Sam Bankman-Fried was charged with fraud and campaign finance breaches in December 2022 after the sudden failure of his cryptocurrency exchange

Federal prosecutors pursuing the criminal case against FTX founder Sam Bankman-Fried said on Wednesday that they were dropping a charge that he infringed campaign finance rules.

SBF was charged with fraud and campaign finance breaches in December 2022 after the sudden failure of his cryptocurrency exchange. He was swiftly repatriated to the US from the Bahamas, where the exchange was based.

However in a court filing on Wednesday night, the prosecutors said that the Bahamas had informed them that the country’s government had not intended to repatriate SBF on the campaign finance charge.

In line with its treaty obligations to the Bahamas, the federal government doesn’t intend to proceed to trial on campaign contributions, according to the prosecutors’ filing.

The removal of the charge is a win for SBF’s legal team, which had contended that the US mismanaged the extradition process. It comes after the prosecution’s decision in June to proceed to a trial in October without pursuing five other charges that were added to SBF’s indictment in the weeks following his repatriation.

The authorities have stated that SBF and others at the exchange used customer funds to make $90mln in campaign contributions to around 300 political candidates or political action committees. Months back, FTX’s prosecutors and bankruptcy lawyers started asking receivers of those donations to return them.

Overall, SBF is now set to face seven charges at his October trial, including allegations that he deceived FTX customers and lenders.

Prosecutors have contended that he organised an extensive fraud, withdrawing billions of dollars that customers had deposited with FTX to finance campaign contributions, charitable donations and real estate purchases.

Prosecutors are planning a second trial on the five charges that were withdrawn in June, including an accusation that SBF bribed a foreign government. They stated that they had to delay a trial on those counts while lawsuit over the repatriation progressed in the Bahamas.

John P Fishwick Jr, a former US attorney for the Western District of Virginia, said prosecutors still had “overwhelming evidence against Sam Bankman-Fried”. He said that the removal of the campaign finance charge could work to the government’s advantage by making it a simpler fraud case to present to a jury.