FTX chief Sam Bankman-Fried seeks to dismiss fraud charges

Bankman-Fried was released on bail in December but confined to his parents’ home in Palo Alto, California. He faces an uphill legal battle. Three of his top colleagues have pleaded guilty and are cooperating with prosecutors. If convicted, he could spend decades in a federal prison.

The motions filed on Monday are most likely the first of many attempts by Bankman-Fried’s legal team either to seek the production of more documents from prosecutors or to persuade Judge Lewis A Kaplan of the US District Court in Manhattan to dismiss some of the 13 counts against him.

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In all, Bankman-Fried is seeking to dismiss 10 of the charges. The filings argue that four of the counts — including the foreign bribery charge, the campaign finance charge and a bank fraud charge — violated elements of the extradition process between the United States and the Bahamas, where Bankman-Fried was arrested. In extradition cases, prosecutors are usually limited in bringing new charges after a defendant has been transferred.

The defence lawyers argued that another six of the charges should be dismissed for being too vague or having other legal flaws. They said the prosecutors had displayed an “eagerness to run up charges against Mr Bankman-Fried.”

Much of the defence’s early strategy also focuses on the role of Sullivan & Cromwell in the case. Bankman-Fried had hired lawyers from the firm to help with a range of legal tasks before FTX collapsed.

When the exchange imploded, Sullivan & Cromwell’s lawyers took control, naming a veteran restructuring expert, John Jay Ray III, to replace Bankman-Fried. One of Ray’s first acts was to issue a scathing report that said FTX under Bankman-Fried had lacked internal controls.

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But in January, the US trustee in the bankruptcy case raised objections to the law firm’s representation of FTX, arguing that it had not fully disclosed the extent of its previous legal work for the exchange. One of FTX’s former internal lawyers claimed in a court filing that Sullivan & Cromwell’s earlier work created major conflicts of interest.

A judge ultimately ruled that the firm could continue to oversee the bankruptcy.

In the court filings on Monday, Bankman-Fried portrays Ray, FTX and the lawyers at Sullivan & Cromwell as all working against him, with the blessing of the government.

Ray, FTX and the lawyers “have acted as a public mouthpiece for the government” and “have assumed the role of prosecutor by publicly labelling” Bankman-Fried as “‘the villain,’” the filings say.

This article originally appeared in The New York Times.

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