- Sam Bankman-Fried wanted to stall bankruptcy in FTX’s dying days, the Justice Department said.
- Prosecutors said the crypto mogul wanted to transfer FTX assets out-of-country to get better treatment from foreign regulators.
- They also claimed Bankman-Fried tampered with FTX assets in the days leading to its bankruptcy.
Sam Bankman-Fried was hoping to regain control of his fallen crypto exchange by moving FTX’s assets to other regulators he hoped would go easy on him, according to the Department of Justice.
In a court filing on Monday, the Justice Department claimed Bankman-Fried tried to postpone FTX’s bankruptcy proceedings in late 2022 in order to move funds from the defunct crypto exchange to the jurisdiction of regulators in other countries. Prosecutors alleged that the disgraced crypto executive was hoping for better treatment from foreign regulators, which could potentially allow him to regain control of FTX, the filing said.
Bankman-Fried has previously said he regretted the decision to have FTX file for bankruptcy in November of last year, shortly after the crypto exchange suffered from “significant” liquidity issues and halted customer withdrawals. The bankruptcy filing ousted Bankman-Fried from company leadership and exposed numerous accounting scandals within the exchange, such as customer deposits being commingled with Alameda Research, Bankman-Fried’s crypto trading arm.
But the former crypto executive has denied the misuse of customer funds, and has criticized FTX’s new leadership. He’s also maintained that parts of FTX are still solvent, despite the exchange’s lack of record-keeping and chaotic balance sheet.
Prosecutors also say that although the crypto exchange froze customer withdrawals in late 2022, Bankman-Fried unfroze accounts in the Bahamas and allowed millions in customer withdrawals, to show his gratitude for the island nation where FTX was headquartered.
“We are deeply grateful for what The Bahamas has done for us, and deeply committed to it,” Bankman-Fried wrote in a letter at the time to the Bahamas attorney general. “We are also deeply sorry about this mess.”
Bankman-Fried and FTX co-founder Gary Wang were also said to take control of $546 million of Robinhood stock last year, which prosecutors said was illegally purchased with funds from Alameda. The purchase was an attempt to conceal the misuse of FTX customer funds, the filing added. Over $450 million worth of shares have been seized by the Justice Department.