Federal prosecutors continue to build their case against Sam Bankman-Fried.
The former crypto king on Nov, 11 had to file for bankruptcy after two of his star firms, FTX and Alameda Research, were unable to meet massive withdrawal demands from their clients.
FTX is a cryptocurrency exchange and Alameda Research is a hedge fund and trading platform, both created by the former trader.
The two companies were supposed to be independent, but according to the Department of Justice and the Securities and Exchange Commission, they maintained an incestuous relationship. Bankman-Fried is accused of transferring $10 billion in client funds from FTX to Alameda.
FTX was using the client cryptocurrencies as collateral to borrow money, which in turn it had transferred to Alameda Research with which it shares several links. Alameda used this money to invest in crypto businesses and also for trading operations.
“Bankman-Fried was orchestrating a massive, yearslong fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire,” the SEC alleges in its civil complaint.
During a Jan. 3 hearing in U.S. District Court in New York, Bankman-Fried pleaded not guilty. He was released after his parents, both law professors at Stanford University, signed a $250 million recognizance bond pledging their California home as collateral. Two other friends with significant assets also signed, according to news reports.
The trial is scheduled for Oct. 8.
SBF’s Stake in Robinhood Seized
Federal prosecutors have just disclosed that they seized assets from the former trader. These assets, valued at a total of nearly $700 million, could be subject to forfeiture if Bankman-Fried is found guilty of fraud.
Investigators seized 10 accounts belonging to Bankman-Fried, according to a court document filed by the U.S. Attorney for the Southern District of New York. These accounts contained stocks, cash and cryptocurrencies.
This stake in Robinhood is at the center of a dispute between Bankman-Fried, FTX and bankrupt crypto lender BlockFi. Bankman-Fried acquired those Robinhood shares with a $456 million loan from Alameda Research.
The government also seized more than $20.74 million held in an account in the name of Emergent Fidelity Technologies, a holding company. It also seized $94.57 million cash from an account held with Silvergate Bank on behalf of FTX Digital Markets, a subsidiary of FTX in the Bahamas.
‘$100,000 Left in My Bank Account’
In addition, the Justice Departments confiscated more than $7 million in other accounts held with Silvergate Bank and associated with Bankman-Fried.
Investigators also seized nearly $50 million from an account held with Moonstone Bank, a small Washington-state-based bank. The account was in the name of FTX Digital Markets.
Finally, the government confiscated three accounts on the Binance platform but did not disclose the value of these assets.
Excluding assets seized from Binance, the government seized approximately $698 million in assets belonging to Bankman-Fried between Jan. 4 and Jan. 19, according to the court document.
This amount is at odds with what the former crypto king told ABC-TV during his media offensive in December designed to defend himself. At the time, Bankman-Fried said he only had one ATM card and “$100,000 left in my bank account.”
“That’s honestly, to my knowledge, that’s what I have,” the former billionaire said during the interview with George Stephanopoulos.