Former FTX Executive Riyan Salame Pleads Guilty

2023-09-19, 09:13

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Salame pleaded guilty to the charges of unlawful political contributions and defrauding of the U.S Federal Election Commission.

Salame entered an agreement with the Federal prosecutors which may reduce his sentence or make it irrelevant.

Judge Kaplan will announce Salame’s sentence on 6 March 2024.

Keywords: FTX executive, crypto market, crypto industry, FTX reputation, FTX lawsuits, FTX crash, FTX news
## Introduction 
The drama around the FTX crypto exchange crash continues as one more former executive pleads guilty. The evidence presented during the trial shows several governance malpractices [that led to the collapse of the exchange](https://www.gate.io/blog_detail/1804/key-lessons-from-the-collapse-of-ftx-and-the-implosion-of-ftt "that led to the collapse of the exchange").

This article covers Salame, a former FTX senior executive’s, admission of guilt. We will also look at how this will affect FTX reputation and its revival plan. 
## Salame Pleads Guilty to Several FTX Charges
Ryan Salame, the former co-CEO of FTX’s Bahamian subsidiary and a close [associate of Sam Bankman-Fried](https://www.gate.io/explore/ftx-sbf "associate of Sam Bankman-Fried") pleaded guilty to two charges levelled against him which include making unlawful political donations.

On Thursday, 7 September, Salame pleaded guilty before US District Judge Lewis Kaplan in Manhattan. Officially, Salame became the fourth former FTX executive to admit their contributions towards the downfall of the crypto exchange.

Salam’s plea of guilty came about a month before the trial of FTX founder and CEO Bankman-Fried who is charged with conspiracy to defraud FTX which resulted in its bankruptcy in November 2022 commences. Incidentally, Kaplan is the man who will oversee SBF’s trial which starts on 3 October.

Read also: [Singapore Temasek Named in FTX amidst Struggles](https://www.gate.io/uk/blog_detail/3102/singapore-temasek-named-in-ftx-amidst-struggles "Singapore Temasek Named in FTX amidst Struggles")
## Riyan Salam’s Background and Role in FTX
Before we cover what Salam did wrong, let’s look at his background and executive role in [FTX](https://www.gate.io/price/ftx-ftt "FTX").

Riyan Salam, 29 years of age, grew up in Sandisfield, Massachusetts, United States. He worked as a dishwasher at a restaurant in the local area when he was only 14 years old. Later on, he studied at the Martial Arts Institute of the Berkshires. In 2019 he finished his master’s degree in Finance at Georgetown University.

After that Salam worked for a short period as a senior tax consultant at Ernst & Young, a consulting firm, before joining Circle, the stablecoin issuer, where he worked as a trader. In 2019 he joined Alameda Research, Bankman-Fried’s <a href="/uk/price/quant-qnt" target="_blank" class="blog_inner_link">Quant</a> trading firm. In the Bahamas where he was based, Salame was the point of contact between FTX and the government.

Read also: [Alameda's $700M Pursuit for Celebrity-Political Access](https://www.gate.io/tr/blog_detail/2867/alameda-s-700m-pursuit-for-celebrity-political-access "Alameda's $700M Pursuit for Celebrity-Political Access")

According to his LinkedIn profile, Salame became FTX Digital Market's Co-CEO in 2021. It was during that period, stretching from 2020 to 2022, that he started acquiring various properties which include restaurants and real-estate.

As an example, Salame bought six pieces of real estate worth $6 million. He also acquired several restaurants that include Sweet Dreams bakery, Firefly Gastropub and The Olde Heritage Tavern.

Read also: [Is the FTX Crash by SBF a Ponzi Scheme or Fraud?](https://www.gate.io/explore/ftx-sbf "Is the FTX Crash by SBF a Ponzi Scheme or Fraud?")
## Criminal Charges against Salame
The US government arraigned Salame at the U.S. Courthouse in the Southern District of New York to answer charges of unlawful political contributions and defrauding U.S Federal Election Commission.

The federal prosecutors alleged that Salame and Singh made donations worth millions of dollars to political candidates in the United States. According to the prosecutors Salame and his associates used FTX customer funds to make the unlawful donations. Also,  the government said that their contributions exceeded the federal limits.

According to the prosecutors, Salame and his associates, including Bankman-Fried’s actions, were meant to influence policy decisions which might have an impact on the crypto industry. Salame and SBF channelled the donation funds through Alameda Research. The FTX executives categorized the funds transferred to Alameda Research as loans.

Salame admitted that he was a straw donor who secretly channelled millions of dollars to the Republican political candidates. On the other hand, Bankman-Fried was responsible for all the donations they gave to the Democrats.

Read also: [The FTX Saga Continues | Where Does the Domino Go?](https://www.gate.io/blog_detail/1777/ftx%E4%BA%8B%E4%BB%B6%E8%BF%9B%E8%A1%8C%E6%97%B6-%E5%A4%9A%E7%B1%B3%E8%AF%BA%E9%AA%A8%E7%89%8C%E5%80%92%E5%90%91%E4%BD%95%E6%96%B9 "The FTX Saga Continues | Where Does the Domino Go?")

Salame who was the co-CEO of FTX's unit in Bahamas, did not waste the court’s time as he easily admitted that he played a big role in defrauding the Federal Election Commission, made unlawful political contributions as well as operating an unlicensed money-transferring business.

Salame said, “I made political contributions in my name that were funded by transfers from an Alameda subsidiary.”

Regarding his open admission Damian Williams said, “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.”

Read also: [FTX Event and Its Domino Effects?](https://www.gate.io/blog_detail/1792/ftx-event-and-its-domino-effects "FTX Event and Its Domino Effects?")

In the meantime, the court will announce Salame’s ruling on 6 March 2024 where he faces a possibility of up to 10 years in jail. 
## Salame’s Plea Agreement 
Salame’s plea agreement with the government involves several key clauses and terms which determine the final court sentence which Judge Kaplan will hand in March 2024.

First, Salame agreed to hand over $6 million dollars to the government before the court passes the sentence. Also, Salame will forfeit $1.5 billion which represents the property that falls under the unlicensed money transmitter charge. The court also ordered Salame to pay restitution of about $5.5 million to FTX debtors.

Already, Salame has agreed to hand over several assets, which include“2021 Porsche automobile, to the government. He will also give the government multiple properties such as the two Massachusetts homes and Rood Farm Corporation.

If Salame manages to honor the plea agreement in full by the agreed date “he will be off the hook for the full amount.” This is in accordance with the DOJ filing that states: "Upon receipt of the payment ... the [U.S.] shall accept the Payment and Substitute Assets in full satisfaction of the Money Judgement.” Judge Lewis Kaplan in U.S. District Court in Manhattan will hand the judgement on the stated date.

Commenting on FTX lawsuits and Salame’s admission of guilt, Jason Linder of  Mayer Brown firm, who is Salame’s legal counsel, believes that his client will receive a favourable sentence so he starts a new chapter in his life.

Linder said, "Ryan looks forward to putting this chapter behind him and moving forward with his life.'' Notably, Salame is one of the several former FTX executives, including Gary Wang and Caroline Ellison, who forged plea deals with the court. 
## The Impact of Salame’s Plea on FTXs Reputation and Operations 
Per the latest FTX news, by the time Salame made his guilty plea the crypto exchange’s revival plan was at an advanced stage. Citing a presentation filed in a Delaware court, Bloomberg recently reported that the defunct FTX crypto exchange has already received over 75 bidders.

Currently, the estate management firm has recovered $16 billion consisting of cryptocurrencies worth about $3.4 billion and other assets valued at around $7 billion. A recent report revealed that the current FTX management that comprises CEO John J. Ray III and other executives are planning to re-launch the exchange.

However, Salame’s admission of poor corporate and financial management could impede the progress the current FTX executives have made. The reason is that it is not yet clear whether or not the firm has a suitable corporate structure in place as well as sufficient oversight to detect and prevent similar irregularities in the future. Even if the current executive re-launch FTX many investors may desist from investing in it, something that could affect its competitive ability within the entire crypto market.

Read also: [FTX Sues Sam Bankman-Fried and Former Execs for $1 Billion](https://www.gate.io/th/blog_detail/3017/ftx-sues-sam-bankman-fried-and-former-_s-for-1-billion "FTX Sues Sam Bankman-Fried and Former Execs for $1 Billion")
## Conclusion 
Riyan Salame, the former FTX executive, pleaded guilty to two charges levelled against him. However, he entered a plea agreement with the federal prosecutors to settle some financial obligations which include a restitution of $5.5 billion to FTX debtors. Judge Kaplan will sentence Salame on 6 March 2024.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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