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(Kitco News) -
Federal prosecutors have decided to drop the charges related to alleged campaign finance violations in their case against FTX founder Sam Bankman-Fried.
Previously, the Justice Department said Bankman-Fried and other members of senior management at FTX used customer deposits to make $90 million in campaign contributions to around 300 political candidates or political action committees (PAC). Bankman-Fried pleaded not guilty to the charges in March.
The former crypto CEO was extradited from the Bahamas, where FTX was based, to the United States in December. In a court filing submitted on Wednesday night, prosecutors for the Justice Department said officials in the Bahamas had informed them that their government had not intended to extradite Bankman-Fried on the campaign finance charge.
“In keeping with its treaty obligations to the Bahamas, the government does not intend to proceed to trial on the campaign contributions count,” the court filing said.
The dropping of the charge is a partial victory for Bankman-Fried’s lawyers, who have argued at previous court hearings that the United States government mishandled his extradition. It remains unclear whether or not the DoJ’s decision to drop the charge will impact others charged with the same crime, including Nishad Singh, the former Director of Engineering of FTX who has already pleaded guilty to the campaign finance violations among other charges and who struck a plea deal with Justice in February.
Earlier on Wednesday, the DoJ asked the judge presiding over Bankman-Fried’s criminal proceedings to revoke his bail and jail him ahead of his trial, saying he “crossed a line” by allegedly trying to intimidate a witness.
Prosecutor Danielle Sassoon told U.S. District Judge Lewis Kaplan at a hearing in Manhattan federal court that the former crypto CEO has had over 1,000 phone calls with journalists. And last week, the DoJ filed a complaint against Bankman-Fried accusing him of leaking the private diary of former Alameda CEO Caroline Ellison in an effort to discredit her as a witness.
The court filing submitted by U.S. Attorney Damian Williams on July 20 accused Bankman-Fried of sharing Ellison’s journal and other personal writings with a New York Times reporter for an article published that same day, characterizing the leak as an “attempt to interfere with a fair trial by an impartial jury.”
Ellison became a government witness in December, and she had a tumultuous partnership with SBF spanning several years that was both romantic and professional.
“This latest incident is an escalation of an ongoing campaign with the press that has now crossed a line,” Sassoon said of the Ellison article. “No set of release conditions can ensure the safety of the community.”
She also said she is concerned about what Bankman-Fried may have told Michael Lewis, the author of financial true-crime best-sellers Liar’s Poker and The Big Short, who will be releasing a book about FTX around the time that the fall trial is scheduled to begin.
One of the purposes of the court hearing on Wednesday was to consider what Kaplan called “the adequacy and continuation of the current bail conditions.” Bankman-Fried has been confined to his parents' home in Palo Alto, California since his extradition, apart from legal and health-related appointments.
The Justice Department’s complaint asserts that the government “is particularly attuned to these concerns after the defendant’s improper outreach to a potential witness resulted in the modification of his bail conditions,” referring to SBF’s attempts to communicate with Ryne Miller, General Counsel of FTX US, through both email and Signal on Jan. 15.
Bankman-Fried’s lawyer Mark Cohen told Judge Kaplan that his client was merely trying to protect his reputation, and that it "really would be almost impossible" to prepare for the upcoming trial if his client were jailed. Cohen asked that the judge “deny the application and put forth an order, however strict the court determines is required, so we can just put this issue behind us.”
Bankman-Fried’s trial on the first set of criminal charges is scheduled to begin on Oct. 2, 2023.
