Bankman-Fried SEC Case Postponed Until After Criminal Trial

The federal government’s civil cases against Sam Bankman-Fried are on hold, at least for now.

A court ruling Monday (Feb. 13) postponed lawsuits by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) against the FTX founder until after his criminal trial concludes.

Bankman-Fried, 30, is charged with multiple counts of fraud and conspiracy connected to the collapse of FTX last year.

On the same day the Department of Justice (DOJ) filed those charges, the SEC and CFTC also initiated civil proceedings against the one-time crypto billionaire.

Prosecutors asked the court last week to stay those proceedings until the criminal case against Bankman-Fried is finished.

According to a filing last week, Damian Williams, the prosecutor handling the case for the DOJ, said that the SEC, CFTC, Bankman-Fried and his former colleagues — and likely government witnesses — Caroline Ellison and Gary Wang have all agreed to the stay.

Williams argued in the filing the criminal case “is likely to have a significant impact on what issues are ultimately in dispute” in the civil matters.

In addition, allowing discovery in the civil cases to go forward without restriction could allow 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,” Williams wrote.

Monday’s ruling follows several weeks of arguments between Bankman-Fried’s lawyers and prosecutors over his bail conditions.

Last week saw U.S. District Judge Lewis Kaplan deny Bankman-Fried’s request to adjourn oral arguments on his bail.

After coming to an agreement over the bail conditions with prosecutors, Bankman-Fried’s legal defense team indicated in a letter to Kaplan that there was no longer a need for Bankman-Fried to travel to Manhattan.

Kaplan disagreed, ordering the parties to appear before him for the previously scheduled oral arguments.

Meanwhile, a pair of top congressmen is questioning the SEC’s handling of the Bankman-Fried matter.

In a letter to SEC Chair Gary Gensler, House Financial Services Committee Chairman Patrick McHenry and Oversight and Investigations Subcommittee Chairman Bill Huizenga pointed out that Bankman-Fried was arrested by Bahamian authorities Dec. 12, the night before he was to testify before the committee.

The arrest was in anticipation of an extradition request from the United States, and officials from both the SEC and the federal prosecutors said that same evening they would file charges against Bankman-Fried the next morning.

“Yet, the timing of the charges and his arrest raise serious questions about the SEC’s process and cooperation with the Department of Justice,” the congressmen said in the letter. “The American people deserve transparency from you and your agency.”