Feds eye more suspects in Sam Bankman-Fried FTX case: ‘Very much ongoing’
Accused crypto-fraudster Sam Bankman-Fried’s alleged accomplices were put on notice Tuesday that they face imminent arrest — and were urged to start cooperating before it’s too late.
Manhattan US Attorney Damian Williams said his “all-hands-on-deck investigation” into the $8 billion-plus collapse of Bankman-Fried’s FTX cryptocurrency exchange and Alameda Research hedge fund “is very much ongoing and it is moving very quickly.”
“But I also want to be clear about something else: While this is our first public announcement, it will not be our last,” he said during an afternoon news conference in Lower Manhattan to formally unveil the charges against Bankman-Fried.
Williams noted that Bankman-Fried’s eight-count indictment referenced unidentified co-conspirators and also said that various unidentified people were cooperating with the federal probe into “one of the biggest financial frauds in American history.”
“To anyone who participated in wrongdoing at FTX or Alameda Research and who has not yet come forward, I would strongly encourage you to come see us before we come to you,” he said.
Williams said Bankman-Fried’s alleged scam encompassed “four areas of misconduct” that involved defrauding FTX customers and investors, Alameda’s lenders, as well as violating campaign finance laws by making tens of millions of dollars in political donations to “both Democrats and Republicans.”
“These contributions were disguised to look like they were coming from wealthy co-conspirators when, in fact, the contributions were funded by Alameda Research with stolen customer money,” he said.
“And all this dirty money was used in service of Bankman-Fried’s desire to buy bipartisan influence and impact the direction of public policy in Washington.”
During a Q&A with reporters, Williams was asked about how Bahamas-loving, shaggy haired Bankman-Fried, 30, didn’t fit the profile of a typical white-collar criminal.
“Well, you can commit fraud in shorts and T-shirts in the sun. That’s possible, too,” Williams said.
Williams also acknowledged that it was “very, very fast” for the feds to charge Bankman-Fried just weeks after FTX and Alameda went bust.
“But I’ve also underscored that we’re not done,” he added.
The FBI’s New York assistant director in charge, MIchael Driscoll, said authorities were “determined to help the victims of this case get a sense of justice, and we will continue to make every attempt to recover as much of their funds as possible.”
“Fraud is fraud. It does not matter the complexity of the investment scheme. It does not matter the amount of money involved,” he said. “If you mislead and deceive to take what does not belong to you, we will hold you accountable.”
Gurbir Grewal, the Securities and Exchange Commission’s director of enforcement, said Bankman-Fried “raised more than $1.8 billion from equity investors on the basis of lies” while operating “behind a veneer of legitimacy.”
But Grewal said the “entire house of cards started to crumble as crypto prices plummeted in May of 2022.”
“That collapse has had far-reaching consequences for FTX customers, for its investors and for its counterparties,” he said. “But one immediate takeaway from today’s announcement should be that non-compliant trading platforms pose dramatic risks to both their investors and to their customers.
“Among other things, they don’t provide them with the same robust level of disclosures and protections against fraud and conflicts of interest. That’s what traditional, US-registered securities exchanges provide. So it’s imperative that non-compliant platforms come into compliance,” he added.
