FTX's Sam Bankman-Fried Accused of $2 Billion Misuse of Customer Funds in Binance Stake Purchase
Summary:
U.S. federal prosecutors accuse Sam "SBF" Bankman-Fried of using FTX customer funds to finance his 2021 $2 billion stake purchase in Binance. The allegations imply misuse of client funds for venture investments, property acquisitions, and political contributions. If found guilty of seven counts of fraud and conspiracy to commit fraud, Bankman-Fried could face a sentence of up to 115 years. The defense is set to deliver closing arguments on Nov. 2, after which a final verdict will be reached.
The U.S. federal prosecutors have accused Sam "SBF" Bankman-Fried of allegedly using FTX customer funds to acquire his $2 billion stake in Binance, which he bought in 2021. The government attorneys are suggesting that the transaction was financed by client funds from his FTX platform. The legal proceedings against Bankman-Fried have been underway in the Southern District Court of New York since Oct. 3, with final statements from the prosecution due on Nov. 1. High Court jurors reportedly listened as Assistant U.S. Attorney Nicolas Roos view that Bankman-Fried unethically invested customer fund in FTX’s stock repurchase from Binance. This particular transaction cost $2 billion.
Binance secured a strategic partnership with FTX in 2019, which saw them invest in FTX. Two years on, in 2021, Bankman-Fried decided to reacquire FTX’s shares from Binance for a fee of $2.1 billion, which he paid in Binance’s stablecoin (BUSD) and FTX Token (FTT).
Prosecutors are also examining other payments made using the FTX's customer funds, such as political contributions, real estate purchases in the Bahamas, and venture capital funding. Roos identified that FTX funded an investment of $700 million to K5 Ventures, a venture capital firm that focuses on young startups, in 2022. Alameda Research, an affiliated firm to FTX, also invested $300 million into K5 Global. It is alleged by the prosecution that these investments were sourced from FTX's customer deposits.
Bankman-Fried’s defense posited that FTX’s own resources – which swelled from revenue of $89 million in 2020 to $1.02 billion in 2021– were utilized for property purchases, political donations, and venture investments. They propose that the $8 billion disparity between FTX and Alameda Research was due to Alameda’s risk management deficits and trading errors.
Accused of seven counts of fraud and plotting to commit fraud, Bankman-Fried could face a maximum sentence of 115 years if convicted. The defense’s closing statements are scheduled for Nov. 2, after which the jury will deliver its final decision. Magazine: Beyond crypto — Zero-knowledge proofs show potential from voting to finance.
Published At
11/1/2023 8:03:40 PM
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