Prosecutors Ask For SEC, CFTC Fraud Case Deferment Against SBF To Avoid Breaking Law

Key Points:

• Prosecutors ask the judge to delay the SEC and CFTC fraud lawsuits against Sam Bankman-Fried (SBF) before his criminal case is over.
• The lead prosecutor said he was concerned Bankman-Fried’s legal team could use the civil case discovery process to strengthen its defense in the criminal case.
• SBF and his defense team are still trying to deny criminal and civil charges.

Prosecutors ask the judge to postpone the SEC, CFTC fraud case against SBF until the criminal case against him is over, fearing that the SBF defense team might circumvent discovery rules of crime by civil fraud.

According to Decrypt, US prosecutors have asked that fraud lawsuits against FTX founder Sam Bankman-Fried not proceed until the end of the government’s criminal case against him.

Damian Williams, the lead prosecutor overseeing the criminal case against Bankman-Fried, wrote that the Commodity Futures Trading Commission and the Securities and Exchange Commission have both agreed to a moratorium. Bankman-Fried, former CEO of Alameda Research, Caroline Ellison, and FTX co-founder Gary Wang have also decided to stay, according to court filings.

According to Williams, this is an attempt to prevent the SBF defense team from having a chance to circumvent the law because the outcome of a criminal case could have a “significant impact” on civil matters. Williams also said he was concerned Bankman-Fried’s legal team could use the civil case discovery process to strengthen its defense in a criminal case.

“Moreover, allowing discovery in the Civil Cases to proceed without restriction risks giving the defendant, Samuel Bankman-Fried, the tools to improperly obtain impeachment material regarding the Government’s witnesses, circumvent the criminal discovery rules, and improperly tailor his defense in the Criminal Case,”

He wrote in a court filing on Tuesday.

Previously, the SEC charged Bankman-Fried with conspiracy to defraud FTX investors. On the CFTC side, the agency accused Bankman-Fried, FTX, and Alameda Research of fraud and misrepresentation of documents.

Bankman-Fried faces eight criminal charges, including wire fraud and conspiracy to launder money. The FTX founder appeared in Manhattan federal court on January 3 and pleaded not guilty to all eight wards and is currently awaiting a trial scheduled for October.

The SBF has so far refused to plead guilty and is seeking to deny all charges with a massive $250 million bail that could buy him time and find favorable evidence to refute the crime.

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