US prosecutors seek postponement of fraud charges by CFTC, SEC against SBF

U.S. prosecutors have asked that the fraud cases against FTX founder Sam Bankman-Fried not proceed until the conclusion of the government’s criminal case against him, according to court documents.

Damian Williams, the main prosecutor overseeing the criminal case against Bankman-Fried, wrote that the Commodities Future Trading Commission and the Securities and Exchange Commission had both consented to the stay. Bankman-Fried, former Alameda Research CEO Caroline Ellison, and FTX co-founder Gary Wang have also agreed to the stay, according to the court filing.

According to a Tuesday court filing, Damian Williams stated that the result of the criminal case would probably substantially affect the civil cases. He also expressed concern that Bankman-Fried’s defense team might use the discovery process in the civil case to strengthen their own defense in the criminal case, noting in Tuesday’s filing that the criminal case will likely have a “significant impact” on the civil procedure and should thereby be postponed. 

“Allowing discovery in the Civil Cases to proceed without restriction risks giving the defendant, Samuel Bankman-Fried, the tools to improperly obtain impeachment material regarding the Government’s witnesses, circumvent the criminal discovery rules, and improperly tailor his defense in the Criminal Case,” Williams wrote.

Such a move is not entirely unprecedented. In July 2018, the SEC temporarily suspended its probe into the crypto fraudster Renwick Haddow as both the civil and criminal cases were found to be based on the same facts and circumstances.

On Dec. 13, the SEC formally charged Bankman-Fried for developing a plan to swindle investors of FTX. Likewise, the Commodities Future Trading Commission, or CFTC, has also accused Bankman-Fried of conducting one of the largest frauds in American history, accusing him of allowing funds to flow from FTX to Alameda Research. 

At one point, Bankman-Fried was one of the wealthiest men in the world, having helmed one of the largest centralized crypto exchanges in the world, he had made it a point to cozy himself up to regulators in the US and internationally, including several people from within the SEC itself. 

The move to postpone the civil trial comes after a top SEC official stepped down in January. Following reports that Dan Berkovitz, General Counsel at the Securities and Exchange Commission, had several controversial meetings with Bankman-Fried, it was announced in December that Berkovitz would depart from his role effective Jan. 31. 

In total, Bankman-Fried is facing eight criminal charges, including wire fraud and conspiring to launder money. He appeared in the federal court in Manhattan on January 3rd, where he pleaded not guilty to all eight charges. The FTX founder is now awaiting a trial which is set to take place in October.