FTX founder Sam Bankman-Fried was charged with directing USD 40 million in bribes to one or more Chinese officials to unfreeze assets relating to his cryptocurrency business in a newly rewritten indictment unsealed on Tuesday.
The charge of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act raises to 13 the number of charges Bankman-Fried faces after he was arrested in the Bahamas in December and brought to the United States soon afterward. The indictment was returned on Monday.
The charge also contains language revealing that a fifth arrest was imminent in what US Attorney Damian Williams has repeatedly described as a continuing investigation.
That unidentified individual, according to the indictment, participated in the bribery conspiracy with Bankman-Fried and "will be arrested in the Southern District of New York."
FTX filed for bankruptcy on November 11, when it ran out of money after the equivalent of a bank run on the global cryptocurrency exchange. He has remained free on a USD 250 million personal recognizance bond that lets him stay with his parents in Palo Alto, California.
He has pleaded not guilty to charges that he cheated investors out of billions of dollars before his business collapsed.
An arraignment on the rewritten indictment was set for Thursday by US District Judge Lewis A. Kaplan. He also on Tuesday banned Bankman-Fried from communicating with current or ex-employees of FTX or Alameda Research, its affiliated cryptocurrency hedge fund trading firm.
The order also limits Bankman-Fried to one laptop and phone and bans him from encrypted communications or other cellphones, computers, or 'smart' devices with internet access.
The alleged bribes stemmed from the operation of Alameda Research. The indictment said Chinese law enforcement authorities in early 2021 froze certain Alameda cryptocurrency trading accounts containing about USD 1 billion in cryptocurrency on two of China's largest cryptocurrency exchanges.
Bankman-Fried, 31, understood that the accounts had been frozen by Chinese authorities as part of an ongoing probe of a particular Alameda trading counterparty, the indictment said.
After Bankman-Fried failed multiple attempts over several months to unfreeze the accounts through methods including using lawyers to lobby, Bankman-Fried ultimately agreed to direct a multimillion dollar bribe to try to unfreeze the accounts, the indictment said.
Among failed attempts, the indictment said Bankman-Fried and others he directed opened new fraudulent accounts on the Chinese exchanges using personal identifying information of several individuals unaffiliated with FTX or Alameda to try to evade freeze orders and move cryptocurrency from frozen accounts to the fraudulent accounts.
A portion of the bribe payment of cryptocurrency, then worth about USD 40 million, was moved from Alameda's main trading account to a private cryptocurrency wallet in November 2021 and the frozen accounts were unfrozen at about the same time, the indictment said.
After Bankman-Fried received confirmation that the accounts were unfrozen, he authorized the transfer of additional tens of millions of dollars in cryptocurrency to complete the bribe, according to the indictment.
Among those already charged in the case is Carolyn Ellison, Alameda's former chief executive. She has agreed to testify against Bankman-Fried, as have two former FTX executives who have pleaded guilty in cooperation deals with the government.
Bankman-Fried's lawyers did not immediately respond to messages seeking comment. Messages for comment were also sent to the Chinese consulate in New York and the Chinese embassy in Washington DC.