United States District Judge Kevin Castel approved the Justice Department’s request to stay civil lawsuits filed by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) against Sam Bankman-Fried (SBF), the founder and former CEO of bankrupt crypto exchange FTX.
According to a Reuters reportProsecutors believe that delaying lawsuits makes sense since the outcome of the criminal case could affect civil cases.
Court postpones civil cases against SBF
A stay is an order by a court to temporarily or indefinitely halt legal proceedings or the trial of a case. The court may lift the stay order at any time it deems appropriate to continue the litigation.
Criminal and civil lawsuits against SBF came after FTX archived filed for voluntary Chapter 11 bankruptcy protection in November after struggling with a severe liquidity crisis.
Shortly after the bankruptcy filing, reports emerged about how SBF and its executives at FTX’s trading company, Alameda Research, mishandled client funds. They allegedly used clients’ assets to finance their luxuries and purchase personal property.
As a result, the SEC and CFTC filed civil fraud cases against the FTX founder over the sudden disappearance of his exchange. Last month, Bankman-Fried begged not guilty in Manhattan federal court on charges of criminal fraud that knowingly misled investors.
US District Judge Lewis Kaplan set the trial date for the first week of October and said the trial could last four weeks. SBF is currently on $250 million bail and could face a maximum sentence of 115 years in prison if convicted.
SBF authorizes the suspension order
Prosecutors filed a motion last Tuesday requesting that a judge postpone civil lawsuits against SBF until the conclusion of the criminal case.
In the filing, prosecutors were concerned that SBF could use evidence from civil cases to indict government witnesses and circumvent discovery rules in the criminal case.
In particular, SBF agreed to the stay order for both civil cases together with the attorney for the bankrupt estates FTX and Alameda and its executives Gary Wang and Caroline Ellison.
Binance Free $100 (Exclusive) – Use this link to sign up to receive $100 free and 10% off your first month’s fees for Binance Futures (terms).
PrimeXBT Special Offer – Use this link to sign up and enter the code POTATO50 to receive up to $7,000 on your deposits.
