Judge Halts SEC, CFTC Cases Against FTX
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Judge Halts SEC, CFTC Cases Against FTX

Citing concerns that regulatory cases could interfere with his criminal prosecution, the U.S. Attorney's office convinced a federal judge to order the two civil cases put on hold.

Judge Halts SEC, CFTC Cases Against FTX

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The Securities and Exchange Commission and the Commodity Futures Trading Commission will have to wait for their pound of Sam Bankman-Fried's flesh.

Federal prosecutors said they were concerned that "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."

The criminal case's outcome will likely "have a significant impact on what issues are ultimately in dispute in the Civil Cases," the filing said.

Bankman-Fried's lawyers did not contest the move, which is fairly commonplace.

Nor did the attorneys representing Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang. Both have cut deals with U.S. Attorney for the Southern District of New York Damian Williams, and plan to testify against their former boss.

Bankman-Fried is facing eight charges including wire fraud, securities fraud and anti-money-laundering violations in the collapse of FTX and FTX U.S. He is alleged to have transferred $10 billion worth of the exchange customers' funds to his trading firm Alameda Research after it suffered losses. At least $8 billion of that appears to have been lost.

Talking the Talk

The founder of FTX and Alameda Research had been a leading figure on Capitol Hill in the crypto industry's lobbying to influence regulatory legislation that has been moving through Congress over the past year. That lobbying generally sought to give the CFTC authority over the SEC, considering it the less combative agency.

Bankman-Fried displayed a remarkable contempt for the two agencies in a call to a Vox reporter that he for some reason thought was off the record.

Asked if his pre-collapse campaign for new and better crypto regulation was "pretty much just PR," Bankman-Fried said:

"Yeah, just PR. F*** regulators, they make everything worse. They don't protect customers at all."

He later tried to walk those comments back, saying on his Twitter "What H A P P E N E D" thread:

"It's *really* hard to be a regulator. They have an impossible job: to regulate entire industries that grow faster than their mandate allows them to. And so often they end up mostly unable to police as well as they ideally would."

The criminal trial is scheduled to begin in October.

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