US offers to drop some charges for now against Sam Bankman-Fried

Federal prosecutors in New York said they would drop several criminal charges, at least for now, against disgraced crypto executive Sam Bankman-Fried if the judge agrees to try him later on those charges.

The offer to sever five of the 13 charges followed a ruling earlier this week in the Bahamas that allows Bankman-Fried to challenge the additional charges.

A prosecutor said during a hearing Thursday it was uncertain when the Bahamas would decide whether to consent to the new charges, which included bank fraud and an allegation Bankman-Fried bribed the Chinese.

"Severing those counts seems to be appropriate given the developments in the Bahamas this week," the prosecutor, Nathan Rehn, said.

Bankman-Fried, who has pleaded not guilty, is scheduled to stand trial in October. Rehn said prosecutors would not proceed with the new charges unless the government of the Bahamas consented.

Bankman-Fried was extradited from the Bahamas on eight criminal charges stemming from the collapse of FTX, the crypto-exchange he founded. He has argued the U.S. government breached its extradition treaty with the Bahamas by filing additional charges against him months later, including bank fraud and an allegation he paid a $40 million bribe to the Chinese government to unfreeze a trading account.

"We think dismissal of those counts would be the better outcome," defense attorney Marc Cohen said.

The judge did not immediately rule.

"I’m not going to rule on this now," Judge Lewis Kaplan said. "I’m going to give it a little more thought."

The defense asked the judge to dismiss an original charge that accused Bankman-Fried of violating campaign finance laws, arguing that count also violated the extradition treaty. The charge said Bankman-Fried improperly donated tens of millions of dollars to mainly Democratic and some Republican candidates.

Prosecutors said Bankman-Fried lacked standing to make the argument because the decision to move forward with the charge involved diplomatic policy.

"It’s a matter of diplomatic relations between the U.S. and the Bahamas," Rehn said. "It was an understanding of all the parties involved that this was part of the extradition."

Bankman-Fried is broadly accused of misappropriating billions of dollars in customer and investor money from FTX in what prosecutors have described as one of the biggest financial frauds ever. He has been free on bail, confined to his parents’ home in Palo Alto and restricted in his use of the internet.