Judge Splits Charges Against Sam Bankman-Fried, Sets Two Criminal Trials
Litigation in the Bahamas has thrown a wrench into FTX fraud case in U.S.
A federal judge ruled Thursday that the criminal charges against Sam Bankman-Fried should be split into two trials, after both prosecutors and the defense agreed that litigation in the Bahamas could delay the FTX founder’s case.
Bankman-Fried faces a total of 13 criminal charges connected to the implosion of cryptocurrency exchange FTX and was scheduled to go to trial on all the counts on Oct. 2.
In his ruling, U.S. District Court Judge Lewis Kaplan ordered a separate trial on five of the charges that he tentatively scheduled for March 2024.
The trial in October will proceed on the other charges.
Prosecutors have twice expanded their case against Bankman-Fried since he was transferred to the U.S. from Bahamian custody in December, including new allegations that he conspired to commit bank fraud and bribe a Chinese official. He was originally charged with eight counts, in an indictment that alleged he stole billions of dollars from customers and lenders.
Bankman-Fried, 31 years old, had argued that without the consent of the Bahamas, the U.S. has violated the terms of his extradition.
The treaty between the two countries requires that a host country approve the charges before the transfer of custody and any additional charges brought after the extradition. The Justice Department had conceded that it can’t move forward on the newer charges unless the Bahamas consents.
A Bahamian judge earlier this week temporarily blocked authorities in the island nation from responding to the U.S. government’s request for that consent, which has thrown a wrench into the prosecution’s plans. Bankman-Fried is seeking to make additional legal arguments in the Bahamas against the added charges.
Prosecutors late Wednesday consented to splitting the 13 counts that Bankman-Fried faces into two different trials, a move the Justice Department had previously resisted.
Prosecutors told Judge Kaplan at a hearing earlier Thursday that the October trial would be a week or two shorter if it proceeds on a smaller set of charges.
The bulk of Thursday’s hearing focused on arguments by Bankman-Fried that most of the charges against him should be dismissed outright.
Kaplan didn’t rule from the bench on that request, but signaled he was unlikely to dismiss any counts before trial, given that defendants face a high legal bar for securing dismissal at the preliminary stages.
Bankman-Fried’s lawyers mounted a range of arguments on why they think the charges are improper. They said that some of the charges were now legally invalid in light of a Supreme Court decision last month that narrowed the scope of the federal wire-fraud statute. They also said the government was attempting to make a criminal case out of matters that traditionally would have been handled through civil enforcement.
Prosecutors said their case was legally sound and met all the necessary requirements.
“You wrote great papers, made good targeted arguments,” Kaplan told the lawyers. “Now it’s my turn.”