Criminal Case Against Sam Bankman-Fried Prioritized Over Civil Allegations

Summary:

• Civil proceedings launched by the CFTC and SEC were put on the back burner, per a February 13 court ruling.
• U.S. Attorney Damian Williams for the Southern District of New York pushed for the move citing “judicial economy”.
• Williams stressed that the criminal trial would address overlapping allegations from the civil case and maintain a broader scope.

Civil cases brought against disgraced FTX Founder Sam Bankman-Fried by the U.S. Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have been suspended until after the criminal trial is concluded.

U.S. Attorney Damian Williams for the Southern District of New York filed a motion to stay both cases on February 7. Williams said that the criminal case would include allegations from the CFTC and SEC cases while also adopting a broader scope of charges against Bankman-Fried.

The prosecutor also argued that focusing on the criminal case would save the department time and resources as they were overlapping accusations from all three cases. Williams noted that the criminal trial will first tackle common claims from the CFTC, SEC, and Justice Department’s cases.

CFTC And SEC Vs Sam Bankman-Fried

Both the CFTC and SEC accused Sam Bankman-Fried of defrauding customers, lenders, and investors around the same time as his arrest in December 2022. The CFTC alleged that FTX’s sister firm Alameda research was already insolvent as of April/May 2022. Alameda then increased its use of FTX customer funds to pay off debts and finance operations around the time Terra crashed, the CFTC claimed.

The SEC accused Sam Bankman-Fried and his so-called “inner circle” of blowing customer and investor funds on frivolities and a luxury lifestyle in the Bahamas.

DOJ Slammed FTX Founder With Money Laundering Charges

Southern District of New York (SDNY) prosecutors filed charges against Sam Bankman-Fried accusing the FTX Founder of eight criminal violations. Federal attorneys expanded on allegations made by the CFTC and SEC to include counts of money laundering and campaign finance law infractions.

Former chief regulatory officer for FTX US, Daniel Friedberg, reportedly aided prosecutors in building their case against Sam Bankman-Fried. Caroline Ellison, ex-Alameda Research CEO, and former FTX CTO Gary Wang also previously admitted to fraud at the fallen crypto exchange and trading giant.

SBF’s criminal trial is scheduled to kick off in October 2023 after the FTX Founder pleaded “Not guilty” to all eight charges.