Sam Bankman-Fried Says US Improperly Levied FCPA Charge

The U.S. District Court for the Southern District of New York should toss the U.S. claim that FTX crypto-exchange founder Sam Bankman-Fried violated the Foreign Corrupt Practices Act's anti-bribery provision since the government failed to allege an essential element of the FCPA, Bankman-Fried said in a motion to dismiss. The U.S. said payments were made to unfreeze assets belonging to cryptocurrency firm Alameda Research but didn't say payments were made to "secure or retain a contract with a foreign government agency, gain an unfair advantage, or achieve an objective of the sort addressed in the FCPA’s text or legislative history or in relevant caselaw" (U.S. v. Samuel Bankman-Fried, S.D.N.Y. # 22-00673).

Bankman-Fried added that the venue was wrong to stake the FCPA claim, which was added months later to the indictment against the former FTX head. The venue to allege the FCPA violation would be where the offender is arrested or first brought in connection with the offense, and the motion to dismiss said neither Bankman-Fried nor any other offender was arrested or first brought to the New York Southern District in connection with the FCPA violation.

Bankman-Fried pleaded not guilty to the FCPA charge in March (see 2303300061). The government alleged that the former executive paid around $40 million in cryptocurrency to one or more Chinese government officials to "induce them" to unfreeze certain cryptocurrency trading accounts held by Alameda. In the motion to dismiss, Bankman-Fried described the charge as "vague at best," telling the court that the indictment is "silent on the identities, positions, agencies, and official duties of the alleged recipients of the payments or how they were able to unfreeze Alameda's assets."

Bankman-Fried also said the government failed to satisfy the FCPA's business purpose requirement since the alleged payments were only meant to recoup assets belonging to Alameda and use them "as would occur in the normal course." The brief said that "[i]n an apparent effort to fill the hole in their FCPA theory, the Government alleges that after regaining access to the assets based in China, 'Alameda used the unfrozen cryptocurrency to fund additional Alameda trading activity.' ... This allegation does not rescue the FCPA charge." Bankman-Fried said that under the government's interpretation, the only way to avoid an FCPA violation after recovering these "rightfully owned" assets would be to "stow them under a mattress and refrain from investing them altogether."