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This is one of those blogs that I probably should’ve figured out a way to get out before the holidays, since I’m sure a number of our readers found themselves at holiday parties where they were expected to be talking law books about the DOJ’s criminal proceeding against FTX founder Samuel Bankman-Fried.

In any event, better late than never, here’s a recent blog from Columbia Law Prof. John Coffee that discusses the legal theories the government is pursuing. This excerpt highlights some of the challenges prosecutors face as a result of FTX’s use of The Bahamas as the home base for its operations:

A quick look at the SBF indictment shows that the SDNY is hoping to apply the federal wire fraud statute and the anti-fraud provisions of the federal securities laws extraterritorially against a defendant who largely acted outside the U.S. To succeed, prosecutors will need to rely on the second step analysis, as neither statute reveals on its face a congressional intent to apply it extraterritorially.

The wire fraud statute was modelled after the mail fraud statute, which was passed in 1872, and that 1872 Act was primarily intended to protect the mails from corruption and misuse. Congress had learned that post offices were being used to further gambling, pornography, and the dissemination of counterfeit money, and it sought to put a stop to such use. In the case of the federal securities laws, the facts of Morrison show that the mere sending of mail by the defendant National Australia Bank into the U.S. was insufficient to satisfy Morrison’s “focus” test.

– John Jenkins