According to court filings, U.S. prosecutors have requested that the fraud cases against FTX founder Sam Bankman-Fried not move forward until the conclusion of the government’s criminal case against him.
The Securities and Exchange Commission and the Commodities Future Trading Commission both agreed to the stay, according to a report by Damian Williams, the lead prosecutor in charge of the criminal prosecution against Bankman-Fried. According to the court document, Bankman-Fried, former Alameda Research CEO Caroline Ellison, and co-founder of FTX Gary Wang have also consented to the stay.
Damian Williams reportedly noted in a court document filed on Tuesday that the outcome of the criminal case will undoubtedly have a significant impact on the civil cases. In the Tuesday filing, he noted that the criminal case will probably have a “significant impact” on the civil procedure and should therefore be postponed. He also expressed concern that Bankman Fried’s – defense team might use the discovery process in the civil case to strengthen their defense in the criminal case.
“Allowing discovery in the Civil Cases to proceed without restriction risks giving the defendant, Samuel Bankman-Fried, 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,” Williams wrote
This kind of action is not altogether unheard of. As it was discovered that the facts and circumstances behind both the civil and criminal cases were the same, the SEC temporarily halted its investigation against the crypto fraudster Renwick Haddow in July 2018.
The SEC officially charged Bankman-Fried for creating a scheme to defraud FTX investors on December 13. Similarly, the Commodities Future Trading Commission, or CFTC, has charged Bankman-Fried with orchestrating one of the biggest scams in American history by permitting money to travel from FTX to Alameda Research.
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