In an indictment unsealed yesterday, prosecutors for the Southern District of New York allege that Sam Bankman-Fried, the disgraced founder of crytocurrency exchange FTX, which was headquartered in The Bahamas, conspired with others to commit wire fraud, commodities fraud, securities fraud and money laundering.
SBF, as he is widely known, is also accused of conspiracy to defraud the United States and violate the campaign finance laws.
It total, he is charged with eight counts.
The indictment alleges that from at least in or about 2019, up to and including in or about November 2022, in the Southern District of New York, and elsewhere, SBF and others known and unknown, “willfully and knowingly did combine, conspire, confederate, and agree together and with each other to commit wire fraud”.
Prosecutors allege that SBF, as he is widely known, agreed with others to defraud customers of FTX.com by misappropriating those customers’ deposits and using those deposits to pay expenses and debts of Alameda Research, his proprietary crypto hedge fund, and to make investments.
It is further alleged that Bankman-Fried agreed with others to defraud lenders to Alameda Research “by providing false and misleading information to those lenders regarding Alameda Research’s financial condition”.
SBF and conspirators are also accused of wire fraud on lenders.
Prosecutors say Bankman-Fried and others misappropriated FTX.com customer deposits in order to, among other things, satisfy loan obligations owed by Alameda Research.
It is alleged that from at least in or about May 2022, up to and including in or about November 2022, in the Southern District of New York, and elsewhere, SBF and others known and unknown conspired with each other to commit securities fraud.
Prosecutors say SBF and conspirators engaged “in an act, practice, and course of business which operated and would operate as a fraud and deceit upon a person”.
They said Bankman-Fried agreed with others to engage in a scheme to defraud investors in FTX. com by providing false and misleading information to those investors regarding FTX.com’s financial condition.
It is alleged that on or about September 18, 2022, he caused an email to be sent to an FTX investor in New York, New York that contained materially false information about FTX’s financial condition.
Prosecutors further allege that as part of the conspiracy at least in or about 2020, up to and including in or about November 2022, in the Southern District of New York, and elsewhere, Bankman-Fried and others knowingly engaged and attempted to engage in a monetary transaction in criminally derived property of a value greater than $10,000.
Bankman-Fried and conspirators are also accused of agreeing to commit offenses against the United States by engaging in violations of federal law involving the making, receiving, and reporting of a contribution, donation, or expenditure.
They are accused of “impairing, obstructing, and defeating the lawful functions of a department and agency of the United States through deceitful and dishonest means”.
It is alleged that they obstructed the Federal Election Commission’s function to administer federal law concerning source and amount restrictions in federal elections, including the prohibitions applicable to corporate contributions and conduit contributions.
SBF and his alleged co-conspirators are accused of knowingly and willfully making contributions to candidates for federal office, joint fundraising committees, and independent expenditure committees in the names of other people, aggregating to $25,000 and more in a calendar year in violation of federal law.
It is alleged that Bankman-Fried and one or more other conspirators agreed to and did make corporate contributions to candidates and committees in the Southern District of New York that were reported in the name of another person.
As a result of committing the offenses alleged in four of the eight counts of the indictment, prosecutors seek to have Bankman-Fried forfeit to the United States any and all property, real and personal, that constitutes or is derived from proceeds traceable to the commission of the offenses, including but not limited to a sum of money in United States currency representing the amount of proceed traceable to the commission of those offenses.
The indictment states: “If any of the above-described forfeitable property, as a result of any act or omission of the defendant: (a) cannot be located upon the exercise of due diligence; (b) has been transferred or sold to, or deposited with, a third person; (c) has been placed beyond the jurisdiction of the court; (d) has been substantially diminished in value; or (e) has been commingled with other property which cannot be subdivided without difficulty; it is the intent of the United States … to seek forfeiture of any other property of the defendant up to the value of the above forfeitable property.”
The Americans are seeking to have Bankman-Fried extradited, but might have to wait a while to see if that happens.
Shortly before 5 p.m. yesterday, Chief Magistrate Joyann Ferguson-Pratt refused to grant him bail a day after police arrested him at his luxury Albany apartment.
After hours of legal wrangling in the South Street court, the magistrate said she is of the view that the flight risk is so great that Bankman-Fried ought to be remanded to custody.
She remanded him to the Bahamas Department of Correctional Services until February 8, 2023.
