Ryan Salame, a former high-ranking executive at the cryptocurrency exchange FTX, entered a guilty plea last Thursday, marking a significant development in the ongoing fraud case against FTX’s founder, Sam Bankman-Fried. This plea adds substantial pressure on Bankman-Fried, who is scheduled to face trial next month.
Salame, appearing in a federal courtroom in downtown Manhattan, admitted to violating campaign finance laws and operating an unlicensed money-transmitting business. He confessed to making substantial political contributions under Bankman-Fried’s direction.
These contributions were disguised as loans from FTX’s sister company, Alameda Research. Salame acknowledged that he believed these loans would eventually be forgiven, relieving him of repayment obligations.
In his guilty plea, Salame agreed to pay a $6 million fine and over $5 million in restitution to FTX. Additionally, he will forfeit two properties in Lenox, Massachusetts, and a Porsche automobile. His sentence could potentially include up to 10 years in federal prison.
Salame, aged 30, previously managed FTX’s subsidiary in the Bahamas and was a prominent donor to Republican politicians. He becomes the fourth executive within Bankman-Fried’s inner circle to admit to criminal wrongdoing following FTX’s collapse in November.
The others, Nishad Singh, Caroline Ellison, and Gary Wang, have all pleaded guilty to fraud charges and have agreed to cooperate in the case against Bankman-Fried. It is worth noting that Salame is not currently cooperating with federal prosecutors.
The collapse of FTX last year was a shocking event that highlighted the hubris within the cryptocurrency industry. With Salame’s assistance, Bankman-Fried had successfully elevated FTX to household name status, even gaining endorsements from celebrities and politicians. However, the company’s rapid downfall resulted in customers losing more than $8 billion in deposits.
Bankman-Fried, aged 31, was arrested in December and charged with seven criminal counts, including wire fraud and securities fraud. He is accused of misusing billions of dollars in FTX customer funds for extravagant real estate purchases, political donations, and investments in other companies.
He maintains his innocence, and his trial is set to commence on October 3. Notably, Bankman-Fried’s bail was revoked recently, leading to his incarceration, as a judge determined that he had attempted to interfere with witnesses in the case.
Mr. Salame’s attorney, Jason Linder, expressed that Salame is eager to put this chapter behind him and move forward with his life.
One significant aspect of Salame’s involvement in the case is his participation in a scheme that allowed FTX to accept funds from U.S. customers through Alameda’s accounts with select U.S. banks. These accounts were originally designated as trading accounts and were not approved for deposits from cryptocurrency customers.
For years, Salame was one of Bankman-Fried’s top advisers. A native of the Berkshires, Salame initially worked at Alameda when Bankman-Fried operated it in Hong Kong. When FTX relocated to the Bahamas, Salame served as the main point of contact with the local government. Over time, he became one of the wealthiest figures in the crypto industry, indulging in luxury purchases like private jets and expensive cars.
Salame also became active in Washington’s political arena, positioning himself as a “budding Republican megadonor.” In the 2022 midterm elections, he donated a substantial $24 million, primarily to Republican causes. He was even romantically linked to Michelle Bond, a crypto lobbyist who unsuccessfully ran for Congress as a Republican candidate from Long Island, New York.
The collapse of FTX and the subsequent legal proceedings have thrust Salame into the spotlight as a target for federal prosecutors. In April, the FBI searched his Potomac, Maryland home, seizing phones belonging to both Salame and Bond.
Additionally, prosecutors implicated Salame directly in the charges against Bankman-Fried, asserting that Bankman-Fried had enlisted his executives in a “straw donor” scheme to bypass campaign contribution limits. They alleged that Bankman-Fried used these executives as proxies to make tens of millions of dollars in donations on behalf of the company.
Although the campaign finance charge against Bankman-Fried was eventually dropped due to procedural issues with his extradition, prosecutors indicated they would still leverage the campaign finance allegations to support other charges against him.
