NEW YORK (Reuters) – Sam Bankman Fried, who has long denied theft from clients of its cryptocurrency exchange, says prosecutors have accused him of “alarming” haste and asked a U.S. judge to dismiss 10 of the 13 criminal charges against him.
In a lawsuit filed in Manhattan federal court, Bankman-Fried’s lawyers said the now-bankrupt FTX wasn’t the only cryptocurrency firm to crash during the massive market crash of 2022, and that plaintiffs hastily accused their client of “rush to judgment.”
“Instead of waiting for the traditional civil and regulatory processes that follow their normal course to remedy the situation, the government, jumping in with both feet, improperly sought to turn these civil and regulatory cases into federal crimes,” his lawyers wrote.
Bankman-Fried, the 31-year-old former billionaire, made his breakthrough in bitcoin and other digital assets to accumulate a net worth of an estimated $26 billion, and became an influential political and philanthropic donor ahead of the FTX announcement in November.
He has pleaded not guilty to fraud and conspiracy.
The exchange collapsed after a flurry of customer withdrawals in the wake of reports that it had mixed assets with Alameda Research, Bankman-Fried’s cryptocurrency-focused hedge fund.
Federal prosecutors in Manhattan said Bankman-Fried misled investors and lenders at FTX, stealing billions of dollars in client money to bridge losses in Alameda, buy real estate, and make political contributions through an illegal donor scheme. They also charged him with bribing Chinese officials.
Ahead of the trial, scheduled for Oct. 2, his attorneys asked US District Judge Lewis Kaplan to order plaintiffs to turn over any documents in FTX’s possession that could aid the defense, arguing that plaintiffs were only asking the company for information to help its case.
“FTX debtors have worked so extensively with the government, and are so involved in the investigation, analysis, and strategy of the government’s case, that they should be considered part of the ‘prosecution team,'” his attorneys wrote.
Representatives for FTX’s current leadership did not immediately respond to a request for comment. A spokesperson for the US Attorney’s Office in Manhattan declined to comment.
The plaintiffs have until May 29 to respond to the motion to fire Bankman-Fried, and Kaplan will hear arguments on June 15.
extradition
Bankman-Fried has acknowledged that FTX has inadequate risk management but denies theft of funds, and has sought to distance itself from FTX’s day-to-day operations.
Three confidants at one point — former Alameda co-CEO Caroline Ellison, former FTX technology chief Gary Wang, and former FTX engineering director Nishad Singh — pleaded guilty and agreed to cooperate with prosecutors.
In his conviction, Singh admitted that he made political donations in his name that were funded in part with remittances from Alameda.
But lawyers for Bankman-Fried said Monday that the donations made by Singh, which are referred to as CC-1 in accusing documents filed by plaintiffs against their client, did not in fact violate election laws.
“The campaign finance allegations reveal, once again, the consequences of the government’s rush to indict Mr Bankman-Fried,” his lawyers wrote.
Bankman-Fried has been largely confined to his parents’ home since his December arrest in the Bahamas, where he lives and where FTX is located. He was extradited to the United States a week after his arrest.
His parents, who live in Palo Alto, California, are Stanford law professors and signed a $250 million bond.
In their court papers on Monday, his lawyers said the campaign finance charge should be dropped because it was not included in the surrender note signed by the Bahamian Secretary of State prior to Bankman-Fried’s extradition, and that other charges including a bribery charge were improperly brought after his extradition.
(Reporting by Luke Cohen) in New York
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