The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX’s founder has warned he will use the Bahamian judicial system to block efforts to bring additional fraud, bribery and corruption-related charges against him “for years” by going all the way to the UK-based Privy Council.

Sam Bankman-Fried, the embattled crypto exchange chief, warned US prosecutors in Tuesday filings in New York that he “intends to pursue” his legal rights all the way through the Bahamian judicial network to the system’s highest court in a bid to slash the charges against him by almost half.

Noting that this process, and the multiple hearings it will require, will take “potentially months or years” to conclude, the FTX founder and his attorneys are arguing that the multiple new counts and charges levied against him following his extradition from The Bahamas should be dismissed or, alternatively, “severed” from those that formed the basis of his surrender to US federal authorities.

With Mr Bankman-Fried’s Bahamian legal action effectively blocking the Davis administration from giving US prosecutors the permission they need to proceed with the additional charges filed post-extradition, his advisers are arguing it will be impossible to bring or hear these at his New York trial that is scheduled to begin on October 2 this year. For that very reason, they argue, these should be dismissed.

Justice Loren Klein, in a June 13, 2023, verdict, has already given Mr Bankman-Fried leave to bring a Judicial Review challenge to ensure he has the right to contest any decision by The Bahamas government to grant US authorities the go-ahead they are seeking. And he also issued a temporary injunction blocking the Government, at least for the moment, from giving that consent until Mr Bankman-Fried’s case is heard on the merits.

Capitalising on this, Mr Bankman-Fried’s attorneys alleged in filings with the southern New York federal court: “If the Bahamian Supreme Court subsequently determines that Mr Bankman-Fried has a right to be heard by the minister (Fred Mitchell, minister of foreign affairs) regarding the Government’s specialty waiver request, the minister may only decide the request after Mr Bankman-Fried has been given an opportunity to be heard.

“And if the minister makes an initial determination to grant the waiver, such initial determination is subject to an appeals process in The Bahamas up to the United Kingdom’s Judicial Committee of the Privy Council, which Mr Bankman-Fried intends to pursue. The appeals process would likely further stay the minister’s initial determination, and is anticipated to take potentially months or years.

“Thus, even if the minister were to initially consent, this consent cannot be considered provided under the Extradition Treaty until the appeals process in The Bahamas has been exhausted. For its part, due to its own delay in seeking The Bahamas’ consent as discussed above, the [US] government cannot now reasonably contest the severance of the charges by citing some pretense of urgency that requires Mr Bankman-Fried to be tried on the at-issue charges in October.”

Mr Bankman-Fried is seeking 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 he 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”.

Setting out their arguments for having these additional charges dismissed, or at least “severed” from the original indictment so the October 2, 2023, hearing can proceed only on offences for which he was extradited, the former FTX chief’s attorneys argued: “In its haste to proceed against Mr Bankman-Fried, the [US] government has repeatedly erred as to both matters of process and law, warranting relief from this court.

“First, in its opposition brief, the [US] government now admits that it has not properly followed the treaty between The Bahamas and the US. After The Bahamas agreed to extradite Mr Bankman-Fried on only seven of the original eight charges, the government ignored this direction, seeking to prosecute Mr Bankman-Fried on all eight charges.

“The government then filed two superseding indictments, adding six new charges without first seeking (or obtaining) consent from The Bahamas as required under the extradition treaty. And now, when confronted with the fact that the new charges - nearly half of the indictment - were not properly brought, the [US] government scrambles about, saying it has belatedly sought the appropriate permission in The Bahamas and asking the court and the defendant to bear with it.

“But this is not how the process works. 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 - well beyond the October 2 trial date set by this court,” they continued.

“In light of this, the new charges must be dismissed for lack of personal jurisdiction, or in the alternative severed, so that we may go forward on the October 2 trial date. To proceed otherwise would cause significant prejudice to Mr Bankman-Fried and should not be permitted, particularly where this entire situation is of the government’s own making.”

Mr Bankman-Fried’s attorneys argued that US prosecutors only belatedly sought The Bahamas’ permission to proceed with the extra charges when they realised the FTX chief was about to make the Extradition Act and treaty violations an issue.

“It appears to have only been after the defence indicated its intent to make a motion regarding specialty that the [US] government decided to take the requisite action at all,” they alleged. “The government’s delay in seeking The Bahamas’ consent has not stopped the government from pressing forward in prosecuting Mr Bankman-Fried for these charges.

“If the court determines that it cannot dismiss any of the at-issue charges at this stage of the proceedings, they should be severed pursuant to Federal Rule of Criminal Procedure 14 due to the substantial prejudice Mr Bankman-Fried will suffer if required to prepare for a trial that is less than four months away without knowing whether he will be tried on nearly half of the counts in the indictment.”