Ryan Salame, a former top executive of FTX, the now-bankrupt cryptocurrency trading platform, has pleaded guilty to criminal charges in a New York courtroom on Thursday afternoon. He has also agreed to forfeit $1.5 billion.
The plea comes less than one month before Sam Bankman-Fried, co-founder of the digital currency exchange, is set to go on trial. Prosecutors allege Bankman-Fried orchestrated one of the largest financial frauds in US history.
Salame served as the chief executive of FTX and was a top lieutenant of Bankman-Fried, who is set to go to trial on October 2 facing numerous wire fraud and conspiracy charges. Bankman-Fried has pleaded not guilty to the charges.
Salame pleaded guilty to one count of conspiracy to operate an unlicensed money transmitting business and one count of conspiracy to make unlawful political contributions and defraud the Federal Election Commission. He faces a maximum of 10 years in prison.
According to the plea deal, besides the $1.5 billion forfeiture, Salame will make restitution of $5.6 million to FTX debtors. Salame has also agreed to pay $6 million to the US government by his sentencing date and forfeit property in the Berkshires and a 2021 Porsche 911. His sentencing is set for March 6, 2024.
A change of heart
Salame’s guilty plea is a reversal. His attorney had previously told prosecutors he would invoke his Fifth Amendment rights against self-incrimination if called as a witness against Bankman-Fried at next month’s trial, according to a court filing last month.
“Ryan looks forward to putting this chapter behind him and moving forward with his life,” said Salame’s attorney Jason Linder of law firm Mayer Brown.
Three other insiders have previously pleaded guilty and are cooperating with authorities against Bankman-Fried since the company collapsed and filed for bankruptcy court protection last November: Caroline Ellison, the former head of Alameda Research, Bankman-Fried’s hedge fund; Gary Wang, co-founder of FTX and Nishad Singh, a former engineer at FTX.
Prosecutors allege Salame and Singh made over 300 political donations totaling tens of millions of dollars using FTX customer funds obscuring Bankman-Fried’s role and exceeding federal contribution limits.
“Ryan Salame agreed to advance the interests of FTX, Alameda Research, and his co-conspirators through an unlawful political influence campaign and through an unlicensed money transmitting business, which helped FTX grow faster and larger by operating outside of the law,” said US Attorney Damian Williams, in a statement.
Prosecutors allege Bankman-Fried misused customer funds to make loans to Alameda, to fund venture investments and feed straw donors that were used to contribute to political campaigns, Republican and Democrat, to try to influence policy decisions impacting the crypto industry.
Prosecutors have said Salame played a role in the alleged scheme involving political donations. They want to show the jury a private message Salame sent to a family member in November 2021, explaining that he was a straw donor that Bankman-Fried used to make political donations.