In the Sam Bankman-Fried case, the US withdraws new charges

Federal prosecutors investigating the collapse of the FTX cryptocurrency exchange said late Wednesday that they will, at least for now, drop several of the charges against the company’s founder, Sam Bankman-Fried.

In a court filing, prosecutors said they would proceed to a trial in October without pursuing five of the 13 charges against Mr. Bankman-Fried — a set of charges the government added to the crypto mogul’s indictment in the months after he was extradited from the Bahamas in December. Among those charges was one count of bank fraud, as well as an allegation that Mr. Bankman-Fried bribed a foreign government.

Mr. Bankman-Fried has argued that prosecutors should not have been allowed to charge him with additional crimes after the extradition. But the withdrawal came with a major caveat: Prosecutors asked the judge overseeing the case, Lewis A. Kaplan of the Federal District Court in Manhattan, to schedule a new trial in early 2024 on those five counts.

Prosecutors said the delay was a procedural necessity. This week, Mr. Bankman-Fried won a ruling in the Bahamas, where FTX was based, that allowed him to argue in court there that the Bahamian government should not agree to the additional charges. The legal dispute could take months to unfold.

In court filings Wednesday, prosecutors said it was uncertain when the Bahamas will decide whether to approve the new charges. They wrote that their move was intended to “simplify the evidence at trial and reduce the burden of trial preparation” on Mr. Bankman-Fried.

Mr. Bankman-Fried was arrested in December following the collapse of FTX, one of the largest crypto exchanges in the world. He agreed to be extradited amid allegations that he had orchestrated a massive fraud in which he used billions of dollars in customer deposits to fund lavish real estate purchases, charitable donations and crypto trading.

After his arrival in the United States, Mr. Bankman-Fried was granted bail and allowed to remain under house arrest at his childhood home in Palo Alto, California.

In February, prosecutors filed a revised indictment, adding four charges to the eight in the original document. The new charges included allegations that Mr. Bankman-Fried committed bank fraud and operated an unlicensed money transmission business.

A month later, prosecutors brought another charge, accusing Mr. Bankman-Fried of paying a $40 million bribe to the Chinese government to release trading accounts maintained by Alameda Research, a hedge fund he owned.

In court documents, Mr. Bankman-Fried’s lawyers have said the new charges violate elements of the extradition process between the Bahamas and the United States. In such cases, the prosecution is usually limited to issuing new charges after a defendant has been transferred.

Prosecutors said in a recent filing that they would not pursue the new charges unless the government of the Bahamas authorized them. In this week’s ruling, a Bahamian judge cleared the way for Mr. Bankman-Fried to challenge that authorization in court.

Mr. Bankman-Fried has also argued that several of the original charges against him should be dropped, saying they are too vague or have other legal flaws. The first indictment charged him with, among other things, money laundering, securities fraud and campaign finance violations.

His lawyers appeared in federal court Thursday to press the case for some of those charges to be dropped as well.

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