FTX founder, Sam Bankman-Fried (commonly known as SBF), faces new charges, including conspiracy to commit bank fraud and operating an unlicensed money transmitting business, under a superseding indictment unsealed on Thursday.
SBF, previously arrested and on bail, now faces a total of 12 charges brought by the Department of Justice following the collapse of FTX. These charges also include conspiracy to make unlawful political contributions and defrauding the US Federal Election Commission.
The indictment contains several new allegations including that SBF, in a bid to open a US bank account:
falsely represented to a financial institution that the account would be used for trading and market making, even though BANKMAN-FRIED knew that the account would be used to receive and transmit customer funds in the operation of a cryptocurrency exchange
US prosecutors say SBF later omitted material facts in a manner that made the above representation misleading. It appears the account was intended to be used to accept and send wire transfers for FTX's international exchange (FTX.com) despite that business not being a registered money transmitter or money service business in the United States.
Prosecutors allege that SBF set up a fake company called North Dimension ("which had no employees or business operations") to obscure the relationship between FTX and Alameda Research (Alameda, the trading firm owned by SBF), and to overcome the bank's reluctance to open an account. It is alleged that SBF created a website for the fake company, paid for with his own credit card.
Meanwhile, it is alleged that FTX also used bank accounts in the name of Alameda to receive customer funds intended for FTX and process customer withdrawals.
The US is seeking forfeiture orders against SBF in relation to hundreds of millions of dollars' worth of assets, which in many cases have already been seized by the government. They include more than 55 million shares in the trading app, Robinhood Markets, currently valued at $550 million. The Government also seeks the seizure of over US$150 million in cash held at Silvergate Bank and Farmington State Bank in the name of FTX Digital Markets (FTX DM).
The superseding indictment reveals additional details of the alleged fraud perpetrated by SBF and his co-conspirators including the diversion of customer deposits to support trading by Alameda, fund investments, loans to executives and political donations. SBF is set to face trial in October and is currently living at his parents' house on a $250 million bail. The FTX group is currently subject to US chapter 11 bankruptcy, with FTX Australia and the Bahamian entity, FTX DM, in separate insolvency proceedings.