Another FTX former executive pleads guilty, could face up to $1.5 billion in asset forfeiture.

Editor: Felix, PANews

Former executive of cryptocurrency exchange FTX, Ryan Salame, has pleaded guilty to criminal charges related to a major fraud case involving FTX founder Sam Bankman-Fried (SBF). Less than a month later, on October 3rd, SBF's trial will take place, and this guilty plea will undoubtedly be detrimental to SBF.

Salame, 30, was the co-CEO of FTX Digital Markets, a subsidiary of FTX based in the Bahamas. He admitted to conspiring to make illegal political donations to deceive the Federal Election Commission, as well as conspiring to operate an unlicensed money transfer business to help FTX grow faster through illegal operations.

As a major Republican donor, Salame was the secret intermediary for FTX's donations to right-wing politicians and political causes. Salame is being tried in the Southern District of New York federal court, and when he pleaded guilty, he told Judge Lewis Kaplan that he made political donations in his personal capacity, with funds transferred from a subsidiary of Alameda.

Each of the charges admitted by Salame carries a maximum sentence of 5 years imprisonment, meaning he will face 10 years in prison for the two charges. As part of a plea agreement with the government, Salame has agreed to forfeit assets worth over $1.5 billion, which is equivalent to the funds involved in the money transfer crimes. This is even more than the $700 million the prosecutor sought from SBF, but only if Salame lies or fails to surrender a small amount of assets, including $6 million in cash and assets such as a Porsche 911 Turbo, will this money be seized.

Salame has agreed to pay $6 million before sentencing on March 6th next year. He will also give up the Porsche 911 Turbo and several properties, including two residential properties in Massachusetts and the ownership of East Rood Farm Company, which holds some of Salame's restaurants in Lenox. Salame was known for investing in restaurants. In 2019, Salame spent over $6 million buying five restaurants in Berkshire County, Massachusetts.

In addition, Salame was ordered to pay over $5.5 million in compensation to FTX creditors. Currently, Salame has been released after posting $1 million bail.

Salame leaving the Southern District of New York courtroom

Salame's role in FTX

The US Department of Justice initially listed Salame as an unnamed co-conspirator in the indictment against SBF, accusing SBF of using a straw donor scheme (note: in the United States, providing political donations on behalf of others is illegal, and agreeing to be a designated donor using another person's money is also illegal. For example, a straw donor may make a contribution to a political campaign before being reimbursed by another person, who then uses that person as a channel to exceed the legal limits on election contributions imposed by jurisdictional laws) to secretly provide political donations, in violation of campaign laws.

Due to SBF publicly stating himself as a fervent supporter of the Democratic Party - he made the second largest single contribution to Joe Biden's 2020 presidential campaign and he and his family actively engaged in various progressive political causes - it is alleged that SBF used Salame to secretly curry favor with Republicans.

During his tenure at FTX, Salame donated over $24 million to Republican political candidates, making him the 11th largest individual political donor in the United States for 2022, according to OpenSecrets.org. Due to obligations under a treaty with the Bahamas, the Department of Justice dropped campaign finance charges against SBF in July, but later clarified that the FTX founder would still be "charged with implementing an illegal campaign finance scheme."

Salame's testimony is potentially significant, particularly in relation to the illegal campaign finance allegations against SBF. Although these charges have been temporarily dropped from the upcoming trial scheduled for October due to an extradition treaty, they are expected to be included in the subsequent trial next year.

Four FTX Executives Have Pled Guilty

Salame's plea means that the Department of Justice now has four former SBF executives, including Salame, testifying against him. The other three individuals are the co-founder of the exchange, Gary Wang, former CEO of Alameda Research, Caroline Ellison, and former FTX executive Nishad Singh.

FTX co-founder Gary Wang was the first to plead guilty. In December of last year, Gary Wang admitted to four charges, including telecommunications fraud and conspiracy to commit money laundering, which carries a maximum sentence of up to 50 years in prison. Former FTX CEO Caroline Ellison pleaded guilty to seven charges, including money laundering and wire fraud, for a maximum sentence of up to 110 years in prison. Both individuals have reached settlement agreements and have been released on bail of $250,000 each. They have signed plea agreements, and if the prosecution deems their cooperation helpful and in compliance with the agreement, they may recommend lenient punishment.

In addition, former FTX Director of Engineering Nishad Singh has admitted to six US criminal charges. Singh admitted 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 violating campaign finance regulations. Singh modified FTX's software in 2020, which allowed Alameda to continuously borrow from FTX without automatically liquidating assets if Alameda incurred too much borrowed funds. Additionally, Singh made donations of $8 million to the Democratic Party for the 2022 election cycle.