On Monday, a court in the United States placed two civil lawsuits against Sam Bankman-Fried, the creator of the now-defunct FTX cryptocurrency exchange, on hold pending the completion of the Department of Justice’s criminal prosecution against Bankman-Fried. The lawsuits were filed by regulators.
On February 13, the United States District Judge for the Southern District of New York, Kevin Castel, granted the motions to stay the civil proceedings “without prejudice.” This means that the cases will now be halted until after the criminal trial being conducted by the Department of Justice has concluded. The application to delay both civil lawsuits against the FTX founder and former CEO was first presented on February 7 by Damian Williams, who serves as the United States Attorney for the Southern District of New York.
The prosecution said that it was in everyone’s best interest to postpone those lawsuits since the proceedings included a large amount of redundancy and the decision of the criminal case was likely to have an effect on the issues that were still open in the civil litigation. They also underlined the possibility that Bankman-Fried may collect material in the civil cases to illegally impeach government witnesses, avoid discovery procedures in the criminal proceedings, and design his criminal defense. All of these risks were mentioned.
According to the document filed in court last week, the criminal case has additional charges of money laundering and campaign finance violations, which are not specifically alleged in the civil cases, and it is generally “broader in scope” than the civil actions. Additionally, the civil cases do not specifically allege that the defendant committed any of these violations.
