DOJ Indicts Bankman-Fried for Fraud and Conspiracy

“To any person, entity, or political campaign that has received stolen customer money, we ask that you work with us to return that money to the innocent victims.” Damian Williams, US Attorney for the Southern District of New York, appealed for the return of stolen billions as he announced the indictment of Samuel Bankman-Fried on Dec. 13. The Democrats’ second largest donor has been pinned with a host of fraud and conspiracy charges, plus money laundering and “campaign finance violations.” He was arrested by Bahamian authorities on Dec. 12 and has been denied bail.

Bankman-Fried Worse Than Madoff?

One of the greatest scams in history began its public disintegration in early November. CoinDesk, a cryptocurrency news site, revealed likely fraud between FTX, the trading platform owned by Bankman-Fried, and Alameda Research, the hedge fund he founded and controlled. Since the FTX collapse and bankruptcy, Bankman-Fried has been on a media tour proclaiming his innocence. The gist of his defense is that he was not a criminal but an in-over-his-head actor with good intentions. Gurbir S. Grewal, director of the SEC’s Division of Enforcement, laid bare that characterization as categorically false at a press conference:

“[F]rom FTX’s inception in 2019 Bankman-Fried began secretly and improperly diverting FTX customer funds to his crypto hedge fund Alameda Research … he then misused those funds to make undisclosed venture investments, lavish real estate purchases, and large political donations.”

In a White House press briefing after the indictment was announced, AP correspondent Zeke Miller asked Press Secretary Karine Jean-Pierre if President Joe Biden would return the donations Bankman-Fried gave his campaign and encourage others to do the same. Jean-Pierre issued her usual refusal to comment based on the Hatch Act. The 1939 legislation prohibits political activity by government employees. This lawyer considers it preposterous that answering a reporter’s question could break the law. As long as she gets away with it, however, expect more of the same. Last week Jean-Pierre cited Hatch to avoid answering questions about Hunter Biden’s laptop.

Saved by the Bell

Bankman-Fried was arrested hours before he was scheduled to testify virtually before the US House Financial Services Committee. It remains to be seen why Attorney General Merrick Garland ordered the FTX owner’s apprehension before he could answer questions under oath before Congress. Bankman-Fried made political contributions to Democrats and Republicans, but wildly in favor of Democrats. Several politicians have already donated amounts equal to those collected from SBF to charities. That might salve their conscience but not recompense the victims.

Bankman-Fried told a Bahamian judge that he would continue to fight extradition to the United States.