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The downfall of FTX is likely one of the reasons for intense regulatory pressure from the United States authorities in 2023.
Sam Bankman-Fried (SBF), the former FTX CEO, is undoubtedly having it rough as his criminal charges have been split into two separate trials. SBF faces 13 charges, including securities fraud, wire fraud, and multiple conspiracy counts related to wire fraud on FTX customers and Alameda’s lenders; illegal campaign contributions; money laundering; operating an unlicensed money transmitting business; and bank fraud.
According to a ruling on June 15, the United States District Court Judge Lewis Kaplan has stated that five charges will be split off into a second trial on March 11, 2024.
Judge Kaplan’s Court order on June 14. Source: CourtListener
The new trial in March will pivot on bribery conspiracy, conspiracy to operate an unlicensed money-transmitting business, bank fraud conspiracy, derivatives, and securities fraud.
Last December, Mr. Bankman-Fried was extradited to the U.S. on eight charges. Following the extradition, the Department of Justice (DoJ) unwrapped four additional charges in February this year relating to fraud and conspiracy charges, along with an additional charge in March alleging bribes to Chinese officials.
However, the charge split comes as DOJ prosecutors requested a waiver from Bahamian authorities to try SBF on the five additional charges they imposed after his extradition.
The attorneys of the former FTX co-founder have, however, attempted to dismiss those charges. Bankman’s legal team has argued that the additional five charges from February “violate the Treaty’s rule of specialty provision.”
U.S. Prosecutors Insist SBF Trial Will Be On Original 8-Count Charge
On June 14, the DoJ lawyers asserted that they would proceed to try Bankman-Fried on the original eight charges they leveled against him — at least for now.
In a motion filed by Bankman-Fried in the Bahamas, the DoJ argued that many of the 13 charges he faced were not in the original indictment, which was the basis for his extradition from the country. As this is likely to be a lengthy process, the prosecutors wrote, they’re “prepared to proceed to trial as scheduled on the counts contained in the original indictment.“
In the court filing, the prosecutors noted:
It now appears that litigation of that motion will take some time and may not be resolved until near or even after the trial date.
Further, the Supreme Court of the Bahamas has stipulated that SBF must be allowed to formally challenge the new charges before the country can agree to them.
Will SBF Dodge A Prison Cell?
Bankman-Fried is the founder and former CEO of the crypto exchange FTX. He was initially charged in December 2022 in connection with his management of the bankrupt exchange. The exchange suffered a liquidity crisis in November 2022, forcing the exchange to file for a Chapter 11 Bankruptcy protection.
The crypto exchange is notably estimated to owe creditors over $3 billion. Prosecutors allege that Bankman-Fried commingled customer funds and misled investors about FTX’s risk management practices, leading to losses for investors and customers.
Further, the exchange co-founder Gary Wang and former CEO of sister company Alameda Research, Caroline Ellison, have pleaded guilty to fraud charges concerning FTX’s downfall. On the other hand, SBF has pleaded not guilty, claiming that FTX’s collapse was due to the company’s mistakes and not fraudulent reasons, as the court alleges.
As his trial commences on October 2, SBF will bite the bullet by having to spend 115 years in jail if found guilty.
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