FTX founder Sam Bankman-Fried may face two criminal trials after a federal judge on Thursday granted a request by prosecutors to delay a trial on some of the charges until next year.
Bankman-Fried faces trial in October on charges brought against him last year. Judge Lewis A. Kaplan in Manhattan set a March 11 trial date for him on newer charges filed earlier this year.
Kaplan chose to schedule two trials after prosecutors said they will only go ahead with the newer charges if authorities in the Bahamas — where Bankman-Fried was first arrested — agree to it.
The judge acted hours after Bankman-Fried appeared before Kaplan as his lawyers argued for dismissal of charges alleging that he and other top executives cheated investors and looted FTX customer deposits, in part to fund lavish lifestyles. Kaplan seemed skeptical toward some of their arguments but didn’t immediately rule.
When one defense lawyer finished speaking, the judge told him: “I congratulate you on an extraordinarily imaginative argument.”
Assistant U.S. Attorney Thane Rehn told Kaplan charges brought in a rewritten indictment in February and again in March require approval from Bahamian authorities to comply with the terms of a U.S. Extradition Treaty that was activated when the man once viewed by some as a cryptocurrency visionary was extradited from the Bahamas in December.
Those new charges included a claim that Bankman-Fried directed the payment of $40 million in bribes to a Chinese official or Chinese officials to free $1 billion in cryptocurrency that was frozen in early 2021.
Rehn said prosecutors will not continue with the new charges unless it obtains the waiver, citing “an interest in observing diplomatic relationships.” He said discussions with Bahamian authorities prior to the unsealing of the superseding indictment led prosecutors to believe the waiver will be delivered.
He said a trial based on the original indictment will last four to five weeks, about a week shorter than it would be with the new charges included.
Bankman-Fried, 31 — referred to by crypto enthusiasts as “SBF” — has pleaded not guilty to all charges as he awaits trial at his parent’s home in Palo Alto, California, where the terms of his $250 million personal recognizance bond severely limit his online communications and ability to move money. If convicted, he could face years in prison. U.S. Attorney Damian Williams has called it “one of the biggest frauds in American history.”
In asking the judge to dismiss the indictment, his lawyers have argued that the charges are flawed, saying they are duplicative, vague and non-specific and the kinds of things that usually result in regulatory enforcement actions rather than criminal charges.
“They’re trying to criminalize a civil matter,” argued attorney Christian Everdell as he tried to poke holes in various charges facing his client, including a bank fraud conspiracy charge. It was Everdell who prompted the judge to praise his “extraordinarily imaginative argument.”
Prosecutors contend that Bankman-Fried and other executives in his cryptocurrency operation cheated investors and looted FTX customer deposits to make lavish real estate purchases, donate money to politicians and make risky trades at Alameda Research, his cryptocurrency hedge fund trading firm.
FTX entered bankruptcy in November when the global exchange ran out of money after the equivalent of a bank run.