Federal prosecutors pursuing a criminal case against cryptocurrency mogul Sam Bankman-Fried said Wednesday they are dropping a charge that he violated campaign finance rules.
Mr. Bankman-Fried was charged with fraud and campaign finance violations in December after the sudden collapse of his company, cryptocurrency exchange FTX. He was quickly extradited to the United States from the Bahamas, where FTX is based.
But in a court appearance on Wednesday night, prosecutors said the Bahamas had informed them that the country’s government did not intend to extradite Mr. Bankman-Fried on campaign finance charge.
“Consistent with its treaty obligations with the Bahamas, the government does not intend to proceed with litigation on the campaign contributions count,” the prosecutors’ filing said.
The dismissal of the charge was a victory for Mr. Bankman-Fried’s legal team, which argued that the United States had erred in the extradition process. And it follows the prosecution’s decision in June to proceed with a trial in October without pursuing five other charges added to Mr. Bankman-Fried in the weeks after his extradition.
The authorities said that Mr. Bankman-Fried and others at FTX used customer deposits to make $90 million in campaign contributions to about 300 political candidates or political action committees. A few months ago, prosecutors and bankruptcy attorneys for FTX began asking the recipients of those donations to return them.
A spokesman for Mr. Bankman-Fried. A spokesman for the US attorney’s office in the Southern District of New York, which is prosecuting the case, did not respond to a request for comment.
In total, Mr. is now set to face. Bankman-Fried pleaded guilty to seven charges at his trial in October, including accusations that he defrauded FTX customers and lenders. Prosecutors argued that he orchestrated a massive fraud, siphoning billions of dollars deposited by FTX customers to finance campaign contributions, charitable donations and real estate purchases.
Prosecutors are planning a second trial on five charges that were dropped in June, including an accusation that Mr. Bankman-Fried bribed a foreign government. They said they had to postpone a trial on those counts while extradition proceedings took place in the Bahamas.
John P. Fishwick Jr., a former US attorney for the Western District of Virginia, said prosecutors still have “overwhelming evidence against Sam Bankman-Fried.” He added that dropping the campaign finance charge could work to the government’s advantage by making a fraud case simpler to present to a jury.
If found guilty of securities fraud and wire fraud charges, Mr. Bankman-Fried faces the prospect of being sentenced to dozens of years in prison.
It is unclear what effect the prosecutors’ decision will have on others associated with Mr. Bankman-Fried, who are being investigated for campaign finance violations — including Nishad Singh, a former FTX executive who was a key cooperating witness .
In February, Mr. Singh, 27, became the third former top lieutenant of Mr. Bankman-Fried to plead guilty to various charges and cooperate with prosecutors. The company’s former director of engineering, he pleaded guilty to participating in a scheme overseen by Mr. Bankman-Fried to funnel tens of millions in illegal campaign donations to mostly Democratic candidates and committees. political action.
Andrew Goldstein, a lawyer for Mr. Singh, was not immediately available for comment.
Mr. Fishwick said Mr. Singh had “no valid reason to withdraw his appeal” of the campaign finance charge. Doing so is not an easy task, he added.
Ryan Salame, another former FTX executive, is also under investigation for making campaign finance contributions to mostly Republican candidates. Mr. Salame has not been charged with any wrongdoing.
But in April, federal agents showed up at his Maryland home to seize cellphones used by him and his girlfriend, Michelle Bond, who ran a crypto lobbying group and unsuccessfully campaigned for Congress as a Republican. from Long Island.
Jason Linder, an attorney for the couple, was not immediately available for comment.
