A New Development in the Ongoing Saga Surrounding FTX and its Founder
In a recent court filing, United States prosecutors have requested permission to seize cryptocurrency allegedly linked to bribes paid to Chinese officials by FTX co-founder Sam Bankman-Fried. This development comes as part of an ongoing investigation into the collapse of FTX and the alleged actions of its former CEO.
The Allegations
According to a November 12th suit filed in a New York District Court, prosecutors allege that a Binance account worth approximately $8.6 million (as of December 12, 2023) was used to launder funds used for bribes before FTX collapsed in late 2022. The value of the account has since increased to around $18.5 million due to market fluctuations.
The Alleged Bribe
Prosecutors claim that in 2021, Chinese law enforcement froze two Alameda Research accounts on Chinese crypto exchanges, which held a combined total of approximately $1 billion in cryptocurrency. However, after sending a $40 million bribe to a private wallet, the accounts were allegedly unfrozen soon after.
The Role of Sam Bankman-Fried
According to prosecutors, Bankman-Fried authorized additional payments in the amount of tens of millions of dollars in cryptocurrency to complete the alleged bribe. Caroline Ellison, the former CEO of Alameda Research, testified that the total amount paid in bribes was around $150 million.
The Account at the Center of the Investigation
US authorities have identified an account they believe is linked to the alleged bribe. The account has five deposit accounts associated with it, which were allegedly used to conceal or disguise the bribe paid by Bankman-Fried. Prosecutors claim that the account experienced a regular flow of incoming deposits and outgoing withdrawals while the five wallets received nearly daily deposits of Bitcoin and stablecoins.
The Conversion of Cryptocurrency
Prosecutors allege that the cryptocurrency deposited into the wallets was then converted into other cryptocurrencies, further obscuring the alleged bribe.
A Timeline of Events
- 2021: Chinese law enforcement freezes two Alameda Research accounts on Chinese crypto exchanges, holding a combined total of approximately $1 billion in cryptocurrency.
- November 16, 2021: Bankman-Fried allegedly sends a $40 million bribe to a private wallet, and the accounts are unfrozen soon after.
- Aftermath of FTX collapse (late 2022): Prosecutors claim that the account at the center of the investigation was used to launder funds used for bribes.
- December 21, 2023: During Bankman-Fried’s trial, the account is seized on the orders of Judge Lewis Kaplan.
The Current Status
Following the collapse of FTX in 2022, Bankman-Fried faced a jury trial and was convicted of seven felony counts. On March 28, Judge Kaplan sentenced him to 25 years behind bars. However, six additional charges, including bank fraud and foreign bribery conspiracy charges connected to the allegations he bribed Chinese officials, were dropped.
An Ongoing Appeal
On September 13, Bankman-Fried’s lawyers filed an appeal arguing that their client was not treated fairly at trial.
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