Indicted FTX founder Sam Bankman-Fried urges court to toss charges
Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, walks outside the Manhattan federal court in New York City, US on Mar 30, 2023. (File photo: REUTERS/Amanda Perobelli)
NEW YORK: Sam Bankman-Fried, who has long denied stealing from customers of his FTX cryptocurrency exchange, on Monday (May 8) asked a US judge to throw out criminal charges against him over the now-bankrupt FTX's collapse.
In a filing in Manhattan federal court, Bankman-Fried's lawyers said many cryptocurrency exchanges collapsed during a broad market crash in 2022, and that prosecutors hastily charged their client in a "rush to judgment".
"Rather than wait for traditional civil and regulatory processes following their ordinary course to address the situation, the government jumped in with both feet, improperly seeking to turn these civil and regulatory issues into federal crimes," his lawyers wrote.
Bankman-Fried, a 31-year-old former billionaire, has largely been confined to his parents' home since his December arrest in the Bahamas, where he had lived and where FTX was based. He was extradited to the United States just over a week after his arrest.
FTX imploded after a flurry of customer withdrawals in the wake of reports it had commingled assets with Alameda Research, Bankman-Fried's crypto-focused hedge fund.
Federal prosecutors in Manhattan said Bankman-Fried stole billions of dollars in FTX customer funds to plug losses at Alameda, buy real estate, and make political contributions through an illegal straw-donor scheme. They have also charged him with bribing Chinese officials.
In court papers on Monday, his lawyers said the campaign finance charge should be dismissed because it was not included on the surrender warrant signed by the Bahamas' foreign affairs minister ahead of Bankman-Fried's extradition, and that other charges including the bribery accusation were improperly brought after he was extradited.
Under an extradition treaty between the United States and the Bahamas, Bankman-Fried may only be tried and punished for charges he faced at the time of his extradition, unless the Bahamas government consents to the new charges.
Prosecutors have until May 29 to respond to Bankman-Fried's dismissal request, and US District Judge Lewis Kaplan will hear arguments on Jun 15.
Bankman-Fried rode a boom in bitcoin and other digital assets to an estimated net worth of US$26.5 billion, according to Forbes magazine. He became an influential donor to U.S. political and philanthropic causes until his fortune largely evaporated when FTX collapsed in November.
OCT 2 TRIAL
The Massachusetts Institute of Technology graduate has pleaded not guilty to 13 counts of fraud and conspiracy. He has acknowledged that FTX had inadequate risk management but denies stealing funds, and has sought to distance himself from FTX's day-to-day operations.
Three onetime close associates - former Alameda co-chief executive Caroline Ellison, former FTX technology chief Gary Wang, and former FTX engineering chief Nishad Singh - have all pleaded guilty and agreed to cooperate with prosecutors.
In pleading guilty, Singh admitted to making political donations in his own name that were funded in part by transfers from Alameda.
But Bankman-Fried's lawyers said on Monday that the donations made by Singh, referred to as CC-1 in prosecutors' charging documents against their client, did not actually violate election laws.
"The campaign finance allegations reveal, yet again, the consequences of the government's rush to indict Mr. Bankman-Fried," his lawyers wrote.
Bankman-Fried's trial is set for Oct 2.
His parents, who live in Palo Alto, California, are Stanford University law professors and co-signed his US$250 million bond. Bankman-Fried has limited access to technology, after prosecutors warned he might tamper with witnesses.
