Another FTX executive receives a custodial sentence, a Binance compliance chief falls “seriously ill” while on trial in Nigeria, and Binance announces a $3 incentive for customers to undergo "know your customer" checks.
Another FTX executive receives a custodial sentence, a Binance compliance chief falls “seriously ill” while on trial in Nigeria, and Binance announces a $3 incentive for customers to undergo "know your customer" checks.
Ryan Salame, former co-CEO of FTX’s Bahamas affiliate, FTX Digital Markets, has been sentenced to seven and a half years in prison after pleading guilty to all charges.
Salame, 30, was convicted of conspiracy to operate an unlicensed money transmitting business and conspiracy to make unlawful political contributions and defraud the Federal Election Commission (FEC).
Damian Williams, US attorney for the Southern District of New York (SDNY),said Salame’s sentence underscores the “substantial consequences” of the offences.
“Ryan Salame agreed to advance the interests of FTX and his co-conspirators through an unlawful political influence campaign and an unlicensed money transmitting business, which helped FTX grow faster and larger by operating outside of the law,” he said. “Salame’s involvement in two serious federal crimes undermined public trust in American elections and the integrity of the financial system.”
In addition to the custodial sentence, Salame must pay more than $6m in forfeiture and $5.59m in restitution. According tocourt documents, Salame will transfer an apartment in the Bahamas worth $5.9m to FTX debtors to meet the restitution obligation.
The restitution figure covers Salame’s personal withdrawal of over $5m from FTX.com in November 2022, shortly before the exchange collapsed and customer withdrawals were disabled.
In addition to real estate, Salame also misappropriated FTX Group assets to buy restaurants and food service companies, and to make purchases of luxury items, including a private jet.
Salame is the first FTX executive to be sentenced since Sam Bankman-Fried, co-founder and former CEO of FTX, received a 25-year sentence in March this year.
During Bankman-Fried’s trial, the crypto mogul’s former girlfriend and C-suite colleague, Caroline Ellison, testified that Bankman-Fried “really valued [Salame] for his loyalty.”
Prior to being made co-CEO of FTX Digital Markets in 2021, Salame served as a high-ranking official at Alameda Research, an FTX-affiliated crypto trading firm, from 2019 to 2021.
While working at Alameda Research, Salame conspired with Bankman-Fried and other employees to unlawfully use FTX companies to transmit customer funds without a licence.
Salame also made false statements to US banks to continue his unlawful activities, and conspired with Bankman-Fried to act as a “straw donor” for political contributions.
“These donations were made to improve Bankman-Fried’s personal standing in Washington, DC, increase FTX’s profile, and curry favour with candidates that could help pass favourable legislation,” the Department of Justice (DOJ) said in astatement.
In total, Salame and other FTX employees made more than $100m in contributions to candidates and political action committees (PACs) from both US parties.
Salame’s contributions were unlawful not only because he served as a proxy for Bankman-Fried, but because he used FTX corporate funds under his own name.
Binance executive “collapses” during Nigerian court hearing
The criminal trial of a Binance compliance executive in Nigeria has been postponed after the defendant collapsed due to ill health while in court last week.
Tigran Gambaryan, head of financial crime compliance at Binance, was detained in Nigeria in late February and was later charged with money laundering and tax evasion.
After being called to the dock last Thursday (May 24), Gambaryan collapsed and had to be reseated by his lawyer, according tolocal media.
Both in writing and in court, Gambaryan’s lawyer, Mark Modi, informed the judge that his client was “indisposed” and may be unable to stand trial without medical attention.
A motion was filed to allow Gambaryan, 40, to be moved out of Kuje prison to a private hospital.
The motion was granted and the trial was postponed until June 20. One day after the collapse, Gambaryan was given an intravenous treatment for malaria, according to a statement from his lawyer.
Gambaryan’s wife, Yuki, also submitted a statement to court, CoinDeskreported. “The conditions in the notorious Kuje prison are, in a word, devastating,” she said. “My husband is a strong, healthy person, but he is facing an environment that would bring even the strongest among us to our knees.”
Kuje was the site of an Islamic State assault and prison break in 2022, and its inmates today include convicted terrorists from both Islamic State and Boko Haram.
Binance among several crypto exchanges offering KYC bonuses
Binance has begun offering bonuses for undergoing know your customer (KYC) checks — a move that has sparked debate among compliance professionals.
In selected markets, Binance isoffering $3 payouts in the Tether stablecoin for users to complete KYC checks.
Other exchanges, such as Lithuania-incorporatedBTCC and Turkey’sMEXC, are also offering $20 in Tether stablecoin to those who undergo KYC.
Unlike other financial services, such as bank accounts, users of crypto exchanges are typically able to create an account without KYC, but won’t have full access to the exchange’s features until KYC is complete.
Patrick McKenzie, strategic advisor to Stripe,said there may be “good-faith” reasons for a financial institution to incentivise users to complete KYC.
For example, KYC information could be requested by a regulator, or a new KYC regulation could be introduced, which requires users to quickly update their personal information.
However, in McKenzie’s view, the KYC incentives are more likely to be an attempt to pad out the compliance credentials of the crypto exchanges offering them.
It’s a way to be seen as “doing something”, he said, and to have “documentable evidence” of the efforts that the exchange has made to remedy deficiencies in KYC compliance.
Vixio has contacted Binance for comment but did not yet receive a reply.
