US seizes $170 million linked to FTX and Bankman-Fried

The Justice Department said Friday that it seized $170 million in cash with ties to FTX as part of the criminal case against disgraced cryptocurrency executive Sam Bankman-Fried.

Damian Williams, the US Attorney for the Southern District of New York, said in a court filing on Friday that the money was taken over the past few weeks from accounts at a global brokerage firm, a crypto bank and a small bank based in the state. of washington. who has ties to FTX management. It was all in US dollars, not cryptocurrency, and is being held by the government as the criminal case against Bankman-Fried progresses.

The accounts were held by a company called Emergent Fidelity Technologies, majority-owned by Bankman-Fried, and FTX Digital Markets, a subsidiary of FTX in the Bahamas.

After more than three years as one of the world’s best-known cryptocurrency companies, FTX filed for bankruptcy in November amid a spectacular collapse of its peer and exchange currency. The following month, the Justice Department indicted the company’s former CEO, Sam Bankman-Fried, with eight counts of fraud, money laundering and other crimes. Bankman-Fried has pleaded not guilty and remains under house arrest at his parents’ home in Palo Alto, California.

The Southern District also said it took about 55 million shares of the Robinhood trading platform, worth about $525 million as of Friday afternoon, which it had previously said it would.

Those actions are in dispute, with the Justice Department, Bankman-Fried and defunct cryptocurrency lender BlockFi all claiming them.

While Bankman-Fried’s prior personal access to the funds is unclear, the amounts could contradict Bankman-Fried’s statements in interviews in November that he had less than $100.00 in assets.

Additionally, Williams said the government could seize holdings in three FTX-linked Binance accounts whose value was not disclosed.

It is still possible that some of the money will be given to the defendant to pay legal fees. Bankman-Fried’s lawyers have said it needs the proceeds from Robinhood shares to do just that.

Meanwhile, the company’s restructuring leadership is trying to track down FTX’s assets as part of the bankruptcy process. FTX’s new CEO, John J. Ray, with the help of New York law firm Sullivan & Cromwell, recently said some $5.5 billion of the $8 billion missing in assets has been located.

On Friday, the presiding judge in the case, John Dorsey, rejected an offer by two FTX creditors to remove the law firm, which has been trying to continue its primary investigative role. Sullivan & Cromwell had revealed last month that it had earned nearly $9 million working for Sam Bankman-Fried’s company, and that it once employed FTX US general counsel Ryne Miller, raising concerns of a conflict of interest. and the action of creditors.

But Dorsey told a hearing that he saw no reason to agree to the creditors’ request.

“There is no evidence of any actual conflict,” the judge said.

Shayna Jacobs contributed to this report.

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