According to a letter by the Department of Justice sent to the District Court for the Southern District of New York, the federal government is allegedly not pursuing the charge because the government of the Bahamas did not plan to extradite Bankman-Fried to the United States on campaign finance charges.
"Accordingly, in keeping with its treaty obligations to the Bahamas, the government does not intend to proceed to trial on the campaign contributions count," wrote U.S. Attorney Damian Williams to the court.
Prosecutors originally accused Bankman-Fried of using approximately $90 million in client deposits to donate to hundreds of political campaigns and political action committees. He funneled these client deposits through at least two currently unnamed co-conspirators to circumvent donation limits.
If convicted, the former billionaire would have had as much as five years added to his prison term.
This is not the first time federal prosecutors have narrowed the charges against Bankman-Fried. Last month, prosecutors announced that they would withdraw five of the 13 charges after a ruling in a court in The Bahamas allowed Bankman-Fried to challenge those charges.
These five charges were not dropped but merely postponed to a new trial in March 2024. Some of the charges include foreign bribery conspiracy and bank fraud conspiracy.
Bankman-Fried's trial on the other counts that were announced in December 2022 will proceed as scheduled on Oct. 2.
The dropping of the charge also comes after District Judge Lewis A. Kaplan in Manhattan placed an interim gag order on Bankman-Fried after federal prosecutors alleged he was leaking information to the press. A hearing is also set to begin shortly on whether to revoke his $250 million bail due to this allegation.
Bankman-Fried's $90 million in campaign donations went to around 300 candidates and PACs associated with their campaigns, most of whom were affiliated with the Democratic Party. (Related: Democrats SCRAMBLING to hide evidence linking them to former FTX CEO Sam Bankman-Fried.)
During the 2022 midterm cycle alone, Bankman-Fried contributed nearly $39 million to Democrat-aligned causes, emerging as the second-largest individual donor to the party, just behind billionaire George Soros.
He contributed to the campaigns of Democratic Sens. Kirsten Gillibrand of New York and Cory Booker of New Jersey, as well as to Rep. Debbie Stabenow of Michigan. He even provided more than $5 million to President Joe Biden's 2020 campaign.
Mark Karsten, a lawyer for the firm Buchanan Ingersoll & Rooney in Philadelphia, warned that dropping the campaign finance charge could help Bankman-Fried by allowing his lawyers to better "focus their narrative" on his other charges.
"Jurors have a visceral reaction to campaign finance charges. Campaign finance charges are crimes on the public, and jurors themselves are indirect victims," said Karsten. "Victims of the other charges, by comparison, are customers of or investors in Alameda or FTX."
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Watch this episode of "The Kim Iversen Show" as host Kim Iversen speculates on why the administration of President Joe Biden is not forging ahead with the campaign finance violation charge against Democratic megadonor Sam Bankman-Fried.