A PYMNTS Company

New Criminal Charges Allege Bankman-Fried Used FTX Funds Personally

By  |  February 27, 2023
New Criminal Charges Allege Bankman-Fried Used FTX Funds Personally

Sam Bankman-Fried’s associates have flipped on him, and now here comes the script. This, as a superseding indictment charging the failed FTX and Alameda Research founder with an additional four criminal counts was filed with the United States District Court for the Southern District of New York earlier this week (Feb. 22) and subsequently unsealed to the public.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    “I just had an increasing dread of this day that was weighing on me for a long time, and now that it’s actually happening it just feels great to get it over with one way or another,” Alameda CEO Caroline Ellison, who has pleaded guilty to multiple criminal fraud charges for her role in the FTX collapse, reportedly said to Bankman-Fried on Nov. 6, 2022, just days before the far-flung crypto enterprise and its over 100 affiliate companies filed for bankruptcy.

    The knock-on crimes being alleged bring the curly-haired crypto fraudster’s new count to an even dozen.

    Related: FTX Gets Court Approval To Subpoena Founder Bankman-Fried

    He’ll be looking at a lot more years in jail than that if convicted. Wire fraud sentences alone can run up to 20 years.

    The freshly unsealed indictment sheds considerable light on the illegal activities allegedly performed from 2019 to 2022 at Bankman-Fried’s direction, as well as underscores the incestuous, back-door relationships between the FTX group’s various businesses, revealing how they enabled the willful misappropriation and loss of billions of dollars of customer funds.

    As reported by PYMNTS Thursday (Feb. 23), the filing takes a no-holds-barred approach in puncturing the portrait Bankman-Fried presented of himself as “the figurehead of a trustworthy and law-abiding segment of the cryptocurrency industry that was focused not only on profits, but also on investor and client protection.”

    Rather, the unsealed document alleges that Bankman-Fried, “routinely tapped FTX customer assets to provide interest-free capital for his and Alameda’s private expenditures, and in the process exposed FTX customers to massive, undisclosed risk … the defendant corrupted the operations of the cryptocurrency companies he founded and controlled through a pattern of fraudulent schemes that victimized FTX customers, investors, financial institutions, lenders, and the Federal Election Commission.”

    Bankman-Fried is being charged with the third largest corporate fraud in U.S. history, topped only by the Bernie Madoff and Enron scandals.

    The court filing states, “FTX never held customer funds in dedicated accounts for the benefit of customers.”

    Bankman-Fried pleaded not guilty to his previous indictment of eight criminal counts.