Damian Williams, Attorney for the Southern District of New York, has asked the court to delay the civil proceeding against former FTX CEO Sam Bankman-Fried “until the parallel criminal case is concluded.”
On February 7, Williams asked the court to stay the civil proceeding and discovery against Bankman-Fried by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) until conclude his criminal case, whose trial is scheduled for October. According to Williams, the criminal case against Bankman-Fried is “likely to have a significant impact” on the SEC and CFTC civil cases.
“All the facts that are controversial in civil cases are also controversial in criminal cases,” the letter says. “Indeed, as to the conspiracy to defraud FTX.com customers, the conspiracy to defraud FTX.com investors, the conspiracy to commit securities fraud by materially deceiving FTX.com investors, and the conspiracy to commit commodity fraud by misappropriating FTX.com client funds intended to be used for swap trading, virtually all of the same documents, witnesses, and other evidence that would be used by the SEC and CFTC to prove Their claims stemming from these schemes would also be used to prove the government’s criminal case.”
US prosecutors ask to postpone SEC, CFTC cases against Bankman-Fried https://t.co/wxU2nOPxps pic.twitter.com/4RiSODbuZo
— Reuters (@Reuters) February 7, 2023
Regarding the stay of discovery proceedings, the US Attorney stated that, without intervention, Bankman-Fried had the tools to “improperly obtain impeachment material in relation to government witnesses, circumvent rules for presenting criminal evidence and improperly adapting their defense in criminal proceedings”. The judge overseeing the Bankman-Fried criminal case has already banned the former FTX CEO from using encrypted messaging apps as a condition of his bail following allegations he contacted witnesses potentially implicated in the case.
Bankman-Fried’s lawyers said they did not oppose the stay of the civil cases before the SEC and CFTC until the conclusion of the criminal case. The legal teams of Caroline Ellison, former CEO of Alameda Research, and Gary Wang, co-founder of FTX, have agreed to stay the CFTC case, as both have already resolved their civil cases with the SEC.
Both the SEC and CFTC filed separate lawsuits against Bankman-Fried in December, shortly after his arrest in the Bahamas. The SEC’s complaint sought injunctive relief that could prevent Bankman-Fried from participating in the issuance, purchase, offer, or sale of any security except for its personal account, while the CFTC said it was seeking injunctive and other equitable relief. , as well as civil money penalties against the former CEO, FTX and Alameda.
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