United States District Judge Kevin Castel has approved the Justice Department’s request to stay the 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 report, prosecutors believe delaying the lawsuits makes sense as the criminal case’s outcome could affect the civil cases.
Court Postpones Civil Cases Against SBF
A stay is an order by a court to temporarily or indefinitely stop legal proceedings or the trial of a case. The court may lift the stay order at a time deemed fit to continue the litigation.
The criminal and civil lawsuits against SBF came after FTX filed for voluntary Chapter 11 bankruptcy protection in November after struggling with a severe liquidity crunch.
Shortly after the bankruptcy filing, reports emerged on how SBF and his executives at FTX’s trading firm Alameda Research mishandled customer funds. They allegedly used clients’ assets to fund their luxuries and purchase personal properties.
As a result, the SEC and CFTC filed civil fraud cases against the FTX founder over the sudden demise of his exchange. Last month, Bankman-Fried pleaded not guilty in Manhattan federal court to criminal fraud charges that he knowingly cheated investors.
U.S. District Judge Lewis Kaplan set the trial date for the first week of October, saying the trial could last for four weeks. SBF is currently on a $250 million bail and could face a maximum sentence of 115 years in prison if found guilty.
SBF Consents to Stay Order
Prosecutors filed a motion last Tuesday requesting that a judge postpone the civil lawsuits against SBF until the conclusion of the criminal case.
In the filing, prosecutors were concerned that SBF could use evidence from the civil cases to impeach government witnesses and escape discovery rules in the criminal case.
Notably, SBF consented to the stay order for both civil cases alongside the counsel for the bankrupt estates FTX and Alameda and their executives Gary Wang and Caroline Ellison.
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.