Federal prosecutors investigating the case against cryptocurrency mogul Sam Bankman-Fried made a notable announcement on Wednesday. They have decided to drop the charge of violating campaign finance rules against him. This development comes after Bankman-Fried was charged with fraud and campaign finance violations following the abrupt collapse of his cryptocurrency exchange, FTX. He was swiftly extradited from the Bahamas, where FTX was headquartered.
In a court filing on Wednesday evening, the prosecutors revealed that the government of the Bahamas had informed them that they never intended to extradite Bankman-Fried on the campaign finance charge. The filing stated, “In keeping with its treaty obligations to the Bahamas, the government does not intend to proceed to trial on the campaign contributions count.”
The removal of this charge is seen as a triumph for Bankman-Fried’s legal team, who had argued that the United States mishandled the extradition process. Additionally, the prosecution had earlier decided to pursue a trial in October without pursuing five other charges that were added to Bankman-Fried’s indictment after his extradition.
According to authorities, Bankman-Fried and others at FTX allegedly used customer deposits amounting to $90 million to make campaign contributions to around 300 political candidates and political action committees. Some time ago, prosecutors and FTX’s bankruptcy lawyers began requesting recipients of these donations to return them.
Mr. Bankman-Fried’s spokesperson declined to comment on this matter, and the U.S. attorney’s office in the Southern District of New York, responsible for prosecuting the case, did not respond to requests for comment.
As of now, Bankman-Fried is set to face seven charges at his trial in October, including allegations of defrauding FTX’s customers and lenders. Prosecutors argue that he orchestrated an extensive fraud scheme by diverting billions of dollars deposited with FTX to finance campaign contributions, charitable donations, and real estate purchases.
Moreover, prosecutors have plans for a second trial on the five charges that were withdrawn in June, including an accusation that Bankman-Fried bribed a foreign government. The trial on these counts was postponed due to ongoing litigation surrounding the extradition process in the Bahamas.
John P. Fishwick Jr., a former U.S. attorney for the Western District of Virginia, believes that prosecutors still possess “overwhelming evidence against Sam Bankman-Fried.” He suggests that the removal of the campaign finance charge may work in the government’s favor by simplifying the fraud case for presentation to the jury.
If convicted on charges of securities fraud and wire fraud, Bankman-Fried could face a lengthy prison sentence.
It remains unclear how this decision by prosecutors will impact other individuals associated with Bankman-Fried who are being investigated for campaign finance violations. This includes Nishad Singh, a former FTX executive who serves as a crucial cooperating witness. In February, Singh pleaded guilty to various charges and agreed to work with prosecutors. He admitted involvement in Bankman-Fried’s scheme to funnel millions of dollars in illegal campaign donations primarily to Democratic candidates and political action committees. Andrew Goldstein, Singh’s lawyer, was not available for immediate comment on the matter.
Another former FTX executive, Ryan Salame, is also under investigation for making campaign finance contributions primarily to Republican candidates. However, Salame has not been charged with any wrongdoing. In April, federal agents searched his Maryland home and seized cellphones used by him and his girlfriend, Michelle Bond, who ran a cryptocurrency lobbying group and campaigned unsuccessfully for Congress as a Republican from Long Island. Jason Linder, the couple’s lawyer, was not immediately available for comment.
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