United States Attorney Announces Charges Against FTX Founder Samuel Bankman-Fried

 

Bankman-Fried Charged in an Eight-Count Indictment with Fraud, Money Laundering, and Campaign Finance Offenses

 Damian Williams, the United States Attorney for the Southern District of New York, Merrick B. Garland, the United States Attorney General, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging SAMUEL BANKMAN-FRIED, a/k/a “SBF,” with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.  The charges in the Indictment arise from an alleged wide-ranging scheme by the defendant to misappropriate billions of dollars of customer funds deposited with FTX, the international cryptocurrency exchange founded by the defendant, and mislead investors and lenders to FTX and to Alameda Research, the cryptocurrency hedge fund also founded by the defendant.  BANKMAN-FRIED was arrested yesterday in the Bahamas on these charges and will be presented before a Bahamian magistrate judge today.

U.S. Attorney Damian Williams said: “One month ago, FTX collapsed, causing billions of dollars in losses to its customers, lenders, and investors.  Now, a federal grand jury in New York has indicted the former founder and chief executive officer of FTX and charged him with crimes related to the phenomenal downfall of that one-time cryptocurrency exchange, including fraud on customers, investors, lenders, and our campaign finance system.  As today’s charges make clear, this was not a case of mismanagement or poor oversight, but of intentional fraud, plain and simple.” 

Attorney General Merrick B. Garland said: “The Justice Department has filed charges alleging that Samuel Bankman-Fried perpetrated a range of offenses in a global scheme to deceive and defraud customers and lenders of FTX and Alameda, the defendant’s crypto hedge fund, as well as a conspiracy to defraud the United States government.  We allege that the defendant conspired to defraud customers by misappropriating their deposits; to defraud lenders; to commit securities fraud and money laundering; and to violate campaign finance laws. As this indictment demonstrates, the U.S. Department of Justice will aggressively investigate and prosecute alleged criminal wrongdoing in the financial system and violations of federal elections laws.  We will continue to work to ensure U.S. capital markets operate honestly and with the integrity that investors, lenders, and the American people are entitled to.”  

FBI Assistant Director Michael J. Driscoll said: “As the indictment today alleges, Bankman-Fried knowingly defrauded the customers of FTX.com through the misappropriation of the customer deposits to pay expenses and debts of a different company he also owned as well as make other investments.  If you deceive and defraud your customers, the FBI will be persistent in our efforts to bring you to justice.”

As alleged in the Indictment unsealed in Manhattan federal court and court filings:[1]

SAMUEL BANKMAN-FRIED was the founder and chief executive officer of FTX, an international cryptocurrency exchange.  Since 2019, the defendant and his co-conspirators perpetrated a scheme to defraud customers of FTX by misappropriating billions of dollars of those customers’ funds.  As alleged, the defendant used billions of dollars of FTX customer funds for his personal use, to make investments and millions of dollars of political contributions to federal political candidates and committees, and to repay billions of dollars in loans owed by Alameda Research, a cryptocurrency hedge fund also founded by the defendant.  BANKMAN-FRIED also allegedly defrauded lenders to Alameda Research and equity investors in FTX by concealing his misuse of customer deposits in financial information that was provided to them.  

SAMUEL BANKMAN-FRIED and his co-conspirators made millions of dollars in political contributions funded by Alameda Research to federal political candidates and committees in advance of the 2022 election.  To conceal the fact that those contributions were paid for using funds from a corporation and to evade contribution limits and reporting requirements, BANKMAN-FRIED caused contributions to be reported in the names of co-conspirators rather than in the name of the true source of the funds.

SAMUEL BANKMAN-FRIED, 30, of Stanford, California, is charged with two counts of wire fraud conspiracy, two counts of wire fraud, and one count of conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years.  He is also charged with conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to defraud the United States and commit campaign finance violations, each of which carries a maximum sentence of five years.    

The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. 

Mr. Williams praised the investigative work of the FBI.  He also expressed appreciation for the assistance of the Justice Department’s Office of International Affairs, National Cryptocurrency Enforcement Team, Public Integrity Section, and the Drug Enforcement Administration, as well as that of the Securities and Exchange Commission and the Commodity Futures Trading Commission, both of which separately initiated civil proceedings against the defendant today.  Mr. Williams further thanked the Bahamas Office of the Attorney-General & Ministry of Legal Affairs as well as the Royal Bahamas Police Force for their assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Nicolas Roos and Danielle Sassoon are in charge of the prosecution.  The Money Laundering and Transnational Criminal Enterprises Unit and Assistant U.S. Attorneys Samuel Raymond and Thane Rehn also contributed to the investigation.

The allegations in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.