The Tribune

• Supreme Court gives SBF Judicial Review permission

• AG brands case ‘a novel matter’; invites court review

• Exchange founder asserts he has ‘right to be heard’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Supreme Court yesterday blocked the Bahamas government from - temporarily at least - giving the US permission to bring multiple fraud, bribery and corruption-related charges against embattled FTX founder, Sam Bankman-Fried.

Justice Loren Klein also gave the imploded crypto exchange’s chief the go-ahead to launch a Judicial Review challenge against two Cabinet ministers over assertions he has “a right to be heard” before this nation decides whether to allow US federal prosecutors to proceed with new counts and charges added after Mr Bankman-Fried was extradited to New York just prior to Christmas 2022.

The ruling represents an initial success in Mr Bankman-Fried’s legal battle, being fought in both The Bahamas and US, to prevent additional charges being brought that threaten to expose him “to greater penalties and a much longer period of imprisonment” if he were tried and convicted on any of them.

The FTX founder and his legal advisers are bidding to ensure charges of “conspiracy to commit bank fraud”; “conspiracy to violate the Foreign Corrupt Practices Act’; “conspiracy to operate an unlicensed money transmission business”; commodities fraud; securities fraud; and US campaign finance law violations are all dismissed on the basis that they were not included in the offences for which he was extradited from The Bahamas.

They are arguing that many of the charges brought against Mr Bankman-Fried subsequent to his departure from this nation run afoul of The Bahamas-US extradition treaty, and specifically its Article 14. Known as the “rule of specialty”, this stipulates that someone being extradited from The Bahamas “may only be detained, tried or punished” in the US “for the offence for which extradition was granted”, while setting out other criteria.

The alleged breach occurred because of the charges added following Mr Bankman-Fried’s extradition, and the US is now moving to correct this by seeking The Bahamas’ permission to proceed with the new grounds. It formally requested The Bahamas’ consent on May 22, 2023, via a “diplomatic note”, and the FTX founder’s Judicial Review challenge is designed to prevent the Government giving the go-ahead without him being allowed to contest this.

Fred Mitchell, minister of foreign affairs, who signed Mr Bankman-Fried’s “warrant of surrender”, and attorney general Ryan Pinder KC, are named as defendants in Justice Klein’s verdict.

Mr Pinder, in a messaged reply to Tribune Business questions, described Mr Bankman-Fried’s Judicial Review case a “a novel matter” and said the Government was keen for the courts to rule on the issues it raised. He also left the door open to the FTX founder and his Bahamian attorney, Krystal Rolle KC, to address the Attorney General’s Office on matters relating to the Extradition Act, treaty with the US and “rule of specialty”.

“This is a novel matter, and we invite judicial interpretation on the matter,” Mr Pinder said. “We invite counsel for SBF (Sam Bankman-Fried) to make any representations on the legal issues related to ‘waiver of specialty’ as they wish to the Office of the Attorney General.”

This seemingly represents a shift from the position detailed in yesterday’s verdict from Justice Klein. The judgment described a “terse” June 6, 2023, e-mail sent by the “second defendant”, who is Mr Pinder in his capacity as attorney general, to Mr Bankman-Fried’s attorneys refusing to give “an undertaking” that the former FTX chief would be allowed to make “representations” on why The Bahamas should not give the US permission to proceed with the extra charges.

“Thank you for your e-mail,” Mr Pinder wrote. “As you can appreciate this matter is solely a matter between sovereign states. As such we cannot agree to you[r] request for an undertaking that The Bahamas will not consent to the United States’ request to prosecute Mr Bankman Fried for those offences without first affording you the opportunity to make legal and factual representations in this regard.”

Legal sources, speaking to Tribune Business yesterday on condition of anonymity, suggested that Mr Bankman-Fried and his Bahamian attorneys face a tough task in trying to block this nation granting the US permission to add the extra charges. They suggested that Mr Pinder was essentially correct to state it is “solely a matter between sovereign states”, and that the Government enjoys a prerogative when it comes to The Bahamas fulfilling its international obligations.

However, they argued that the Government should have allowed Mr Bankman-Fried and his attorneys to make their “representations” even if these are ultimately ignored and The Bahamas still gives the US the go-ahead. Refusing to permit this, they suggested, had triggered a Judicial Review action - and ruling by Justice Klein - that could have been avoided.

Justice Klein, in his verdict, conceded that the case is “far removed from the routine fare of applications for leave which normally trouble the courts, however, as these proceedings are marked by several striking features”. He identified these as including the “high profile” collapse of FTX and imminent trial of Mr Bankman-Fried before the southern New York court.

“Further, it raises novel and difficult questions about the extradition process and, in particular the interpretation of the so-called ‘specialty’ principle in the scheme of the Extradition Act 1994 and the Extradition Treaty between the Government of the US and the Government of the Commonwealth of the Bahamas, signed 9 March, 1990, and which entered into effect on 22 September, 1994,” Justice Klein added.

“These issues arise because the US, after reviewing additional documents and interviewing witnesses following his extradition, has returned two superseding indictments against SBF to try him for additional offences which were not covered under the original indictment. In this regard, they have sought the post-surrender consent of The Bahamas, as is required under the Extradition Treaty and Act, to try him on the new offences.”

US federal prosecutors, in legal filings with the southern New York district court, have disclosed they will not proceed with the extra counts and charges against Mr Bankman-Fried unless they obtain the Bahamian government’s “consent” to move ahead with them. This imposes further pressure on The Bahamas, especially now that Justice Klein’s ruling has - at least for the moment - blocked this nation from giving that permission.

“The claimant (SBF) asserts that he has a right to be heard before The Bahamas can consent to his prosecution on the additional offences for which he was not extradited,” Justice Klein noted. “He has therefore launched these proceedings to challenge an e-mail decision of 6 June, 2023, from the second defendant, the effect of which he claims is to assert that the process by which that consent is given is a matter between states in their role as sovereigns, and deny him a right to make representations.”

This interpretation was disputed by Kayla Green-Smith, the Attorney General’s Office counsel representing both Cabinet ministers. Describing Mr Bankman-Fried as “famous, and perhaps now infamous”, Justice Klein said his Bahamian attorneys had contacted Mr Pinder on June 1, 2023, to seek “an undertaking” that the Government would not give the go-ahead the US wanted before the former FTX founder was allowed to contest the granting of such permissions.

This produced Mr Pinder’s June 6 response, which prompted Mr Bankman-Fried to file his Judicial Review challenge the very next day and led to the Friday, June 9, hearing before Justice Klein where all parties were present. “The urgency is said to be justified on the basis that there is a pre-trial hearing on 15 June, 2023, when the US District Court in southern New York will hear oral arguments on the claimant’s motions as well as other pretrial matters, including the extradition issues,” the judge wrote.

“The claimant fears that the US will likely seek to procure the consent of The Bahamas in advance of the hearing scheduled for 15 June, 2023, to facilitate the US government’s oral arguments for the hearing, and that The Bahamas will give its consent without hearing him, having refused to give an undertaking in that regard. During the course of the hearing, the defendants gave an undertaking not to make any decision on the issue prior to the court’s decision on the application.”

Finding that Mr Bankman-Fried has sufficient standing to bring the Judicial Review challenge, Justice Klein also ruled that “all of the grounds” argued by the FTX founder had “a real prospect of success” with regards to the merits of his case. 

“In my judgment, the issue of whether the claimant is entitled to invoke the specialty rule as a basis for being heard on the exercise of the power by The Bahamas to consent to new charges is an arguable issue that has some real prospect of success,”Justice Klein ruled.

“If the charges in the superseding indictment were put forward at the time of the request, the claimant would have had the opportunity and right to challenge them in formal extradition proceedings. Therefore, denial of a right to be heard would deprive the claimant of an interest or benefit to procedural rights to which he would otherwise have been entitled under the Act.”

Justice Klein found that Mr Bankman-Fried will suffer greater harm than the Government if the injunction was not granted, and he was not heard on the “consent” issue, as “he will be exposed to further criminal penalties and sentences as a result, when it might turn out that some of the offences were not extradition offences in the first place.....

“If the injunction is granted, the defendants would be delayed for a period in their ability to make a decision on the US request for consent, and in fact that process could (at least conceivably) be short-circuited by executive action to provide a proper opportunity for the claimant to be heard,” the judge added. Based on Mr Pinder’s comments, it appears the Government is getting ready to do exactly that.

In giving Mr Bankman-Fried permission to launch Judicial Review proceedings, and granting the injunction blocking the Government from giving the US permission to move forward with the extra charges until the substantive case is heard, Justice Klein also ordered that the case proceed in an “expedited manner”.

The latest developments place an unwanted spotlight back on The Bahamas, temporarily at least, given that much of Mr Bankman-Fried’s fate will be determined by this nation’s judicial system. Many had hoped his extradition to New York would have diverted much of the unwelcome publicity surrounding FTX’s collapse away from these shores.