NEW YORK — Sam Bankman-Fried’s alleged multibillion-dollar fraud involved more than mere regulatory violations, Manhattan federal prosecutors said in rebuttal to the suspect’s claim that most of the charges against him are not crimes.
Bankman-Fried’s bid filed May 8 to dismiss eight of the 13 charges he faces is “meritless,” Assistant U.S. Attorney Danielle Sassoon wrote in a motion filed late Monday. “The charges track the relevant statutes, and the defendant’s alleged misconduct falls within the heartland of what these statutes prohibit,” Sassoon said.
Prosecutors said they had interviewed dozens of witnesses in their wide-ranging investigation, including his cooperating co-conspirators. They also say they issued more than 100 subpoenas, and carried out multiple search and seizure warrants unveiling Bankman-Fried’s staggering criminality.
The discredited wunderkind — known by the initials SBF and once estimated to be worth $26.5 billion — has pleaded not guilty to diverting billions of dollars of investments for his benefit in what prosecutors have described as one of the largest financial frauds in American history, among other crimes.
Bankman-Fried has argued that he didn’t intend to defraud anyone but succumbed to a market crash that affected the entire cryptocurrency sector in 2022.
Describing prosecutors’ response within a month of his filing bankruptcy in November, when his firms FTX and Alameda ran out of money, as “dramatic” and “troubling,” Bankman-Fried’s lawyers said the government improperly sought “to turn these civil and regulatory issues into federal crimes” in a rush to judgment when they charged him. They said the charges first brought against him were nonspecific and “hopelessly vague.”
But the feds said their evidence clearly shows that Bankman-Fried was no innocent victim, having known by fall 2022 that Alameda had borrowed more “than it could ever reasonably expect to repay,” yet continued to take and misappropriate money from customers “belying any assertion that the defendant had a realistic plan for repayment.”
“(The) defendant fraudulently induced lenders to lend new money or to forbear from calling existing loans for immediate repayment,” Sassoon later wrote.
Citing an 1842 treaty between the U.S. and Great Britain, Bankman-Fried has also argued that the feds’ agreement with the Bahamian government upon his December extradition protected him from new charges brought after his return to the U.S.
Among the newer allegations was that Bankman-Fried made millions of dollars of masked donations to U.S. political campaigns — to Republicans and Democrats — for personal gain. According to the indictment, between his public and concealed donations, Bankman-Fried was one of the biggest political donors in the 2022 midterm elections.
He was also charged with trying to bribe the Chinese government to unfreeze his crypto war chest.
In their response, Manhattan prosecutors said they had asked the Bahamian government to consent to the newest charges going to trial. But they said a possible violation of international law is not Bankman-Fried’s argument to make.
That “can be invoked only by the extraditing country — here, the Bahamas — and not the individual extradited defendant,” Assistant U.S. Attorney Thane Rehn wrote.
A spokesman for Bankman-Fried declined to comment. The parties are expected to appear in court June 15. Judge Lewis Kaplan has tentatively set a trial date for fall.