A Manhattan judge wryly told Sam Bankman-Fried’s lawyers Thursday that their arguments to toss some charges against the alleged crypto crook were “extraordinarily imaginative” — suggesting he wasn’t inclined to grant their request.
The former billionaire’s camp is seeking to get 10 of the 13 fraud charges against him thrown out in the case charging him with stealing from customers of his since-defunct FTX cryptocurrency exchange.
“I congratulate you on extraordinarily imaginative arguments,” Manhattan federal Judge Lewis Kaplan said after Bankman-Fried lawyer Christian Everdell wrapped up his arguments during a hearing.
Kaplan seemed particularly skeptical of Everdell’s arguments that the feds failed to sufficiently prove conspiracy to commit bank fraud against his 31-year-old client, claiming that prosecutors didn’t argue that banks were harmed but rather customers were.
“They do not allege that he misled to steal money from the bank,” Everdell said.
Kaplan responded that the lawyer was taking “a very narrow view” of the charge.
But Everdell shot back, “I think we are conflating what the fraud is against the customers and what the fraud is against the bank.”
Kaplan pushed back saying some of the allegedly pilfered money belongs to banks while some belongs to customers.
Bankman-Fried is not only charged with conspiracy to commit bank fraud but also conspiracy to commit wire fraud against FTX customers and other related crimes.
Everdell claimed that the charges against his client belong in a civil lawsuit rather than in a criminal case.
“They are trying to criminalize a traditionally civil matter,” Everdell said referring to prosecutors.
Bankman-Fried is slated to face trial on Oct. 2 on allegations that he lied to investors and lenders and stole billions of dollars from customer funds to shore up losses of his crypto hedge-fund Alameda Research.
He allegedly also used the money he ripped off to buy real estate and make illegal political contributions through straw donors.
The feds claim Bankman-Fried also bribed Chinese officials. He’s pleaded not guilty in the case.
Five charges that were more recently added to the case against Bankman-Fried remain up in the air after a Bahamas court Tuesday temporarily barred its government from agreeing to let the US prosecute foreign bribery, bank fraud and conspiracy crimes.
Since those charges were not in the original complaint from December and were added after Bankman-Fried was extradited from the Bahamas to the US, the Bahamas government must consent to them, under the two countries’ extradition treaty.
Prosecutors Thursday argued that the October trial should proceed on the original eight charges and a separate trial could be conducted if the Bahamas government eventually agreed to the additional five charges.
Meanwhile, Bankman-Fried’s team said the five charges should be tossed out. If the judge doesn’t agree to toss the newer charges then, Bankman-Fried’s team agreed with prosecutors that they should fall under a second trial.
Bankman-Fried is awaiting trial on home detention at his family’s house in California. He is out of jail on a $250 million bond.
The judge will rule at a later date on the motions to dismiss.
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