US Prosecutors Want to Delay CFTC, SEC Fraud Cases Against Sam Bankman-Fried

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.

The outcome of the criminal case will likely have a “significant impact” on the civil cases, he said in the Tuesday court filing. Williams also said he was concerned Bankman-Fried’s legal team could use the civil case’s discovery process to bolster its defense in the criminal case.

“Moreover, 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,” he wrote.

The SEC has charged Bankman-Fried with scheming to defraud FTX investors. Meanwhile, the CFTC charged Bankman-Fried, FTX, and Alameda Research, with fraud and material misrepresentations.

In total, Bankman-Fried faces eight criminal charges, including wire fraud and conspiracy to commit money laundering. The FTX founder appeared in Manhattan federal court on January 3 and pleaded not guilty to all eight charges and now awaits a trial scheduled for October.

Just a few months ago, Bankman-Fried was one of the most powerful CEOs in the crypto industry. But cracks started to show in the foundation when it was revealed that Alameda Research held billions worth of FTT, the FTX utility token, on its balance sheet against billions worth of liabilities. The resulting panic led to billions worth of withdrawals from the FTX exchange. The company did not have enough customer assets on hand to meet the demand for withdrawals, and on November 11, FTX filed for Chapter 11 bankruptcy protection and Bankman-Fried stepped down as CEO.

A month later, on December 12, Bankman-Fried was arrested by Bahamas police at the request of U.S. authorities. After being held in the notorious Fox Hill Prison for a week, he was extradited to the United States. He is now under house arrest at his parents’ Palo Alto home where he will remain until his trial.