Prosecutors drop another charge against FTX co-founder Sam Bankman-Fried

Indicted FTX founder Sam Bankman-Fried leaves the U.S. Courthouse in New York City, July 26, 2023.

Amr Alfiky | Reuters

Federal prosecutors dropped a campaign finance charge against Sam Bankman-Fried, the second time they have narrowed the indictment against the founder of crypto exchange FTX .

Prosecutors told Judge Lewis Kaplan on Wednesday that they were dropping the charge of conspiracy to make unlawful campaign contributions because they had failed to obtain permission from the government of the Bahamas for that charge when Bankman-Fried was extradited from the island nation in December.

The U.S. Attorney’s Office in Manhattan previously dropped another charge against him, for violating anti-bribery statutes, on the same grounds.

The moves narrow the criminal exposure of the former billionaire, who prosecutors allege conspired to defraud investors and customers out of billions. The alleged scheme precipitated the collapse of Bankman-Fried’s FTX and sent shockwaves throughout the crypto industry.

Prosecutors had alleged that Bankman-Fried funneled hundreds of millions of dollars in bipartisan campaign financing through two unnamed co-conspirators to avoid campaign contribution limits. The charge could have added two to five years to Bankman-Fried’s imprisonment if convicted.

In their letter Wednesday to Kaplan in U.S. District Court in Manhattan, prosecutors wrote, “The Government has been informed that The Bahamas notified the United States earlier today that The Bahamas did not intend to extradite the defendant on the campaign contributions count.”

“Accordingly, in keeping with its treaty obligations to The Bahamas, the Government does not intend to proceed to trial on the campaign contributions count,” prosecutors wrote.

Since Bankman-Fried’s detention and extradition, civil and criminal charges have been brought against several exchanges, advisors and individuals for crypto-related schemes. Former FTX executives, including top lieutenants Caroline Ellison, Gary Wang and Nishad Singh, have all pleaded guilty to federal charges. They are cooperating with the government’s prosecution against Bankman-Fried, who is expected to face trial later this year.

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