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Charges Withdrawn From FTX CEO Sam Bankman-Fried’s Trial

Last Updated June 23, 2023 12:49 PM
Omar Elorfaly
Last Updated June 23, 2023 12:49 PM

Key Takeaways

  • US prosecutors agreed to remove extra charges against FTX founder during the trial this year.
  • Extra charges were filed after Bankman-Fried was extradited from the Bahamas where he resided.
  • Prosecutors decided Sam Bankman-Fried would still answer to those charges in 2024.

Sam Bankman-Fried reached an agreement with prosecutors to not face extra charges during his trial in October. The FTX founder was facing a total of thirteen cases in his upcoming trial before prosecutors agreed to remove the five filed after his extradition from the Bahamas. 

Documents  filed by the prosecutors stated they would not pursue the extra charges unless the Bahamas government permitted them. A Bahamian judge facilitated Bankman-Fried’s way toward challenging the extra charges. 

Sam Bankman-Fried Is Set To Be Tried For Five Extra Charges In 2024

Bankman-Fried secured a win  when he argued that US prosecutors should not be been allowed to charge him with additional crimes after his extradition. However, Lewis A. Kaplan of the Federal District Court in Manhattan received a request from the prosecutors to schedule another trial in 2024.

After arriving in the US, Bankman-Fried was admitted to a facility in Nassau for 9 days before posting ball for a whopping $250 million. He is now under house arrest in his childhood home in Palo Alto, California.

However, New York law states that defendants in criminal cases are not subjected to the full amount paid for bail unless they attempt to flee ahead of trial or otherwise violate bail conditions.

Charges against the former billionaire include bribing a Chinese official to unfreeze FTX’s subsidiary in China called Alameda Research which was co-run by his then-partner Caroline Ellison.

US prosecutors had also charged him with bank fraud, alleging that he created a shell company to secure banking with a California bank after FTX had been rejected. 

Original Charges Against FTX Founder

The founder of the cryptocurrency exchange and crypto hedge fund, Sam Bankman-Fried was indicted by the US government for several criminal violations , including wire fraud on customers, lenders, conspiracy to commit laundering, conspiracy to commit securities fraud, and the list goes on.

FTX, an evergreen name in the crypto trading industry collapsed in November last year and was run by Sam Bankman-Fried who held a position valued at $5 billion in FTT, FTX’s own crypto token.

The founder moved to the Bahamas, where he resided with his crew until getting extradited last December. While in the Bahamas, FTX was valued at $25 billion after securing funding of $420 million from several major investors, including the Ontario teachers’ pension plan.

At the time, Bitcoin was at one of its peaks, valued at $66,000. The company’s name was on the venue where the Miami Heat played and Baseball league umpires had the FTX logo on their uniforms.

It all came crashing down when FTX was unable to maintain enough liquidity to meet customer demand. Bankman-Fried then attempt to sell parts of the company to Binance, currently the world’s biggest trading platform. When attempting to gain sufficient liquidity, the founder stepped down from the leadership position and FTX filed for bankruptcy.

Bankman-Fried is set to answer to the original eight charges on October 21st, with the second trial for the other charges set for the first quarter of 2024.

Crypto Industry’s Legal Black Hole

News of the FTX founder comes at a time when the US government is in other legal battles against major crypto exchanges, including Binance, whose founder might also face criminal charges by the DOJ for allegedly defrauding the US government. 

June is proving to be a heavily-turbulent time for the crypto industry as the US Securities and Exchange Commission is on a roll of suing major crypto exchanges such as Binance, its founder Changpeng Zhao, Coinbase, and Ripple.

Proceedings of the Bankman-Fried trial are bound to echo through the crypto world and the industry braces for news of lawsuits from all over.