Lawyers for Sam Bankman Freed late Wednesday revealed details of his planned testimony if he takes the stand in the FTX fraud trial.
Bankman Freed’s lawyers told Judge Lewis Kaplan: In a six-page letter He said he would address three key areas in such testimony, including FTX’s reliance on its former legal team in authorizing some of the actions that later led to the cryptocurrency exchange’s implosion and bankruptcy. It also included hints that he had done so.
Lawyers for the disgraced FTX chief also said he demonstrated an understanding of prevailing industry practices and a willingness to comply with Bahamian authorities.
Bankman Fried is charged with seven counts including wire fraud, securities fraud and money laundering, and if convicted in Manhattan federal court, he could face more than 100 years in prison. There is.
Bankman Fried, the son of two Stanford law professors, has pleaded not guilty in the case.
Will he or won’t he?
The letter to Kaplan appears to cast doubt on whether the disgraced crypto billionaire will take the stand.
But in a letter Wednesday evening, Cohen said: “Thus, if Mr. Bankman-Fried decides to testify in his own defense, the use of the Omnibus Wallet will be necessary to demonstrate his good faith and integrity. should be allowed to testify regarding their understanding of industry practices regarding No criminal intent. ”
The statement suggests Bankman Fried may decline to testify if the defense’s request is denied.
Former FTX lawyer accused
Mr. Kaplan previously ruled. Bankman Freed’s lawyer said he could not make so-called legal advice arguments in his opening remarks because it could prejudice the jury.
But in a new letter, Mr. Cohen told Mr. Kaplan that although prosecutors had “previously moved to prevent Mr. Bankman-Fried from providing evidence or arguments regarding the involvement of his attorneys,” Mr. “I have first-hand knowledge of the attorney’s involvement in these matters,” he said. It relates to “his state of mind and integrity at the time.”
Mr. Cohen, with guidance from FTX attorneys, cited specific examples of Bankman Freed adopting policies that prosecutors say demonstrate criminality.
One example was a company-wide policy for the encrypted messaging app Signal.
Bankman Fried’s ex-girlfriend, Caroline Ellison, who also ran the cryptocurrency hedge fund Alameda Research, says SBF has instructed FTX and Alameda employees to use a disappearing message setting on Signal. He testified that he did. She said she told them to be very careful about what they put in writing because of potential legal exposure.
Little-known FTX co-founder and former chief technology officer Gary Wang and FTX senior developer Adam Yedidia also testified about the directive to set Signal communications to auto-delete.
The government similarly argued in its opening argument to the jury that Signal’s 30-day automatic deletion policy was because Bankman-Fried “did not want to leave evidence of his crimes on paper.”
But Cohen wrote that Bankman Freed understands that these automatic deletion policies were “implemented under the guidance of legal counsel.”
As another example, Cohen pointed to billions of dollars worth of FTX customer deposits that were deposited directly into bank accounts controlled by Alameda.
Prosecutors say the customers’ cash was sent to Alameda through two routes. One route allows users to deposit cash directly into an account held by Alameda, and the other route goes through a secret backdoor built into FTX’s code.
However, Bankman Freed’s lawyers argued that “SBF’s understanding of the involvement of attorneys” in the opening of these accounts and the payment arrangements established between FTX and Alameda “directly and directly contradicts the defendant’s good faith beliefs.” It claims to be related. There is nothing improper in using an entity controlled by Alameda to accept deposits from FTX customers. ”
In these and other examples regarding the guidance of former FTX attorneys, Bankman Fried attorneys argue that the former FTX chief was acting in good faith and not with the criminal intent the government alleges. Return to rationale.
blame Bahamian authorities
Wang testified on November 12 last year that after FTX was declared bankrupt, Bankman Freed asked him to drive with him to a meeting with the Bahamas Securities Commission.
During the car ride, Mr. Bankman Freed told Mr. Wang to transfer the assets to a Bahamian liquidator because he believed that would allow them to maintain control of the company. Mr. Wang said Mr. Bankman Freed’s father was present, but he did not attend the meeting with securities regulators. Wang said he returned to the United States and met with U.S. prosecutors the next day.
When sentenced by a judge after the trial, he could face up to 50 years in prison. He told jurors that he signed a six-page cooperation agreement that required him to meet with prosecutors, answer questions truthfully and provide evidence.
The Fed further alleges that SBF prioritized payments to certain creditors, including the Bahamian authorities. In pretrial motions, the government pointed to Bankman Fried’s “criminal intent” and the “false nature of his representations” that he “wanted to do the right thing by his clients.”
Mr. Cohen said: “We have confirmed Mr. Bankman Freed’s good faith intentions on November 12, 2022 with respect to complying with the order of the Bahamian authorities to transfer assets from FTX to the Bahamas Securities Commission over the objections of FTX. We look forward to eliciting testimony regarding this matter.” In-house Counsel and U.S. Bankruptcy Attorney. ”
“To make such a testimony, Mr. Bankman Freed said that while the Bahamian authorities were acting in the best interests of FTX customers, FTX’s in-house lawyers and its outside U.S. bankruptcy lawyers had no vested interests. It will be necessary to discuss the belief that there is a conflict,” the letter states. continue.
criticize the current state of virtual currency
Mr. Bankman Fried’s understanding of generally accepted industry practices may also be evident in his testimony.
In crypto parlance, an omnibus account refers to where multiple users’ digital assets are held together in one account. Cryptocurrency exchanges and other companies in the industry typically use this type of collective storage strategy to reduce costs and streamline workflows.
In the case of FTX, the confusion of customer and company assets is a major point of contention between government and defense authorities.
Prosecutors argued that FTX’s “use of omnibus wallets is related to this case,” the letter states.
“For example, the government has elicited testimony from Mr. Sun that he does not believe that FTX customer deposits should be allowed to be commingled with other funds in the business…and that FTX ,” the document states. he continued, referring to FTX’s former general counsel Can Sun.
“We respectfully submit that Mr. Bankman Freed’s knowledge of industry practices regarding the use of omnibus wallets is relevant to his good faith belief that his conduct is acceptable,” the letter said. added.
“Mr. Bankman Fried’s understanding of whether FTX’s actions were consistent with crypto industry practices regarding the use of omnibus wallets is based on his good faith belief that FTX’s (and his own) actions were appropriate. It is proof of belief.”
