Sam Bankman-Fried criminal charges unsealed: Conspiracy to defraud the U.S., wire fraud, securities fraud, and money laundering

Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, on Thursday, Oct. 13, 2022.

Ting Shen | Bloomberg | Getty Images

Federal prosecutors in the Southern District of New York unsealed charges against disgraced FTX co-founder Sam Bankman-Fried, charging him with conspiracy to commit wire fraud and securities fraud, standalone charges of securities fraud and wire fraud, money laundering, and significantly, conspiracy to defraud the United States and campaign finance regulations.

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The eight charges form the bedrock of the attempt by U.S. prosecutors to pursue Bankman-Fried for his alleged crimes.

Federal prosecutors say that Bankman-Fried had been engaging in criminal activity as far back as 2019.

Multiple conspiracy counts on charges of wire fraud, securities fraud, commodities fraud, and money laundering were filed against the former billionaire.

Bankman-Fried deliberately and knowingly “agreed with others to defraud customers of by misappropriating those customers’ deposits and using those deposits to pay expenses and debts of Alameda Research,” the indictment read.

“Mr. Bankman-Fried is reviewing the charges with his legal team and considering all of his legal options,” Bankman-Fried’s attorney Mark Cohen from Cohen & Gresser said.

The indictment said Bankman-Fried also conspired with others to defraud FTX’s lenders “by providing false and misleading information to those lenders regarding Alameda Research’s financial condition.”

“Given the speed of the government complaints and the indictment, it seems likely that former FTX employees (most likely those in senior positions) were cooperating with the authorities, most likely in exchange for leniency,” Howard A. Fischer, a former Securities and Exchange Commission lawyer, told CNBC.

“With a large case like this, there is often a rush to be the first one in the prosecutor’s door, because the value of cooperation diminishes rapidly if all you can offer is a duplicate of what the authorities already have,” continued Fischer, now a partner with Moses & Singer.

“While it is not known yet if that is the case, or who might be cooperating at this point, I would not be surprised if Ms. Ellison was one of the first person’s seeking to help the prosecution, especially given that her counsel is the former co-head of SEC’s Division of Enforcement, and she knows how the system works and how to work it to her client’s advantage,” Fischer added, referring to former Alameda CEO Caroline Ellison.

Ellison’s attorney was not immediately available to comment.

Bankman-Fried’s arrest took the public and lawmakers by surprise. The accelerated timeline suggests prosecutors have a high level of confidence in securing a conviction, a legal expert told CNBC.

From 2020 prosecutors allege the FTX founder had been conspiring to defraud the federal government by making illegal donations to political candidates, using the names of other persons to mask and augment political giving.

This is breaking news. Please check back for updates.

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