The updates on disgraced FTX founder Sam Bankman-Fried and troubled crypto exchange Binance reflect the risks related to crypto markets and the need for stringent regulation. Bankman-Fried now faces a new allegation of bribing at least one Chinese government official, the Wall Street Journal reported. Meanwhile, the lawsuit filed by the U.S. Commodity Futures Trading Commission (CFTC) against Binance and founder Changpeng Zhao over alleged regulatory violations has led to increased outflows from the crypto exchange.
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In a new indictment unsealed on Tuesday, prosecutors accused Bankman-Fried of conspiring to bribe Chinese government officials to unfreeze accounts and regain access to cryptocurrency worth over $1 billion.
Prosecutors alleged that in 2021, Bankman-Fried authorized bribing one or more Chinese government officials with at least $40 million in cryptocurrency to regain access to accounts that were frozen under an investigation into a party that traded with his crypto trading firm Alameda Research.
These accounts, which held over $1 billion in cryptocurrency, were allegedly unfrozen when the first illicit payment was made. The indictment states that Bankman-Fried then authorized an additional bribe of tens of millions.
Overall, Bankman-Fried is facing mounting legal charges, including fraud, conspiracy, and violation of campaign finance laws.
Binance Outflows Rise
Meanwhile, citing crypto data provider Nansen, the Wall Street Journal reported that Binance witnessed net outflows of $2.1 billion on the Ethereum (ETH-USD) blockchain over the past seven days, as of Monday evening. Binance holds $63.2 billion in its publicly disclosed wallets, based on Nansen’s estimates.
Further, Andrew Thurman, an analyst at Nansen, highlighted that the “pace of withdrawals is heightened compared to normal activity” and has increased following the news of the CFTC lawsuit. As per Coindesk, CryptoQuant data indicates that Binance-branded stablecoin Binance USD (BUSD-USD) faced over $500 million in outflows in about 24 hours since the CFTC lawsuit news.
Nonetheless, Binance has experienced even bigger outflows in the past due to regulatory moves. In February, the crypto exchange saw $1 billion of outflows every 24 hours at its peak, after New York regulators announced a ban on the new issuance of BUSD.
Meanwhile, a federal judge has blocked Binance.US, the American affiliate of Binance, from buying Voyager Digital’s customer accounts out of bankruptcy.
Investors are keenly watching the developments related to Binance and FTX, as they continue to assess the risks associated with crypto markets. Binance’s own cryptocurrency, Binance Coin (BNB-USD), fell on March 27, the day the CFTC lawsuit was announced. Nevertheless, BNB-USD has gained 26.2% so far in 2023. However, it has declined 29% over the past year.
