Prosecutors were set to argue in federal court Monday that FTX founder Sam Bankman-Fried set up massive campaign-finance fraud scheme to buy favorable treatment in Washington DC for his crypto empire.
According to prosecutors in the Southern District of New York, Bankman-Fried paid out more than $100 million in funds stolen from FTX customers then illegally routed much of that money through two top lieutenants to maximize his influence in Washington.
In other words, prosecutors allege that Bankman-Fried committed fraud by misallocating customer funds, and they reportedly plan to argue that he conducted a vast, illegal influence-peddling scheme with that money.
The 31-year-old faces seven criminal counts, including wire fraud and conspiracy, in connection with events that caused $8.7 billion of FTX customer money to go missing. Bankman-Fried has been in state custody since his bail was revoked over accusations of witness tampering nearly two months ago. He had been arrested in the Bahamas in December 2022.
All of his key lieutenants at both FTX and its sister trading company, Alameda Research, have pled guilty and reportedly have flipped on Bankman-Fried.
His cryptocurrency empire imploded last year and FTX, which had once been valued at $32 billion, declared bankruptcy in November, leaving his customers unable to withdraw their money and his investors with little recourse.
In addition to the criminal case against Bankman-Fried, numerous lawyers are representing over a million former FTX customers and creditors in the bankruptcy preceding, trying to claw back an estimated $8.7 billion in expenditures, including payouts to more than 300 political contributions to many members of Congress and outside groups.
Wire fraud and other financial crimes can carry long prison terms even for people with little or no criminal history. If a defendant is found guilty of wire fraud, each charge can carry a penalty of up to 20 years in prison.
