Bankman-Fried charged with paying $40M bribe to China

FILE - FTX founder Sam Bankman-Fried, left, arrives at Manhattan federal court on Feb. 16, 2023, in New York. In a proposal submitted Friday, March 3, 2023, prosecutors and attorneys for Bankman-Fried are requesting the disgraced cryptocurrency entrepreneur be allowed a flip-phone or another device that’s not a smartphone while on bail. (AP Photo/John Minchillo, File)
FILE - FTX founder Sam Bankman-Fried, left, arrives at Manhattan federal court on Feb. 16, 2023, in New York. In a proposal submitted Friday, March 3, 2023, prosecutors and attorneys for Bankman-Fried are requesting the disgraced cryptocurrency entrepreneur be allowed a flip-phone or another device that’s not a smartphone while on bail. (AP Photo/John Minchillo, File)

By LARRY NEUMEISTER

Associated Press

NEW YORK (AP) -- FTX founder Sam Bankman-Fried was charged with directing $40 million in bribes to one or more Chinese officials to unfreeze assets relating to his cryptocurrency business in a newly rewritten indictment unsealed Tuesday.

The charge of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act raises to 13 the number of charges Bankman-Fried faces after he was arrested in the Bahamas in December and brought to the United States soon afterward. The indictment was returned on Monday.

FTX filed for bankruptcy on Nov. 11, when it ran out of money after the equivalent of a bank run on the global cryptocurrency exchange. He has remained free on a $250 million personal recognizance bond that lets him stay with his parents in Palo Alto, California.

He has pleaded not guilty to charges that he cheated investors out of billions of dollars before his business collapsed.

An arraignment on the rewritten indictment was set for Thursday by U.S. District Judge Lewis A. Kaplan. He also on Tuesday banned Bankman-Fried from communicating with current or ex-employees of FTX or Alameda Research, its affiliated cryptocurrency hedge fund trading firm. The order also limits Bankman-Fried to one laptop and phone and bans him from encrypted communications or other cellphones, computers, or "smart" devices with internet access.

The alleged bribes stemmed from the operation of Alameda Research. The indictment said Chinese law enforcement authorities in early 2021 froze certain Alameda cryptocurrency trading accounts containing about $1 billion in cryptocurrency on two of China's largest cryptocurrency exchanges.

Bankman-Fried, 31, understood that the accounts had been frozen by Chinese authorities as part of an ongoing probe of a particular Alameda trading counterparty, the indictment said.

After Bankman-Fried failed multiple attempts over several months to unfreeze the accounts through methods including using lawyers to lobby, Bankman-Fried ultimately agreed to direct a multimillion dollar bribe to try to unfreeze the accounts, the indictment said.

A portion of the bribe payment of cryptocurrency, then worth about $40 million, was moved from Alameda's main trading account to a private cryptocurrency wallet in November 2021 and the frozen accounts were unfrozen at about the same time, the indictment said.

After Bankman-Fried received confirmation that the accounts were unfrozen, he authorized the transfer of additional tens of millions of dollars in cryptocurrency to complete the bribe, according to the indictment.