In a surprising turn of events, federal prosecutors in New York have made the decision to sever a number of criminal charges against FTX crypto executive Sam Bankman-Fried, with the possibility of trying him on those charges at a later date. This decision comes in response to a recent ruling in the Bahamas, where Bankman-Fried can challenge the additional charges. In a ruling on Thursday, a judge granted the request from prosecutors to split the high-profile criminal trial into two separate proceedings due to concerns that a Bahamian court’s review could cause delays.
Bankman-Fried’s legal team has raised objections to the legitimacy of the five additional charges, arguing that they were not included in the original extradition agreement from the Bahamas, where FTX was headquartered. The challenge presented by his attorneys will be reviewed by a court in the Bahamas. During the hearing, prosecutor Nathan Rehn acknowledged the uncertainty surrounding the Bahamas’ decision on whether to consent to the new charges, which involve allegations of bank fraud and a $40 million bribe to the Chinese government to unfreeze a bank account.
Rehn stated: “Severing those counts seems appropriate given the recent developments in the Bahamas.”
Rehn further stated that the new charges would not be pursued by prosecutors unless consent is granted by the government of the Bahamas. Bankman-Fried was extradited from the Bahamas on eight criminal charges related to the collapse of FTX, the crypto-exchange he founded. He argues that the U.S. government violated the extradition treaty by filing additional charges against him.
Defense attorney Marc Cohen expressed the preference for the dismissal of those charges, stating: “We believe that dropping those counts would be the better outcome.”
Judge Lewis Kaplan did not issue an immediate ruling, indicating that he would take more time to consider the matter, stating: “I’m not going to make a ruling on this at this moment. I will give it further thought.”
Bankman-Fried will face a new trial for the five severed charges, which include allegations of bribery conspiracy, conspiracy to operate an unlicensed money-transmitting business, bank fraud conspiracy, derivatives, and securities fraud. The trial is scheduled for March 11, 2024. As for the remaining eight charges, Bankman-Fried has pleaded not guilty and is currently set to stand trial in October.
The defense also requested the judge to dismiss an original charge that accuses Bankman-Fried of violating campaign finance laws, arguing that it also violates the extradition treaty. The charge alleges that Bankman-Fried made improper donations of tens of millions of dollars to mainly Democratic candidates. Prosecutors countered that Bankman-Fried lacks standing to make such an argument as the decision to proceed with the charge involves the extradition agreement.
Rehn argued: “It’s a matter of diplomatic relations between the U.S. and the Bahamas. All parties involved understood that this was part of the extradition.”
Amidst the captivating rise of Bitcoin and digital assets, the FTX founder amassed an extraordinary fortune of $26 billion and wielded influential power as a major political donor. The drastic turn of the wheel of fortune happened when FTX plunged into bankruptcy following a surge of customer withdrawals triggered by reports of a doomed merger with his own hedge fund, Alameda Research. Bankman-Fried faces extensive allegations of misappropriating billions of dollars from FTX’s customers and investors, with prosecutors labeling it as one of the largest financial fraud cases in history.
He has been released on a $250 million bail, confined to his parents’ residence in Palo Alto, California, which was used as collateral, and subjected to restrictions on internet usage. Moreover, three former FTX employees, who have pleaded guilty, are now cooperating with the prosecutors. Should he be found guilty on the eight proceeding charges, the potential consequences are staggering, with the possibility of facing a prison sentence of more than a century.
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