Prosecutors Abandon Additional Charges for SBF

Sam Bankman-Fried will not face foreign bribery charges, and all the other headlines in crypto...

By: André Beganski

January 2, 2024

GM and Happy New Year! Over the holiday break: Federal prosecutors abandoned additional charges against SBF, a New York Judge sided with the SEC’s claims on Terra tokens, Barry Silbert stepped down from Grayscale, and CZ’s travel restrictions were upheld — again.

Listen to Coinage discuss these stories and more in our usual Live News Digest in the video above.

One Trial Was Enough

The U.S. Justice Department won’t pursue additional criminal charges against FTX Founder Sam Bankman-Fried, federal prosecutors said in a court filing last week. While the one-time crypto mogul was found guilty of seven criminal charges in November, including wire fraud and money laundering, a second trial was slated for March.

Federal prosecutors determined a second trial wouldn’t be necessary, considering the need for a “timely and just resolution of the case.” Not to mention the fact that Bankman-Fried could already face over a century behind bars. Judge Lewis Kaplan is still set to determine the length of Bankman-Fried’s sentence at a hearing in March.

Coinage is diving into the defense provided by SBF in our new weekly series and asking our community to join in the search for truth.
Coinage is diving into the defense provided by SBF in our new weekly series and asking our community to join in the search for truth.

The charges dropped include one count of conspiracy to bribe foreign officials, conspiracy to commit bank fraud, and conspiracy to operate an unlicensed money-transmitting business. 

Even though the aforementioned charges weren’t included at trial in November, a portion of the accusations came up when former Alameda Research CEO Caroline Ellison testified at trial. She spoke about an attempt to tap frozen Alameda funds using Thai sex workers, which ultimately led to a bribe when the initial plan failed.

SEC Notches Terra Win

The Securities and Exchange Commission (SEC) notched a partial victory in its lawsuit against Terraform Labs and its co-founder Do Kwon last week. In a ruling, Judge Jed Rakoff found that there was “no genuine dispute” over whether four cryptocurrencies issued by Terraform Labs were securities: UST, LUNA, wLUNA, and MIR.

At the same time, Judge Rakoff denied a motion for summary judgment on accusations of fraud from both sides. A trial centered on the allegations of fraud against Kwon and Terraform Labs is set to take place in a Manhattan courtroom at the end of this month.

The trial will focus on statements made by Kwon and Terraform Labs about the failure of TerraUSD, an algorithmic stablecoin that sparked a wave of corporate blowups when it unraveled abruptly last year. On top of that, prosecutors will scrutinize statements made about the payments application Chai, and whether it was powered by Terra’s network.

Barry Silbert Bows Out

Digital Currency Group (DCG) owner Barry Silbert resigned as chairman of Grayscale Investments last week and was replaced by DCG CFO Mark Shifke. The move comes as anticipation for the approval of several spot Bitcoin ETFs in the U.S. continues to grow.

One of the most influential firms in the crypto space, DCG is the parent company of both Grayscale and Genesis, a crypto lender that went bankrupt in 2022. In October, New York’s Attorney General Letitia James sued DCG, alleging the firm defrauded investors out of more than $1 billion. Silbert was charged with defrauding the public by James too.

Last year, Grayscale’s courtroom victory over the SEC bolstered expectations that a spot Bitcoin ETF could soon be approved in the U.S. after the regulators’ past denial of such products from Grayscale was deemed arbitrary and capricious in court.

Grayscale’s tussle with the SEC may have opened the door to a spot Bitcoin ETF in the U.S., but its competition on Wall Street is stiff. The likes of BlackRock and Fidelity are jockeying for spot Bitcoin ETFs of their own. And as a display of “good boy” behavior, Bloomberg Intelligence analyst Eric Balchunas said on X that Grayscale is trying to show the SEC it is “worthy of making [its] first tranche of [ETF] launches.”

CZ’s Travel Ban Upheld

Binance Founder Changpeng Zhao’s request to travel abroad ahead of his sentencing was denied again last week. In November, the former CEO came to the U.S. to plead guilty to one charge of violating the Bank Secrecy Act as part of a $4.3 billion settlement between the exchange and regulators. Zhao was deemed a flight risk after his initial request to leave the U.S.

Based on sentencing guidelines, Zhao could face up to 18 months in prison. And judge Richard Jones is set to determine the length of his sentence at a hearing in February. So it won’t be long before Zhao finds out whether it’ll be an extended time before he can travel home to the UAE, where his three children and their mother reside.

Meanwhile, Binance said its user base grew 30% to 170 million users in 2023, despite regulatory headwinds in the U.S. and parts of Europe it tried to expand into. In the year-end report, Binance’s new CEO Richard Teng said “new users continued coming in steadily” following the firm’s settlement with U.S. regulators months ago.

Other Headlines

  • NY Financial Regulator Approves Paxos Expansion to Solana, Allowing For Its First Stablecoin Issuance Beyond Ethereum (Fortune)

  • Cathie Wood's ARK Invests in ProShares Bitcoin ETF After Dumping Grayscale Holdings (CoinDesk)

  • Elon Musk Says He Spends Hardly Any Time At All Thinking About Cryptocurrency (The Block)

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