Sam Bankman-Fried hit with 8 criminal charges

Shaggy-haired former FTX CEO Sam Bankman-Fried was slapped with federal charges Tuesday in the $8 billion-plus collapse of his cryptocurrency exchange — with authorities saying he deceived customers to line his pockets and used some of the “dirty money” to curry favor for the unregulated industry on Capitol Hill.

Bankman-Fried, 30, vowed to fight extradition from the Bahamas as he was ordered locked up after a hearing in the capital city of Nassau, where his lawyer reportedly cited his vegan diet and apparent diagnosis with attention-deficit/hyperactivity-disorder in a bid to keep him out of jail on $250,000 cash bail.

Before ruling that Bankman-Fried posed a “great” risk of flight, Magistrate Judge Joyann Ferguson-Pratt allowed him to briefly leave the courtroom to take medication that apparently included an Emsam patch used to treat depression.

When Bankman-Fried, who was wearing a blue suit and white shirt, said he needed to “take my shirt off” to administer the drug, the judge responded, “Well, you certainly can’t take your shirt off in court,” CoinDesk reported.

Later, the accused crypto crook — who was arrested Monday evening at a gated, oceanside resort community called the Albany — hugged his parents, both Stanford University law professors, after the judge lowered the boom.

Bankman-Fried was jailed pending another court appearance Feb. 8.

He faces a maximum 115 years in prison if convicted of all eight felony charges.

During an afternoon news conference, Manhattan US Attorney Damian Williams detailed the allegations against Bankman-Fried, saying his indictment “outlines four different areas of misconduct”:

Since 2019, Bankman-Fried and unidentified co-conspirators allegedly stole billions of dollars from FTX customers, with the defendant using it “for his personal benefit, including to make personal investments and to cover expenses and debts of his hedge fund, Alameda Research.”
Bankman-Fried allegedly “lied to Alameda’s investors about the source of the money that he was using to pay those debts.”
When crypto prices collapsed in May, Bankman-Fried allegedly lied to FTX customers “about the fact that he had sent billions of dollars in FTX customer money to Alameda.”
Bankman-Fried also allegedly used tens of millions of dollars in Alameda funds to illegally make political donations “to candidates and committees associated with 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,” Williams 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.”

Williams said various, unidentified people were cooperating with the feds, and he urged Bankman-Fried’s remaining alleged accomplices to start cooperating or face imminent arrest in what he called “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 warned that his “all-hands-on-deck investigation” was “very much ongoing” and “moving very quickly,” adding, “While this is our first public announcement, it will not be our last.”

During a Q&A with reporters, Williams was asked about how Bankman-Fried 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.

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.”

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,” Grewal added.