In a significant legal development, Sam Bankman-Fried, the former Chief Executive Officer of FTX and Alameda Research, finds himself embroiled in a trial facing seven fraud charges connected to his efforts to recover $1 billion in assets that had been frozen on the Huobi and OKX cryptocurrency exchanges. These assets had been subject to a Chinese money laundering investigation involving an Alameda counterparty, as disclosed during court testimony on Wednesday.
The revelation came from Caroline Ellison, who had formerly served as the head of Alameda Research and had an intermittent romantic involvement with Bankman-Fried. Following unsuccessful negotiations with the Chinese government, Alameda Research reportedly resorted to trading strategies characterized by imbalanced transactions across various accounts. These accounts were notably established using the identities of Thai prostitutes, with the primary aim of causing significant financial losses on the primary account.
At first, Bankman-Fried had rebuffed the idea of bribing a Chinese official. However, according to Ellison’s testimony, he ultimately conceded to the suggestion. It is claimed that a bribe orchestrated by Alameda resulted in the eventual unfreezing of the frozen accounts.
Bankman-Fried is also set to face a second trial in March 2023, where he will confront five additional charges, including an alleged violation of the Foreign Corrupt Practices Act through bribery. Despite the gravity of the charges leveled against him, Bankman-Fried continues to assert his plea of not guilty.
