Defendants Sam Bankman-Fried, Caroline Ellison, and Gary Wang, as well as the FTX and Alameda Research companies, will be prohibited from commodities trading, including trading bitcoin, ether, USDT, or other assets considered "digital asset commodities" by the CFTC. However, with Bankman-Fried already beginning a 25-year prison sentence, and Ellison and Wang due to be sentenced, this may be low on their list of worries.
FTX settles complaint from the CFTC with $12.7 billion payout
FTX will pay $8.7 billion in restitution and another $4 billion in disgorgement to settle the lawsuit from the CFTC, which was filed shortly after FTX collapsed in November 2022. All $12.7 billion, or what is available of it among FTX's remaining assets, will go to creditors rather than to the agency.
- "Judge approves $12.7 billion settlement between FTX and CFTC, bringing 20-month-long lawsuit to an end", The Block [archive]
- Permanent injunction, document #44 in CFTC v. Bankman-Fried [archive]
FTX executive Ryan Salame sentenced to 7.5 years imprisonment
Ryan Salame was the CEO of FTX Digital Markets which was the Bahamian portion of the FTX business. In September 2023, just before Sam Bankman-Fried's trial began, Salame pleaded guilty to one count each of conspiracy to operate an unlicensed money transmitting business and conspiracy to make unlawful political contributions and defraud the Federal Election Commission. He was the only co-conspirator of four to not plead under a cooperation agreement, and he did not testify at Bankman-Fried's trial.
In his sentencing memo, Salame asked for a sentence of no more than 18 months imprisonment, claiming that "he was duped, as was everyone else, into believing that the companies were legitimate, solvent, and wildly profitable." Judge Kaplan didn't seem to agree, ultimately passing down a sentence greater than the five to seven years requested by prosecutors. He also will pay $6 million in forfeiture, $5 million in restitution, and spend three years on supervised release.
Salame is the first of Bankman-Fried's co-conspirators to be sentenced.
- "Former FTX Executive Ryan Salame Sentenced To 90 Months In Prison", U.S. Attorney's Office, Southern District of New York [archive]
Sam Bankman-Fried sentenced to 25 years in prison
Sixteen months after the collapse of his FTX cryptocurrency exchange, Sam Bankman-Fried has been sentenced to 25 years in prison. He has also been ordered to pay an $11 billion monetary judgment.
The sentence follows his conviction on all seven felony charges in November 2022 — a decision reached by the jury within hours of beginning their deliberations.
Bankman-Fried intends to appeal the conviction.
- Minute Entry for proceedings held before Judge Lewis A. Kaplan: Sentencing held on 3/28/2024 for Samuel Bankman-Fried [archive]
Sam Bankman-Fried convicted on seven charges
After less than five hours of deliberation, a jury convicted Sam Bankman-Fried of seven fraud and money laundering charges. The conviction followed a five-week-long trial which culminated in Sam Bankman-Fried himself taking the stand, only to appear evasive and sullen as he told prosecutors he couldn't recall many significant events from his time as FTX CEO.
Sentencing is scheduled for March 28, 2024, though scheduling could be affected by factors including whether the US decides to continue pursuing an additional five charges also set to be tried in March.
- "Sam Bankman-Fried: guilty on all charges", Molly White's Newsletter [archive]
Crypto is the end of Storybook Brawl
Storybook Brawl, a card based autobattler game that was beloved by Sam Bankman-Fried, took its servers offline on May 1. The game had no connection to the crypto industry until its studio was acquired by FTX Ventures in March 2022. This was not taken well by its existing playerbase, who left a flood of negative reviews on Steam based on the developers' intentions to incorporate cryptocurrencies and NFTs. According to SBF, Storybook Brawl was going to be "the vanguard for the ethical integration of gaming and crypto transactions."
The end of FTX seems to have directly spelled the end of Storybook Brawl, which stopped announcing updates in November. However, Protos has pointed out that the game may likely be auctioned off as a part of FTX bankruptcy proceedings.
FBI raids home of FTX exec Ryan Salame
The FBI raided the home of Ryan Salame, the former co-CEO of FTX Digital Markets (FTX's Bahamian subsidiary). Salame was close with Sam Bankman-Fried, although it came out in bankruptcy proceedings that Salame had contacted Bahamian securities regulators during the FTX collapse to tip them off to the improper transfer of FTX client funds to Alameda Research.
Salame was also a major donor to Republican candidates in the 2022 midterm elections, splashing out around $24 million in campaign contributions. However, court filings suggest that much of the money donated to political and other causes by FTX executives may truly have been misappropriated customer funds.
Salame is, at the moment at least, not facing charges in connection to the FTX collapse. In July 2023, the Wall Street Journal reported that the search was likely a part of an investigation into Salame and his girlfriend Michelle Bond over possible campaign finance violations pertaining to Bond's 2022 congressional campaign, and was not related to FTX.
- "F.B.I. Searches Home of Top FTX Executive", The New York Times
- "Former FTX Executive Linked to Campaign-Finance Probe of New York GOP Race", The Wall Street Journal
FTX co-founder Nishad Singh pleads guilty, agrees to co-operate against SBF
Nishad Singh, a co-founder of FTX and its former director of engineering, has agreed to plead guilty to six criminal charges and co-operate against his former boss, Sam Bankman-Fried. Singh has pled guilty to one count of wire fraud, three counts of conspiracy to commit fraud, one count of conspiracy to commit money laundering and one count of conspiracy to defraud the United States by violating campaign finance laws.
In direct messages to a Vox journalist in November 2022, shortly after the FTX bankruptcy, Bankman-Fried wrote that Singh had left, and that he was feeling "ashamed and guilty" because customer deposits were missing.
According to bankruptcy filings, Singh had received a $543 million loan from Alameda Research. Some of this may have gone towards illegal political donations, which Singh admitted in court to making, saying they were intended to bolster Bankman-Fried's and FTX's influence among politicians.
- "FTX Co-Founder Nishad Singh Pleads Guilty to Fraud Charges", The Wall Street Journal
- "FTX's Singh pleads guilty to six U.S. fraud, conspiracy charges", Reuters
Sam Bankman-Fried indicted on four new charges in criminal case
Sam Bankman-Fried, the founder and former CEO of the now-bankrupt FTX exchange, was already facing eight criminal charges for offenses including wire fraud, securities fraud, money laundering, and campaign finance violations. Now, US prosecutors have slapped him with four more charges including conspiracy to operate an unlicensed money-transmitting business and conspiracy to commit bank fraud.
The new indictment includes additional information about Bankman-Fried's alleged fraud. The indictment details SBF's attempts to circumvent due diligence by US banks by creating a fake company called North Dimension. Via North Dimension, SBF diverted funds to FTX, which was unable to get a bank account.
Bankman-Fried has entered a not guilty plea to the original eight charges, but has not yet entered a plea for the additional four.
These criminal charges add to securities fraud and other civil charges from the SEC, as well as civil charges out of the CFTC. Both civil cases have been stayed pending the outcome of the criminal case.
- Indictment, US. v. Sam Bankman-Fried
Bankrupt FTX tries to claw back $446 million from bankrupt Voyager
It's no big secret that there's a lot less money actually floating around in crypto than bogus "market caps" and other numbers would have you believe, but it's being put into stark relief as the various bankrupt crypto firms fight tooth and nail over any scrap of cash that may actually remain.
In FTX's ongoing efforts to dig through the proverbial couch cushions in search of any funds that could be used to fill the gaping hole in its balance sheet, the firm has sued Voyager, a crypto broker that filed for bankruptcy in July, to try to recoup $446 million in funds that were "preferentially transferred" to Voyager when it filed for bankruptcy.
The lawsuit alleges that Voyager served as a "feeder fund" that "solicited retail investors and invested their money with little or no due diligence in cryptocurrency investment funds like Alameda and Three Arrows Capital".
Wallets linked to Sam Bankman-Fried's Alameda Research unexpectedly begin selling off $1.7 million in tokens
Wallets known to be controlled by Alameda Research, the crypto trading firm founded by Sam Bankman-Fried and currently in bankruptcy with the other FTX companies, suddenly began selling off large quantities of mostly small altcoins on December 28. Whoever controls the wallets swapped the tokens for Tether stablecoins or Ethereum, then tumbled the funds through cryptocurrency mixers — a strong sign that this was probably not just the FTX liquidators consolidating wallets.
Altogether, an estimated $1.7 million was moved through various services to obfuscate the flow of funds.