Sam Bankman-Fried, the founder of FTX, is facing criminal charges for allegedly stealing from investors in his multi-billion dollar cryptocurrency fund. In early May, his lawyers filed papers in a Manhattan Federal Court claiming that the United States had overreached in its case against Bankman-Fried, making federal crimes out of regulatory issues.
However, federal prosecutors responded on Monday with a nearly 100-page filing, declaring that the charges “track the relevant statutes” and fall within the scope of what the statutes prohibit.
The 31-year-old was extradited from the Bahamas in December and is now living with his parents in Palo Alto, California on a $250 million personal recognizance bond. Bankman-Fried has pleaded not guilty to charges of cheating investors, looting customer deposits, and making lavish real estate purchases, donations to politicians, and risky trades at Alameda Research, his cryptocurrency hedge fund trading firm. U.S. Attorney Damian Williams has described it as one of the biggest frauds in U.S. history.
In March, new charges were added to the indictment, accusing Bankman-Fried of violating the anti-bribery provisions of the Foreign Corrupt Practices Act by allegedly paying bribes of $40 million to Chinese officials in order to have $1 billion in cryptocurrency freed.
The defense lawyers argued in response that the eight counts in the original indictment were too vague and non-specific to proceed to trial, and that the additional charges were barred by the Extradition Treaty between the U.S. and the Bahamas. Prosecutors, however, asked for all charges to proceed, asserting that the claims against the original charges were legally sufficient and that permission was being sought from the Bahamas to permit the newest charges.
At trial, Bankman-Fried’s lawyers will likely argue that their client was not involved in Alameda’s day-to-day activities and was unaware of the large sums borrowed from FTX. However, prosecutors believe that his spending of misappropriated funds on political donations demonstrates his motive for fraud and improving his own image.
FTX entered bankruptcy in November, resulting in a trial being set for the Fall. Bankman-Fried’s attorneys have not yet commented on the issue.
