Another former FTX executive pleads guilty, helped SBF secretly fund Republican elections, and may face the forfeiture of up to $1.5 billion in assets

Compiled by: Felix, PANews

Former FTX executive Ryan Salame has pleaded guilty to criminal charges related to a massive fraud case involving FTX founder Sam Bankman-Fried (SBF). Less than a month later, on October 3, the court will conduct the trial of SBF, and this plea will undoubtedly be detrimental to him.

30-year-old Salame was the co-CEO of FTX Digital Markets, a subsidiary of FTX located 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 remittance business to help FTX grow faster through illegal operations.

As a major Republican donor, Salame was a secret intermediary for FTX's donations to right-wing politicians and political causes. Salame appeared in the U.S. District Court for the Southern District of New York, where he told Judge Lewis Kaplan that he made political donations in his own name, with funds transferred from a subsidiary of Alameda.

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

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

Additionally, Salame has been ordered to pay over $5.5 million in restitution to FTX creditors. He has been released after posting a $1 million bail.

Salame leaving the U.S. District Court for the Southern District of New York

Salame's Role at FTX

The U.S. Department of Justice listed Salame as an unnamed co-conspirator in the initial indictment against SBF, accusing SBF of using a straw donor scheme (Note: In the U.S., making political donations in someone else's name is illegal, and agreeing to use someone else's money to become a designated donor is also illegal. For example, a straw donor might donate to a political campaign before being reimbursed by another person, while another person uses that individual as a channel to exceed election donation limits set by jurisdictional laws ).

Since SBF publicly claimed to be a passionate supporter of the Democratic Party—having made the second-largest single donation to Joe Biden's 2020 presidential campaign, and with SBF and his family actively involved in various left-leaning political causes—it is alleged that SBF used Salame to secretly curry favor with Republicans.

During his time at FTX, Salame donated over $24 million to Republican political candidates. According to OpenSecrets.org, Salame was the 11th largest individual political donor in the U.S. in 2022. Due to treaty obligations 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 could be significant, particularly regarding the illegal campaign finance charges against SBF. Although these charges were temporarily removed from the upcoming trial in October due to the extradition treaty, they are expected to be included in a subsequent trial next year.

Four Former Executives of FTX Have Pleaded Guilty

Salame's plea means that the Department of Justice now has four former executives of SBF testifying against him, including Salame. The other three are Gary Wang, co-founder of the exchange; former Alameda Research CEO 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 wire fraud and conspiracy to commit money laundering, which together could result in a maximum sentence of 50 years in prison. Former CEO Caroline Ellison pleaded guilty to seven counts, including money laundering and wire fraud charges, which together could lead to a maximum of 110 years in prison. Both have agreed to plea deals, and were released on $250,000 bail. They each signed plea agreements. If prosecutors believe they are helpful to the case and do not violate the terms, they may recommend leniency.

Additionally, former FTX engineering director Nishad Singh pleaded guilty to six criminal charges in the U.S. 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 so that if Alameda lost too much borrowed money, it would not automatically sell assets. This exemption allowed Alameda to continuously borrow from FTX. Furthermore, Singh donated $8 million to the Democratic Party's campaign activities for the 2022 election cycle.