In a surprising turn of events, Sam Bankman-Fried, the founder of FTX, will not be prosecuted by the U.S. Department of Justice (DOJ) on campaign finance violation charges.
The DOJ’s decision aligns with the terms of Bankman-Fried’s extradition treaty with the Bahamas, who have recently confirmed their unwillingness to extradite the defendant on the aforementioned charge, Forbes reports.
In December, the DOJ initially listed eight charges, including wire fraud, securities fraud, money laundering, and the now-dropped campaign finance violation, in its indictment against the FTX founder.
The updated stance from the DOJ was shared with federal judge Lewis Kaplan of New York in a late filing on Wednesday.
Judge Kaplan was informed by the DOJ that, in keeping with its “treaty obligations” with the Bahamas, it had decided against pursuing a trial on the campaign contributions count.
The update came shortly after a gag order had been imposed by Kaplan on Bankman-Fried, in response to allegations that the former crypto tycoon leaked personal writings of Caroline Ellison, his ex-girlfriend and business associate, to the New York Times.
Interestingly, this is not the maiden occasion where Bankman-Fried’s extradition conditions have influenced the accusations leveled against him.
A precedent was set the previous month when the DOJ chose to charge him with the original eight counts, while temporarily setting aside the five additional ones filed this year.
Given the extradition agreement, the Bahamas government must approve any further charges against Bankman-Fried.
However, a Bahamian court has prevented the local government from sanctioning the five additional charges—comprising bank fraud, managing an unlicensed money-transferring operation, and bribery—pending a hearing from his lawyers.
Delving into the case’s history, in May, legal representatives for Bankman-Fried sought the dismissal of most of the criminal charges filed against their client.
They contended that the charges were “dramatic” and transformed “civil and regulatory issues into federal crimes.”
They attributed the dramatic downfall of FTX, which at one point boasted a $32 billion valuation, to the “crypto winter” of 2022.
In November the previous year, FTX had a financial meltdown due to a liquidity crisis, ignited by a sell-off of its proprietary FTT tokens.
The plea for dismissal, however, was refused by Judge Kaplan last month, stating the charges “are either moot or without merit.”
