Facepalm: It's looking pretty bleak for ruined FTX founder and CEO Sam Bankman-Fried. Another executive in his crushed cryptocurrency empire has pled guilty to charges related to the collapse. It's the fourth co-conspirator to take a plea deal and turn state's evidence against the cryptopreneur. It's a good bet that SBF regrets not pursuing a plea deal himself.
On Friday, another conspirator in the FTX collapse pleaded guilty to conspiracy to make unlawful political contributions and conspiracy to operate an unlicensed money-transmitting business. Ryan Salame faces up to 10 years in prison and $1.56 billion in fines and restitution.
Salame signed a plea agreement, so his fate is known pertaining to the monetary assessment. It stipulates that the defendant must surrender two properties, one business, and his 2021 Porsche 911 Turbo S. He must also pay $6 million in fines to the US and $5.6 million in restitution to FTX victims and creditors. If he fails to meet these arrangements or if it's found that he lied on his financial affidavit, the penalty will default to the $1.56 billion judgment. The court will assign jail time of up to five years for each offense in a hearing next March.
Starting in 2019, Salame worked for about a year at FTX subsidiary Alameda Research under another co-conspirator, Alameda CEO Caroline Ellison. He became co-CEO of FTX's Bahamian branch, FTX Digital Markets, in October 2021. CoinDesk notes that Salame admitted to trying to defraud the Federal Election Commission with illegal donations but fingered Sam Bankman-Fried in the transaction, claiming SBF ordered them.
"I made political contributions in my name that were funded by transfers from an Alameda subsidiary," he told Federal Judge Lewis Kaplan. "[The donations] were for the benefit of initiatives introduced by others but supported by Sam Bankman-Fried."
Salame said the plan was to support specific pro-crypto legislators in select elections to replace those looking to implement cryptocurrency regulations.
These transfers were categorized as loans, but he said he was led to believe he did not have to pay them back and that the debt "would eventually be forgiven." Prosecutors allege that the transactions were a concerted effort to influence cryptocurrency regulations from lawmakers by buying off up-and-coming Democrats and Republicans with illegal campaign donations.
The second charge is a process crime involving Alameda and FTX affiliates never filing the licensing paperwork with the Federal Trade Commission to transfer money to and from customer accounts.
"[Mr. Salame] conspired to operate Alameda and its affiliates on behalf of FTX as a means for transmitting funds on behalf of FTX customers, even though Salame and his co-conspirators never obtained the required federal money transmitting licenses for Alameda and the relevant affiliates," read the indictment.
During his employment at FTX, Salame made several large property and business investments in Lenox, Massachusetts. One of the properties he must relinquish hosts a restaurant called Olde Heritage Tavern. He also forfeits equity interest in the business to the federal government.
The Olde Heritage Tavern has been a Lenox hangout since 1969, frequently compared to the fictional television bar Cheers. Its fate is unclear. The Berkshire Eagle reported that when Salame purchased the restaurant in 2021, he kept all the staff and rehired the manager from another restaurant he owned that became a victim of Covid lockdowns.