Yesterday, US prosecutors investigating the misdeeds of FTX founder and CEO Sam Bankman-Fried added another charge against him.
As Reuters reports, the new charge is that he paid a $40 million bribe to Chinese officials so that they would unfreeze funds from his hedge fund.
According to these charges, SBF allegedly ordered a $40 million payment in cryptocurrencies from Alameda’s main trading account to a private wallet, with the goal of convincing Chinese government authorities to unlock precisely the Alameda Research accounts on which there was more than $1 billion in cryptocurrencies.
The fact is that these accounts had previously been frozen as part of an investigation into an anonymous counterparty, and SBF had already tried unsuccessfully to get them unfrozen by pressuring Chinese officials to lift the freeze.
A very important detail in this matter is that these facts refer to 2021, which is more than a year before FTX’s bankruptcy. Despite this, no one knew at the time that Alameda Research had its accounts blocked, and that the blockade was enforced by Chinese officials.
Thus, this allegation adds to the crimes so far alleged, because these were related to the events of November 2022, when FTX was forced to close and file for Chapter 11 bankruptcy proceedings.
Sam Bankman-Fried and the China issue
The nature of the relationship of Alameda Research, and thus the FTX group, with China has not yet been clarified, but surely the US courts will not like it very much that there were relationships.
First of all, it is worth mentioning that cryptocurrency trading in China is prohibited at the government level. Alameda Research was actually not involved in the exchange, but in trading, yet one has to wonder why it had such substantial funds stored in China.
Not least because apparently these were cryptocurrency funds, so it is even possible to imagine that they violated Chinese laws in this regard.
In addition, there has been a real trade clash between the US and China for years now, so much so that US authorities continually fear the leakage of important information, if not outright theft of information, to the Asian country.
It is possible to imagine that some kind of information has been transferred from the US to China by Alameda Research, so it is more than obvious that US authorities are investigating this.
On top of that there is the allegation of corruption against Sam Bankman-Fried, which only makes matters worse.
The issues therefore are twofold: the alleged bribery offense against Sam Bankman-Fried, and the investigation into the relationship between Alameda Research and China. It is worth remembering that Alameda Research was co-founded by SBF, and was owned by the FTX Group, also controlled by SBF.
The bankruptcy of FTX
To all this must be added the lawsuit against Sam Bankman-Fried over the bankruptcy of FTX.
SBF has now been under house arrest for months at his parents’ home in California, and now he will have to answer to an additional charge that apparently has nothing to do with the reasons he was placed under arrest.
The bribery affair against Chinese officials only sheds more bad light on how SBF managed Alameda Research and FTX.
After all, it is now clear that the real reason for FTX’s failure was its mismanagement, since the company had only a small portion of their clients’ funds on hand, because the bulk had spent it as if it were its own money.
The new allegations only further compound an already dire situation for the former CEO of FTX, leaving one to imagine that in the end the sentence against him could be even greater than originally assumed.
At this point, it is also not to be ruled out that by the sheer depths of the investigation into his misdeeds, and those of his entire team, other serious charges may pop up that could if possible further aggravate his position.
The failure of FTX was colossal for the crypto markets and caused harm to millions of people. Despite SBF’s plea of innocence, as of today it seems really difficult for him to get away with it, since FTX’s mismanagement is now clear, and it is also clear that he was a major contributor to the exchange’s failure.