The Chinese authorities froze the Alameda Research trading account in 2021 as part of an ongoing investigation of a particular counterparty.
The United States Department of Justice (DoJ) has unveiled a new indictment against former FTX CEO Sam Bankman-Fried (SBF). According to court filings published on March 28, SBF is charged with bribe dealings with Chinese officials to unfreeze FTX accounts. The distressed former crypto billionaire will be fighting more charges in court at the tail end of this year when his next hearing is scheduled.
With three of his closest colleagues already working with the United States prosecutors against him, SBF lawyers will have a challenging time proving their client is innocent. Moreover, the latest indictment shows SBF conspired to bribe one or more Chinese government officials in a bid to regain access to Alameda research trading accounts that were frozen by the Chinese law enforcement authorities.
Reportedly, SBF directed a bribe payout of at least $40 million to Chinese government officials to unfreeze Alameda Research trading accounts containing over $1 billion in crypto assets.
According to prosecutors, in 2021, Alameda had $1 billion of crypto in a frozen account on a Chinese exchange (which: đź‘€) and SBF then directed the company to pay a $40m bribe to get the crypto out. https://t.co/Nnp7JQaBaa pic.twitter.com/AnQnmtjYYQ
— Jacob Silverman (@SilvermanJacob) March 28, 2023
Notably, the Chinese authorities froze the Alameda Research trading account in 2021 as part of an ongoing investigation of a particular counterparty. In order to regain access to the frozen funds, SBF reportedly used several methods, including opening Chinese accounts using personal details not associated with FTX or Alameda Research.
After several months of failed attempts, SBF directed millions of dollars to Chinese authorities. After receiving the funds, the Chinese authorities unfroze the funds, and SBF transferred the cash to his local account. Reportedly, SBF directed an additional bribe in tens of millions of dollars in cryptocurrency after the funds were unfrozen.
Bigger Picture of SBF’s Latest Indictment
The United States has intensified its crackdown on cryptocurrency-related businesses to uncover the grey areas in the blockchain used to perpetrate fraudulent activities. Already, the United States financial regulators, including the CFTC and SEC, have charged several cryptocurrency exchanges for failing to register appropriately. Notably, SEC Chair Gary Gensler has previously indicated that all digital assets apart from Bitcoin are unregistered securities.
Additionally, the SEC has indicated that crypto staking programs are a form of unregistered securities. As a result, Kraken settled with the SEC for approximately $30 million to provide a staking program without proper registration. Meanwhile, the SEC has also presented Coinbase Global Inc (NASDAQ: COIN) with a Wells notice on its crypto staking and listing programs.
While the crackdown on crypto companies is expected to help bring clear regulations in the United States, businesses are reportedly fleeing to crypto-friendly markets like Europe, Hong Kong, and United Arabs Emirates.
Moreover, the cryptocurrency market is global, and some regulators are lenient in order to attract more international investors.
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