In a Manhattan federal court, prosecutors have strongly advised U.S. District Judge Lewis Kaplan to deny the request made by Sam Bankman-Fried, the founder of FTX, to dismiss criminal charges brought against him. Bankman-Fried, a 31-year-old former cryptocurrency billionaire, stands accused of stealing billions of dollars from customers to offset losses incurred by his hedge fund. The charges include fraud, conspiracy, making illegal campaign contributions, and foreign bribery. Although Bankman-Fried has pleaded not guilty to all 13 counts, prosecutors argue that the motion to dismiss the charges lacks merit and validity.
Prosecutors Dismiss Claim of Insufficient Allegations
FTX founder Bankman-Fried’s defense team claimed that the charges were the result of a rushed judgment made by prosecutors following a broad crash in the crypto market in 2022, which led to the bankruptcy of several prominent cryptocurrency companies, including Bankman-Fried’s own Alameda Research.
However, prosecutors, in a late Monday filing, dismissed these arguments as “meritless.” They countered Bankman-Fried’s assertion that the indictment’s allegations were insufficient and legally defective, stating that the charges adequately outlined how the defendant and his co-conspirators made false representations to lenders regarding Alameda’s financial state. Prosecutors argued that additional specificity was unnecessary, emphasizing that the allegations presented in the indictment were satisfactory.
Bankman-Fried’s Legal Strategy and Supreme Court Ruling
In his bid for dismissal, Bankman-Fried cited a recent U.S. Supreme Court ruling from May 11, asserting that some of the fraud charges against him were based on a theory that the Court invalidated. The theory, known as the “right to control,” revolves around the deprivation of economically-valuable information rather than tangible property.
The Supreme Court overturned a bid-rigging conviction of a construction executive in Buffalo, New York, claiming the theory was inconsistent with the historical application and interpretation of federal fraud laws. Bankman-Fried’s legal team argued that since tangible money was not taken, the charges should be dismissed.
However, legal experts have expressed skepticism about Bankman-Fried’s chances of getting the charges dropped, considering the tangible losses suffered by his customers. They argue that prosecutors can point to the actual funds lost by individuals affected by Bankman-Fried’s alleged actions. Furthermore, Bankman-Fried’s claims of subpar risk management at FTX and his denial of theft notwithstanding, his former hedge fund’s CEO, Caroline Ellison, has already pleaded guilty and agreed to cooperate with prosecutors, potentially strengthening the case against him.
Bankman-Fried’s Rise and Current Circumstances
Sam Bankman-Fried rose to prominence during the cryptocurrency boom, accumulating a net worth of $26 billion. He also gained influence as a political and philanthropic donor. However, his fortune took a drastic turn when FTX sought Chapter 11 protection in November.
Since his extradition from the Bahamas in December, Bankman-Fried has largely been under house arrest at his parent’s residence in Palo Alto, California, with a $250 million bond set. FTX founder’s trial is scheduled to commence on October 2, and Judge Kaplan will hear oral arguments on June 15 to determine whether the charges against him will proceed.
Conclusion
As Sam Bankman-Fried, the founder of FTX, faces criminal charges relating to allegations of stealing billions of dollars from customers to cover losses at his hedge fund, prosecutors have strongly advised against dismissing the case. Despite Bankman-Fried’s pleas and arguments regarding insufficient allegations and a recent Supreme Court ruling, legal experts remain skeptical of his chances of success.
