NEW YORK — Fallen FTX founder Sam Bankman-Fried had his mammoth Manhattan fraud case split in two Thursday, with a judge agreeing to let prosecutors try him in separate trials.
After hearing arguments, Manhattan Federal Court Judge Lewis Kaplan granted a request by the government to divide the 13 charges facing the embattled crypto entrepreneur. He will head to trial this October on the first round of charges he faced upon his extradition from the Bahamas, where FTX was based. He’ll return for a second trial in March 2024 for charges brought after his return to the U.S.
Prosecutors accuse Bankman-Fried of orchestrating a yearslong fraud while he was crowned the king of cryptocurrency. He’s accused of victimizing thousands of FTX customers by diverting billions in stolen deposits to repay his trading firm Alameda Research’s debts, among related crimes. Upon his December extradition, he was hit with eight counts, including wire fraud and money laundering.
In a rewritten indictment filed in February, Bankman-Fried was hit with four more charges in the multibillion-dollar fraud case related to bank fraud conspiracy and allegations he pumped millions in masked donations to Republicans and Democrats for personal gain.
In March, prosecutors revealed another charge, accusing the one-time wunderkind, commonly referred to by his initials “SBF,” of trying to bribe Chinese officials with $40 million in cryptocurrency to unfreeze $1 billion in his trading accounts.
Bankman-Fried, who has pleaded not guilty to all charges, had argued that the newer charges should be dismissed because they weren’t included in the extradition agreement between the U.S. and Bahamas.
The feds, who say diplomatic issues aren’t Bankman-Fried’s to raise, said they would wait for approval from a Bahamas court to proceed on the newer charges.
Once estimated to be worth $26.5 billion, the alleged mini-Madoff traveled from California for his Thursday court appearance. He’s asked the court to dismiss 10 of 13 charges he faces.
At Thursday’s hearing, his attorneys challenged multiple legal theories included in the government’s case.
Christian Everdell said Kaplan should toss the bank fraud conspiracy charge. Prosecutors say Bankman-Fried and other Alameda staffers presented “a false story” when they opened a bank account for a shell company they surreptitiously used to receive and funnel FTX customer deposits.
Everdell argued the charge should be dismissed because his client wasn’t accused of tricking the financial institution — just its customers.
“(If) it’s fraudulently opening the account, you’re not depriving the bank of any of the bank’s property,” Everdell argued. “You’re not taking funds. You’re not convincing the bank to release funds or divert funds elsewhere by fraudulent means.”
Kaplan sounded unconvinced.
“(It) alleges (he) did it for the purpose of getting his hands on the customer funds for the benefit of Alameda and himself,” the judge said.
Bankman-Fried remains under house arrest at his parents’ Palo Alto home on a $250 million bond, the largest federal pretrial package in history. He also faces civil action by the Securities and Exchange Commission.
As Everdell finished addressing the court, the judge lauded his efforts.
“I’d like to congratulate you on an extraordinarily imaginative argument,” Kaplan quipped.
