By Luc Cohen and Chris Prentice
NEW YORK (Reuters) – When he took workplace as the highest federal prosecutor in Manhattan in late 2021, Damian Williams pledged to prioritize “rooting out corruption in our monetary markets.”
Now, with the fraud costs filed earlier this week in opposition to Sam Bankman-Fried, the founding father of the bankrupt FTX change, Williams has additional solidified his workplace’s rising function in prosecuting monetary crimes involving cryptocurrency, in response to interviews with a half-dozen former prosecutors.
“Each U.S. lawyer is outlined within the public eye by a number of the greatest circumstances that they carry,” stated Harry Sandick, a companion at legislation agency Patterson Belknap and former Manhattan federal prosecutor. “This may without end be linked to the present U.S. lawyer.”
The indictment in opposition to Bankman-Fried – who was charged with utilizing billions in stolen buyer funds to purchase actual property, pay money owed for his hedge fund, Alameda Analysis, and donate to political campaigns – situates Williams as a major adversary for the high-profile entrepreneur whose downfall has captured public consideration and led to requires higher regulation of cryptocurrency platforms.
Bankman-Fried, 30, has acknowledged threat administration failures at FTX however stated he doesn’t consider he has felony legal responsibility. His lawyer stated he’s evaluating his authorized choices. On Tuesday, a choose in The Bahamas ordered him detained there whereas he contests a U.S. extradition request.
Williams led the Southern District of New York’s (SDNY) securities and commodities activity pressure earlier than being nominated because the district’s high prosecutor by President Joe Biden. Williams, SDNY’s first Black U.S. lawyer, earned his legislation diploma from Yale and clerked for former Supreme Courtroom Justice John Paul Stevens in addition to present Legal professional Normal Merrick Garland when Garland was an appellate choose.
Earlier this 12 months, Williams introduced the first-ever insider buying and selling circumstances involving digital belongings with costs in opposition to a former worker of non-fungible token buying and selling platform OpenSea in addition to a former product supervisor at Coinbase International Inc, an FTX rival.
Each these defendants have pleaded not responsible.
SDNY has lengthy been often known as one of the muscular enforcers of monetary crimes, and a few former prosecutors in contrast Williams’ string of crypto-related prosecutions to the concentrate on insider buying and selling by Preet Bharara, who served as U.S. Legal professional from 2009 to 2017 and secured convictions of fund managers corresponding to Raj Rajaratnam.
Williams was a prosecutor on a number of high-profile monetary crimes circumstances throughout Bharara’s tenure, together with the insider buying and selling conviction of former Goldman Sachs board member Rajat Gupta and the fraud conviction of a former portfolio supervisor at Visium Asset Administration LP.
“Crypto is the Wild West, however on the finish of the day fraud is fraud,” stated Mike Ferrara, a former prosecutor and now an lawyer with Kaplan Hecker & Fink LLP in New York. “Damian is doing a superb job of claiming, ‘we will push the envelope in crypto,’ the way in which Preet was aggressive about insider buying and selling.”
A spokesman for Williams’ workplace declined to remark.
‘COME SEE US BEFORE WE COME SEE YOU’
Pursuing cryptocurrency-related prosecutions shouldn’t be with out challenges. Protection attorneys could argue that as a result of the sector is comparatively new and questions on how will probably be regulated are nonetheless being labored out, their purchasers weren’t clear on how legal guidelines crafted for conventional finance utilized to them.
“The federal government is having hassle maintaining and making clear to contributors within the trade what they’re imagined to be doing,” stated Elise Maizel, a professor at NYU College of Legislation and former white-collar protection lawyer. “With these felony circumstances, quite a lot of the time they’re regulating by way of enforcement.”
In a single setback for prosecutors, three former founders of crypto change Bitmex and its first worker – who pleaded responsible to costs introduced by Williams’ predecessor of failing to ascertain an anti-money laundering program – earlier this 12 months obtained lighter sentences than prosecutors requested.
The choose in that case stated that whereas the crime was critical, prosecutors had not introduced extra weighty costs of cash laundering or fraud, and there have been no identifiable victims.
To make sure, Williams’ workplace has pursued extra conventional monetary crimes circumstances as properly, with costs filed this 12 months in opposition to the founding father of Archegos Capital Administration for mendacity to banks to acquire loans earlier than the agency’s meltdown, and in opposition to the previous chief funding officer at a unit of Germany’s Allianz SE for inflating fund outcomes.
Each pleaded not responsible.
Within the wake of Bankman-Fried’s arrest, Williams has made clear he would plow on with cryptocurrency enforcement. On Wednesday, he introduced wire fraud conspiracy costs in opposition to the founders of two separate cryptocurrency mining and buying and selling corporations he referred to as Ponzi schemes.
The 5 people charged in one of many circumstances have pleaded not responsible, whereas the three people charged within the different haven’t but entered pleas.
On Tuesday, Williams advised reporters extra costs within the FTX probe have been attainable.
“This investigation could be very a lot ongoing and it’s transferring in a short time,” Williams stated. “To anybody who participated in wrongdoing at FTX or Alameda Analysis and who has not but come ahead, I’d strongly encourage you to come back see us earlier than we come see you.”
(Reporting by Luc Cohen and Chris Prentice in New York; Enhancing by Noeleen Walder, Amy Stevens and Matthew Lewis)