The US seizes over $600 million from SBF

Federal prosecutors allege that Bankman-Fried orchestrated one of the "greatest financial scams in American history"

Exchanges & Wallets January 24
Kimberly Rodriguez Medina

The US federal government has seized more than $600 million in assets from cryptocurrency executive Sam Bankman-Fried this month, according to a new court filing. The decision is part of the criminal case against SBF, 30, who has pleaded not guilty to fraud and conspiracy charges related to the alleged theft of billions of dollars from clients and investors of FTX, the exchange that is now in bankruptcy.

Federal prosecutors submitted a list of assets subject to forfeiture as a result of the criminal charges. In the request, the prosecution claimed cash being held at various banks and accounts, along with more than 55 million Robinhood shares. The most recent seizure occurred when the government seized $94,570,490.63 held at Silvergate Bank, according to the filing. Several Binance accounts have also been seized, although they did not disclose their balance.

Bankman-Fried faces eight counts of fraud and conspiracy. Federal prosecutors have alleged that the defendant masterminded one of the "greatest financial scams in American history" by directing billions of dollars in funds from FTX clients and investors and funneling it into his private hedge fund Alameda Research. Other funds were used to buy luxury properties and make tens of millions of dollars in political donations, court records show.

Alameda, the back door of FTX

The cryptocurrency exchange announced a debt restructuring proposal, seeking to strengthen its financial position and provide a solid foundation for future growth. Despite the efforts of the new CEO to refloat the company, it has been uncovered that $413 million was transferred without authorization from the exchanges FTX and FTX.US, after resorting to the appeal to Chapter 11 of the US bankruptcy code. 

This event has further reduced trust and, now, the prosecution maintains that while Alameda could have been the biggest back door for FTX, it may not be the only one. The exchange has taken steps such as cutting costs and improving operational efficiencies and has secured an additional $20 million loan to support the implementation of the proposal, but it seems SBF's malpractice won't be forgotten so easily.

New leader, new exchange?

The cryptocurrency exchange filed for bankruptcy last November and could now be relaunched under the leadership of new CEO John Ray III. The goal is to draw up a plan to reimburse damaged customers and consider the sale of the company's subsidiaries.

Ray III claims to have built a team dedicated to relaunching the FTX.com group and has mentioned that while some people in key positions in the company may have taken reprehensible actions, the exchange still has potential. Before its bankruptcy, FTX was the world's second-largest cryptocurrency exchange and had earned its place as Binance's main rival.

However, although the intention is good, it seems that for the moment it is not enough, since new information about SBF and its leadership comes to light every day. He is currently scheduled to stand trial in October. Bankman-Fried was extradited from the Bahamas, where he lived in a multi-million dollar mansion, on December 21.

Before his arrest last month, Bankman-Fried insisted in several interviews, including one with Forbes magazine, that he and his FTX company were innocent of all charges. However, the federal government has presented compelling evidence to the contrary and has proceeded to seize a large number of assets related to Bankman-Fried and FTX. The Bankman-Fried trial will take place in October, and is expected to be a major case in the cryptocurrency world.

Related

FTX warns its clients about recent scams

The exchange warns its users about the dangers of a scam that promises to return to victims the funds lost due to the collapse of the exchange.

Exchanges & Wallets
3’