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In motion to dismiss, Bankman-Fried says ‘hasty’ FCPA conspiracy charge violates extradition treaty

FTX crypto-exchange founder Sam Bankman-Fried filed a motion in federal court in New York Monday to dismiss most of the criminal charges against him, including the FCPA conspiracy count.

His motion to dismiss said the FCPA charge is “improperly pleaded” and violates the terms of his extradition from the Bahamas.

Bankman-Fried founded cryptocurrency exchange FTX and served as CEO until its bankruptcy in November 2022.

He was arrested in the Bahamas a month later and agreed to be extradited to the United States. In February, a federal judge released him before trial on a $250 million recognizance bond.

The DOJ’s first indictment charged Bankman-Fried with fraud, money laundering conspiracy, and conspiracy to violate campaign finance laws.

In a March superseding indictment, the DOJ added more charges, including conspiracy to violate the FCPA.

Bankman-Fried has pleaded not guilty to all charges.

The DOJ alleges he authorized and directed a bribe of around $40 million in cryptocurrency to Chinese government officials in November 2021.

The payments were intended to influence the officials to unfreeze accounts worth over $1 billion in cryptocurrency belonging to Bankman-Fried, Alameda Research (FTX’s hedge fund), and others, according to the indictment.

In Monday’s motion to dismiss, Bankman-Fried’s lawyers said the Bahamian government needed to consent to his extradition under an extradition treaty with the United States. That consent, his lawyers said, only covers charges in the original indictment and not those added later, including the FCPA conspiracy count.

The lawyers said the FCPA conspiracy count should also be tossed because “there is clear authority holding that conduct that may violate the FCPA is not considered criminal in the Bahamas” and therefore isn’t an extraditable offense under the extradition treaty.

The lawyers cited a decision in 2012 by the UK Privy council involving Viktor Kozeny.

Kozeny, a Czech citizen who lived in the Bahamas, was indicted by federal grand jury in New York in 2005 on FCPA charges. The DOJ alleged he plotted to bribe Azeri leaders to gain control of the state oil company there.

He was arrested in the Bahamas at the request of the U.S. government in October 2005 and held in prison until granted bail in April 2007.

In 2010, he won an appellate decision in the Bahamas to block his extradition. The Bahamas government appealed that decision to the London-based Privy Council.

The Privy Council’s unanimous ruling said Kozeny’s alleged bribery didn’t break any laws in the Bahamas. Therefore the courts there had no jurisdiction to order his extradition.

Bankman-Fried’s motion to dismiss says the DOJ hasn’t offered any evidence that the conduct alleged in the FCPA count violates Bahamian law or constitutes a “dual” crime in both the Bahamas and the United States as required by their extradition treaty.

The motion says,

Thus, the Privy Council’s opinion in Kozeny must be accorded great deference and establishes that the FCPA charge against Mr. Bankman-Fried runs afoul of the dual criminality requirement. Allowing the [U.S.] Government to spurn its obligations to proffer evidence to satisfy the dual criminality requirement here would allow the United States to substitute its own judgment for the clear directive from the requested state regarding interpretation of its own laws and violate principles of international comity.

Lawyers for Bankman-Fried said the DOJ acted in “haste and apparent willingness to proceed without having all the relevant facts and information.”

The indictment was “improperly brought [and] legally flawed and should be dismissed,” the motion said.

Unlike Viktor Kozeny, who fought extradition at every step, Bankman-Fried consented to his extradition from the Bahamas.

So far, three former FTX or Alameda officials have pleaded guilty in cooperation deals with the DOJ.

On the same day Bankman-Fried was extradited in December 2022, Carolyn Ellison, Alameda Research’s former chief executive, and Gary Wang, an FTX cofounder, pleaded guilty to wire fraud and conspiracies to commit wire fraud, commodities fraud, and securities fraud. Ellison also pleaded guilty to money laundering conspiracy.

In February this year, FTX’s former engineering director Nishad Singh pleaded guilty to conspiracies for wire fraud, money laundering, and violating federal campaign finances laws.

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