Yahoo Finance legal reporter Alexis Keenan discusses the latest legal challenge facing former FTX CEO Sam Bankman-Fried.
Video Transcript
BRAD SMITH: Switching gears here, Sam Bankman-Fried facing four new criminal charges following the collapse of FTX. The latest indictment unsealed earlier today, and it raises the number of criminal counts against the FTX founder to 12. Yahoo Finance legal reporter Alexis Keenan is here to fill us in on the new charges. Alexis, what do we know?
ALEXIS KEENAN: Hey, Brad. Yeah, so this is an unsealed superseding indictment with these four additional criminal charges brought by the Department of Justice. There are two more fraud charges in this indictment. That's related to customers who traded derivatives on FTX. As you said, that brings the total of alleged new charges to 12 from eight previously. Also included are conspiracy charges to operate an unlicensed money transferring business, and also a conspiracy charge related to committing bank fraud, allegedly.
Now, the prior charges, they included wire fraud and conspiracy against FTX customers as well as lenders, and also conspiracy counts alleging that Bankman-Fried committed commodities fraud, securities fraud, money laundering, and also campaign finance law violations. But this new charging document is really a different animal from the original. The original was broad-based, broad sweeping allegations, not a lot of detail. But in this indictment, I want to read to you some of the details that the Justice Department is providing about these allegations.
First, the DOJ says that Bankman-Fried routinely stole customer funds to gain interest-free capital for his own private expenditures, as well as for the expenditures of his associated hedge fund, Alameda Research. The Department says that Bankman-Fried created, quote, "a secret loophole" in the computer code that ran FTX's trading platform, allowing Alameda to incur a multibillion dollar negative balance on FTX that Bankman-Fried, they say, knew Alameda could never repay. They say he lied to a US bank regarding an account that held FTX equity customer funds to avoid the bank's due diligence processes, and also their licensing requirements.
The Department of Justice goes on to say that Bankman-Fried masked the true source of tens of millions of dollars in contributions to both Democrats as well as Republicans in order to gain influence in Washington DC, and that he also required-- and this is something that we knew a little bit about before-- that he required his employees, those that worked for him, to communicate using encrypted messaging platforms that would self-delete. They say that would prevent regulators and law enforcement from accessing records of his, quote, "misdeeds."
