Fraud proceedings against FTX founder Sam Bankman-Fried could be delayed by “months or years” if extra charges are added, potentially running past a planned October trial date, his lawyers have said in legal filings made on Monday.
Bankman-Fried is currently on bail after being arrested in December and extradited from the Bahamas after the collapse of his crypto empire, which had filed for bankruptcy in November. He has pleaded not guilty to charges including wire fraud and money laundering.
His lawyers argue that charges added by the US Department of Justice after his extradition may breach the treaty the US has with the Bahamas – and that he has the right to contest any attempt to add them in overseas courts.
“Mr. Bankman-Fried is currently challenging the Government’s new application for consent in The Bahamas, as is his right, and such proceedings may well take many months, even years to be litigated,” the filing said.
The defense case has been emboldened by the US Supreme Court, which narrowed the scope of federal fraud laws in a May case involving bidding for state contracts.
This and other case-law weakens arguments that Bankman-Fried defrauded a bank and those lending money to his hedge fund Alameda Research, who could in principle still get their money back as the firm is wound up, his lawyers argued.
“The Alameda lenders were not deprived of their contractual rights to collect the existing loans” by Bankman-Fried’s actions, the document said. “We understand that Alameda’s lenders are vigorously asserting their rights in the FTX bankruptcy proceedings.”
“Bank-1’s right to control access to its bank accounts is no longer a valid property right” after the Supreme Court’s May opinion, invalidating charges that Bankman-Fried misrepresented the purpose of a bank account set up for his company North Dimension, the document said.
In May filings, the US government argued it could simply ask the Bahamas for permission to add extra charges, and that it had jurisdiction as the impact of his actions were felt on US crypto markets.
An initial hearing has been set for Thursday.