NEW YORK—A U.S. judge on Thursday appeared skeptical of Sam Bankman-Fried's push to significantly cut back the government's criminal case accusing the former billionaire of defrauding consumers of FTX, the now-bankrupt cryptocurrency exchange he once ran.
U.S. District Judge Lewis Kaplan in Manhattan expressed his concerns at a hearing where Bankman-Fried's lawyers sought to dismiss at least 11 of 13 charges their client faces.
Bankman-Fried, 31, pleaded not guilty in March to fraud, money laundering, campaign finance, and conspiracy charges following his December extradition from the Bahamas, where FTX had been based before its November collapse.
He had asked Kaplan to dismiss six of the 13 charges because the Caribbean country did not consent, and five more because they rested on an invalid legal theory. An Oct. 2 trial is scheduled.
Bankman-Fried is accused of making more than 300 illegal political donations, using straw donors to direct corporate funds to campaign committees while bypassing contribution limits. More than 95 percent of Bankman-Fried's contributions went to Democrats and Democratic committees, the Washington Free Beacon reported. The crypto CEO and his cofounders at FTX gave more than $300,000 to members of the House committee that investigated the company's collapse.
At Thursday's hearing, Kaplan declined to rule on prosecutors' request to schedule a second trial in early 2024 on five charges that Bankman-Fried said required the Bahamas' consent, saying it was uncertain when the Bahamas might grant it.
The judge also said Bankman-Fried appeared to lack standing to invoke an extradition treaty between the two countries to get those charges—including bank fraud and bribing Chinese officials—dismissed.
"You have a major problem," Kaplan told Mark Cohen, one of Bankman-Fried's lawyers. "Whatever the Bahamas' complaints about the United States may or may not be, the question is whether your client has any right to raise them."
Bankman-Fried's original eight-count indictment accused him of stealing billions of dollars from FTX customers to plug losses at his crypto-focused Alameda Research hedge fund, and of lying to investors and lenders.
The defendant's lawyers said some of those charges and a newer bank fraud charge should be dismissed because they rested on a theory that the U.S. Supreme Court declared invalid last month.
The "right to control" theory allows a defendant to be guilty of fraud for depriving someone of economically valuable information, not just tangible property.
Prosecutors have said their charges did not rely on that theory because Bankman-Fried schemed to take his victims' money.
Christian Everdell, another lawyer for Bankman-Fried, said the bank fraud charge accused his client of providing misleading information to a bank so it would open an account for him, not so that he could steal.
Kaplan said the account appeared to be part of Bankman-Fried's broader alleged scheme.
"He allegedly did it for the purpose of getting his hands on the customer funds for the benefit of Alameda and himself," the judge said, raising his voice.
Separately, Kaplan denied Bankman-Fried's request to force prosecutors to review some of FTX's files.
Bankman-Fried had wanted a declaration that FTX's current leadership was part of the "prosecution team," which would force the company to turn over documents for his defense.
(Reporting by Abinaya Vijayaraghavan in Bengaluru and by Luc Cohen in New York; editing by Jason Neely, Elaine Hardcastle and Jonathan Oatis)
