customers.

The bank previously told Bankman-Fried that it did not want to process such transactions, the indictment read.

Reporting by Luke Cohen and Jonathan Stempel in New York; Editing by Mark Porter and Anna Driver

Our Standards: Thomson Reuters Trust Principles.

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