Federal prosecutors investigating the bankruptcy of crypto exchange FTX announced late Wednesday that they were dropping several charges against the company’s founder, Sam Bankman-Fried, at least for the time being.
In court filings, prosecutors said five of the 13 charges against Bankman-Fried will go to trial in October without being pursued. These charges were added by the government to Bankman-Fried’s indictment in the months following his extradition. From the Bahamas in December. The charges included bank fraud charges and charges that Bankman-Fried had bribed foreign governments.
The dismissal of these counts was a victory for Bankman-Fried. He has argued that prosecutors should not have been allowed to file additional charges after extradition.
However, there was a big caveat to this victory. Prosecutors have asked Manhattan U.S. District Court Judge Louis A. Kaplan, who is overseeing the case, to schedule a retrial on those five charges in early 2024.
Prosecutors argued the delay was a procedural necessity. Bankman-Fried won a judgment this week in the Bahamas, where FTX is based, and was granted the right to argue in a court there that the Bahamian government should not have agreed to the additional charges. It could take months for the legal dispute to unfold.
In a court filing Wednesday, prosecutors said it was unclear when the Bahamas would decide whether to approve the new charges. They wrote that their move was aimed at “simplifying the proof in court and reducing the burden of trial preparation for Mr. Bankman-Fried.”
Bankman-Fried was arrested in December following the collapse of FTX, one of the world’s largest cryptocurrency exchanges. He agreed to be turned over on charges of orchestrating a large-scale fraud that used billions of dollars in customer deposits to finance luxury real estate purchases, charitable donations and cryptocurrency trading.
After arriving in the United States, Bankman-Fried was granted bail and allowed to remain under house arrest in his childhood home in Palo Alto, California.
In February, prosecutors filed an amended indictment containing four new charges in addition to the eight in the original dossier. The new charges included charges that Bankman-Fried committed bank fraud and operated an unlicensed money transfer business.
A month later, prosecutors pursued another charge of paying the Chinese government $40 million to unfreeze trading accounts managed by Bankman-Fried’s hedge fund Alameda Research. bottom.
In a court filing, Bankman-Fried’s lawyers called for the new charges to be dropped for violating elements of extradition proceedings between the Bahamas and the United States. In such cases, prosecutors are usually restricted from filing new charges after the defendant has been transferred.
public prosecutor Said A recent filing said new charges would not be pursued unless the Bahamian government authorizes it.this week’s Rulinga Bahamian judge paved the way for Bankman-Fried to challenge that authorization in court.
Bankman-Fried also argued that some of the original charges against him were too vague or had other legal flaws and should be dropped. In his first indictment, he was charged with money laundering, securities fraud, and campaign finance violations.
His lawyers are scheduled to appear in federal court on Thursday to argue that some of those charges should also be dropped.
