Sam Bankman-Fried, the founder and former CEO of the failed FTX crypto exchange, has filed pre-trial motions to dismiss most of the charges levelled against him by United States prosecutors.
Bankman-Fried’s attorneys are arguing that the implosion of FTX in November resulted from the so-called “crypto winter” and not any cruel intention. Their argument also lays blame on the U.S. government over its hostile regulatory environment around crypto assets in recent years.
“A Classic Rush To Judgement”
Sam Bankman-Fried, who is set to face criminal trial in October, has moved to dismiss all but three allegations against him.
In May 8 filings in the Southern District Court in New York, SBF’s lawyers sought to dismiss everything apart from charges alleging conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering.
The disgraced FTX founder, who is currently on house arrest in his parent’s home in Palo Alto, faces a total of 13 different charges ranging from wire fraud to bribery claims. His lawyers are, however, seeking the dismissal of 10 of these charges. The pretrial motions contend that four of the charges added from February, including foreign bribery, campaign finance, and bank fraud, violate “Treaty’s rule of specialty provision.” According to the “rule of specialty”, the U.S. should only trial Bankman-Fried for the offenses for which he was extradited from the Bahamas.
The early defense effort also asserts that the remaining six charges should be dismissed because the federal prosecutors failed to state an adequate offense in these counts.
Furthermore, SBF’s defence argues that the U.S. prosecutors’ pursuit of the fallen crypto star is a “classic rush to judgment.”
Blame Crypto Winter, Not FTX: SBF’s Defense Team
The legal team also contends that the bankruptcy of Bahamas-based FTX — once the third-biggest cryptocurrency exchange in terms of trading volume with a valuation of around $32 billion — was the result of a broader “crypto winter” last year, which saw the price of Bitcoin and other cryptocurrencies dive, rather than failure to back FTX’s native token FTT, or secret loans from FTX to affiliated trading firm Alameda Research as alleged by prosecutors.
The defense claimed that “every major participant” in the crypto sector “cratered,” and compared the fall of various crypto companies to the infamous 2008 global financial crisis, which spurred the popularity of bitcoin and the blossoming of cryptocurrencies.
“Like many other cryptocurrency market participants and many other start-ups that experience exponential growth in a short period, FTX did not have fully developed controls and risk management protocols,” SBF’s defense posited. “FTX, like other market participants, was susceptible to a broader market collapse.”
Bankman-Fried’s estimated fortune of $26 billion, largely accrued during the crypto bull market, was seriously eroded after his crypto empire crumbled last year. Still, prosecutors have accused the former crypto mogul of splurging billions of customer funds on luxury property in the Bahamas, funding sports teams, and political donations in the United States.