DOJ: Bankman-Fried Turned to Foreign Regulators to Hold On to FTX

As his crypto empire collapsed, Sam Bankman-Fried reportedly turned to overseas regulators for help.

Federal prosecutors say the FTX co-founder tried to hold off his company’s bankruptcy proceedings last year so he could move FTX assets to foreign regulators, the Wall Street Journal reported Monday (Jan. 30), citing a court filing from the Department of Justice (DOJ).

According to the report, prosecutors say Bankman-Fried hoped for lenient treatment from those regulators, who would eventually let him take back control of FTX. The Justice Department also says FTX’s attorneys wanted to secure those assets for bankruptcy at the same time Bankman-Fried was attempting to move the funds.

He allegedly spoke of this with Gary Wang, FTX’s former chief technology officer, who pleaded not guilty in December and is cooperating with authorities.

Prosecutors allege Bankman-Fried allowed customers in the Bahamas — where FTX was headquartered — to withdraw millions in funds after the company froze accounts.

“We are deeply grateful for what The Bahamas has done for us, and deeply committed to it,” Bankman-Fried reportedly wrote to the Bahamas’ attorney general, saying the company would make an exception for the country’s customers. “We are also deeply sorry about this mess.”

Bankman-Fried, 30, is facing trial on charges that he stole billions from FTX’s customers and misled his investors. He pleaded guilty at his arraignment last month and has maintained his innocence in a series of public statements.

Some of his communications are the center of a new court battle, PYMNTS wrote Monday, as prosecutors have asked Judge Lewis Kaplan to limit Bankman-Fried’s communications.

The DOJ is asking the judge to expand Bankman-Fried’s bail conditions to block his use of encrypted messaging apps and from getting in touch with current and former FTX employees. This came after Bankman-Fried apparently emailed John J. Ray — FTX’s new CEO — and used an encrypted messaging platform to contact FTX US’s general counsel.

“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible or at least vet things with each other,” Bankman-Fried reportedly wrote to the general counsel, a witness in the case against him.

Prosecutors say this communication amounts to witness tampering, something Bankman-Fried attorney Mark S. Cohen has disputed.

Cohen said his client’s communication with the counsel was “merely an innocuous attempt to offer assistance in FTX’s bankruptcy process and does not reflect misconduct that warrants the restriction the Government proposes here.”