Sam Bankman-Fried’s lawyers pin hopes on The Bahamas

Hi there and welcome to the most recent version of the FT’s Cryptofinance e-newsletter. This week, we’re revisiting The Bahamas.

Might The Bahamas be about to throw sand into the US machine that’s prosecuting Sam Bankman-Fried?

The intriguing query got here to gentle this week in a court docket doc filed in New York by the defence group of the previous FTX chief.

His attorneys are preventing the felony case laid out final December by the Division of Justice, which incorporates allegations of wire fraud, conspiracy to commit cash laundering and conspiracy to violate marketing campaign finance legal guidelines.

There have been eight unique costs, which served as the unique foundation for Bankman-Fried’s extradition from The Bahamas to the US.

Since arriving again within the US Bankman-Fried has been handed new costs, together with securities fraud and conspiracy to violate anti-bribery legal guidelines by paying $40mn to allegedly affect Chinese language officers. Bankman-Fried has pleaded not responsible to all counts.

However as a result of the later costs weren’t a part of the unique settlement to extradite him, his authorized group say the counts ought to be dismissed. Most eye-catching, the US authorities appears to agree that the later costs could also be dropped if The Bahamas authorities doesn’t play ball.

“The federal government will proceed on the brand new costs . . . if The Bahamas consents to trial on these costs, and won’t proceed on these counts if The Bahamas denies the federal government’s request,” the court docket submitting reads.

The Bahamian authorities didn’t reply after I requested whether or not it could consent to the US pursuing the newest costs going through Bankman-Fried.

This may occasionally not come as a shock contemplating that the nation has sought to divorce itself from the FTX scandal for the reason that firm collapsed on its shores eight months in the past.

Weeks after the collapse, attorney-general Leo Pinder was keen to emphasize that “over 100 corporations” within the FTX internet had been situated outdoors The Bahamas.

Throughout my November go to to Nassau, Bahamian prime minister Philip Davis mentioned he discovered no “deficiencies” in his nation’s crypto rules that might have stopped the FTX collapse. As a aspect be aware, The Bahamas had already engaged famend regulation agency Hogan Lovells to evaluate and assist replace its crypto guidelines.

However is the Caribbean nation actually about to place a critical dent within the US’s most eye-catching crypto enforcement case?

“From the DoJ’s perspective, the extra vital the case, the extra they’ll push each button to realize their goals. And I’ve to say, this case is among the many highest profile circumstances interval, not to mention white collar circumstances, for the DoJ,” one former federal prosecutor in Washington DC advised me over the telephone.

Teresa Goody Guillén, companion at BakerHostetler, factors out that superseding indictments are sometimes filed after an extradition.

“The defendant will object to the brand new crimes claiming that the extraditing nation didn’t consent to prosecuting or punishing him for the brand new crimes,” she advised me by way of e-mail.

And though The Bahamas may stand its floor, the US has been asserting the primacy of its personal overseas coverage pursuits within the Caribbean for greater than 100 years. The island nation can anticipate some warmth from American prosecutors if it chooses to not play.

“In all probability, given The Bahamas’s presumed curiosity in sustaining good relations with US regulation enforcement, the nation will grant the waiver and the federal government will proceed with the brand new costs,” mentioned one American lawyer acquainted with the matter.

In any case, the defence attorneys’ submitting is the most recent disagreeable reminder for The Bahamas that it’s going to in all probability by no means divorce itself from the FTX scandal.

What’s your tackle the most recent FTX salvo between the US and The Bahamas? As at all times, e-mail me at scott.chipolina@ft.com.

Weekly highlights

Singaporean state investor Temasek has cut the pay of the workers answerable for its failed $275mn funding in FTX. The corporate mentioned it was “upset” with the funding and the affect it had on its fame. Supposedly Temasek had achieved an “intensive” eight-month due diligence of FTX in 2021.
A few of the finance trade’s largest names, together with Customary Chartered, Nomura and Charles Schwab, are constructing their very own digital markets buying and selling platforms within the hopes that fund managers will gravitate in the direction of established names over opaque and lesser-known crypto exchanges. My colleague Nikou Asgari has the story here.
With reference to opacity in crypto markets, most of the largest names within the trade are (brace your self . . .) nonetheless dodging fundamental questions on their companies. Within the wake of the collapse of FTX and plenty of different once-prominent crypto teams, regulators and customers alike are involved about trade transparency, but when the FT requested 21 of probably the most distinguished crypto corporations about their governance and dealing with of buyer property, many declined to share fundamental data. Take a look at Martha Muir’s record here.
Binance’s grip on crypto is dwindling: the trade behemoth has misplaced 1 / 4 of its market share prior to now three months as a regulatory clampdown and the top of a free buying and selling promotion have clipped its wings. The corporate can also be finishing up a spherical of job cuts. Binance didn’t inform me what number of staff had been in danger and had been fast to say the cuts weren’t about “right-sizing” however as a substitute about expertise re-evaluation. My story here.
Whereas we’re at it, a mini scooplet on Binance: for the reason that begin of the 12 months it has tripled the sum of money it pays to internationally famend regulation agency Hogan Lovells for its lobbying efforts on Capitol Hill. We lined the alternate’s lobbying ways within the US earlier this year. Throughout a time when America’s relationship with crypto is sophisticated at finest, the oldsters at Hogan Lovells — who declined to remark — are definitely incomes their cash.

Soundbite of the week: A vanished CEO

Multichain, a . . . cross-chain router protocol (I do know, me neither) has served up a crypto basic this week.

The platform defined that the know-how points it had been experiencing not too long ago had been all the way down to “unforeseeable circumstances”, which turned out to be the mysterious vanishing of its chief government. Dangerous sufficient however he seemed to be the one particular person with entry to vital servers operating the community.

“The group has achieved all the things attainable to keep up the protocol operating, however we’re at the moment unable to contact CEO Zhaojun and procure the mandatory server entry for upkeep.”

Ah, nicely. Who may have predicted that leaving the digital workplace keys within the palms of 1 particular person could create issues? In crypto land, this sort of occasion is simply referred to as Wednesday.

Information mining: Tether’s dominance grows

Tether is busy reaching new highs within the stablecoin market. It has been nicely documented in latest editions of this text that crypto buyers are fleeing offshore and Tether’s rivals — comparable to Circle — have their very own points to fret about earlier than making an attempt to catch as much as the stablecoin pacesetter, however this week, Tether hit one other milestone.

Based on numbers shared with me by CCData, its present market share of 64.4 per cent is the best level reached by the BVI-registered firm since April 2021.