US Attorney requests SEC and CFTC civil cases against SBF wait until after criminal trial

Damian Williams, United States Attorney for the Southern District of New York, has petitioned the court to delay civil proceedings against former FTX chief executive officer Sam Bankman-Fried “until the conclusion of the parallel criminal case”.

In Feb. 7 filings, Williams requested that the court issue an order staying civil proceedings as well as discovery from the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission against Bankman-Fried until after his criminal case, scheduled to go to trial in October. According to Williams, the criminal case against Bankman-Fried was “likely to have a significant impact” on the SEC and CFTC civil cases.

“All of the facts at issue in the Civil Cases are also at issue in the Criminal Case,” said the filing. “Indeed, as to the scheme to defraud FTX.com customers, the scheme to defraud FTX.com investors, the conspiracy to commit securities fraud by materially misleading FTX.com investors, and the conspiracy to commit commodities fraud by misappropriating FTX.com customer funds intended to be used for swaps trading, virtually all of the same documents, witnesses, and other evidence that would be used by the SEC and CFTC to prove their claims arising from these schemes would also be used to prove the Government’s criminal case.”

U.S. prosecutors ask to postpone SEC, CFTC cases against Bankman-Fried https://t.co/wxU2nOPxps pic.twitter.com/4RiSODbuZo

— Reuters (@Reuters) February 7, 2023

Regarding staying discovery proceedings, the U.S. Attorney claimed without intervention, Bankman-Fried had 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”. The judge overseeing SBF’s criminal case has already banned the former FTX CEO from using encrypted messaging apps as a condition of his bail after allegations of contacting witnesses potentially involved in the case.

Lawyers for Bankman-Fried said he did not object to staying the SEC and CFTC civil cases until the conclusion of the criminal case. The legal teams for former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang consented to staying the CFTC case — the two have already settled their civil cases with the SEC.

Both the SEC and CFTC filed separate lawsuits against Bankman-Fried in December shortly after his arrest in the Bahamas. The SEC’s complaint sought injunctions which could prevent SBF from participating in the issuance, purchase, offer or sale of any securities except for his personal account, while the CFTC said it was looking for injunctive and other equitable relief as well as civil monetary penalties against the former CEO, FTX, and Alameda.