Lawyers for Sam Bankman-Fried late Wednesday revealed particulars of his planned testimony if he takes the witness stand at his FTX fraud trial.
Bankman-Fried’s authorized workforce advised Judge Lewis Kaplan in a six-page letter that he would deal with three key areas in such testimony, together with suggesting that he relied on FTX’s former authorized workforce in permitting some actions that later led to the implosion and chapter of the cryptocurrency change.
Lawyers for the disgraced FTX chief additionally mentioned he would additionally cite his understanding of widespread business practices, in addition to his intention to adjust to Bahamian authorities.
Bankman-Fried faces seven legal counts, together with wire fraud, securities fraud and cash laundering, that might land him in jail for greater than 100 years if he’s convicted at his trial in Manhattan federal courtroom.
Bankman-Fried, the son of two Stanford authorized students, has pleaded not responsible in the case.
Will he or will not he?
The letter to Kaplan seems to solid doubt on whether or not the disgraced crypto billionaire will take the witness stand.
Earlier Wednesday, one among Bankman-Fried’s two chief trial attorneys, Mark Cohen, mentioned in a convention name that his consumer would testify as would three different individuals.
But in his letter Wednesday night, Cohen wrote, “Accordingly, ought to Mr. Bankman-Fried resolve to testify in his protection, he ought to be permitted to testify as to his understanding of business practices concerning use of omnibus wallets to indicate his good religion and lack of legal intent.”
The assertion suggests Bankman-Fried would possibly stand down on testifying, ought to the protection’s requests be rejected.
Blaming ex-FTX lawyers
Kaplan previously ruled that Bankman-Fried’s lawyers couldn’t make a so-called recommendation of counsel argument in their opening remarks since it’d danger prejudicing the jury.
But Cohen in the brand new letter advised Kaplan that though prosecutors “beforehand moved to preclude Mr. Bankman-Fried from providing proof or argument concerning the involvement of attorneys,” Bankman-Fried’s “information of the involvement of counsel in these issues” is “immediately related” to “his way of thinking and good religion on the time.”
Cohen cited particular examples the place, on the steerage of FTX lawyers, Bankman-Fried adopted a coverage which prosecutors argued exhibits his criminality.
One instance was company-wide coverage on the encrypted messaging app Signal.
Caroline Ellison, Bankman-Fried’s ex-girlfriend who additionally ran crypto hedge fund Alameda Research, testified SBF directed FTX and Alameda staff to make use of the disappearing message setting on Signal. She mentioned he advised them to be very cautious about what they put in writing due to potential authorized publicity.
Lesser-known FTX co-founder and ex-chief know-how officer Gary Wang, in addition to senior FTX developer Adam Yedidia, additionally testified to the directive that Signal communications be set to auto-delete.
The authorities equally asserted in its opening argument earlier than the jury that the 30-day auto-deletion coverage on Signal was as a result of Bankman-Fried “did not desire a paper path for his crimes.”
But Cohen wrote that Bankman-Fried’s understanding was that these auto-deletion insurance policies have been “instituted below the guidances of lawyers.”
In one other instance, Cohen pointed to the billions of {dollars} value of FTX buyer deposits that went immediately right into a checking account managed by Alameda.
Prosecutors say buyer money was shuttled to Alameda by way of two channels: customers depositing money immediately into accounts held by Alameda and thru a secret backdoor that was baked into FTX’s code.
But attorneys for Bankman-Fried allege that SBF’s “understanding as to the involvement of counsel in the formation” of those accounts and in the fee association established between FTX and Alameda can be “immediately related” to the defendant’s “good religion perception that there was nothing improper about utilizing Alameda-controlled entities to simply accept FTX buyer deposits.”
In these and different examples involving the steerage of former FTX counsel, protection attorneys for Bankman-Fried return to the identical rationale that the ex-FTX chief was appearing in good religion and never with the legal intent alleged by the federal government.
Blaming the Bahamian authorities
Wang has testified that final Nov. 12, after FTX declared chapter, Bankman-Fried requested that Wang drive with him to the Bahamas Securities Commission for a gathering.
On the drive, Bankman-Fried advised Wang to switch property to Bahamian liquidators as a result of he believed they’d enable him to keep up management of the corporate. Wang mentioned he was not in the assembly with the securities authority, although Bankman-Fried’s dad was current. Wang mentioned he returned to the U.S. and met with American prosecutors the subsequent day.
He faces as much as 50 years in jail when he faces a choose for sentencing following this trial. He advised jurors he signed a six-page cooperation settlement that requires him to fulfill with prosecutors, reply their questions in truth and switch over proof.
Feds additional allege that SBF prioritized paying sure collectors, together with Bahamian authorities. In its pretrial movement, the federal government pointed to Bankman-Fried’s “legal intent,” in addition to the “false nature of his representations” that he wished to “do proper by prospects.”
Cohen writes, “We anticipate eliciting testimony from Mr. Bankman-Fried concerning his good religion intentions on November 12, 2022 with respect to compliance with orders by Bahamian authorities to switch property from FTX to the Securities Commission of The Bahamas over the objections of FTX’s in-house counsel and U.S. chapter counsel.”
“Such testimony would require Mr. Bankman-Fried to debate his perception that the Bahamian authorities have been appearing in the most effective pursuits of FTX prospects, whereas FTX’s in-house counsel and outdoors chapter counsel in the United States had conflicts of curiosity,” the letter continues.
Blaming the established order in crypto
Bankman-Fried’s understanding of generally accepted business practices might also determine prominently in his testimony.
In the crypto vernacular, an omnibus account is the place the digital property of a number of customers are held collectively in a single account. Cryptocurrency exchanges and others in the business sometimes use the sort of collective storage technique into order to slash prices and streamline the workflow.
In the case of FTX, the commingling of buyer and firm property has turn out to be a significant level of rivalry between the federal government and the protection.
Prosecutors argued that FTX’s “use of omnibus wallets is related to this case,” the letter mentioned.
“For instance, the Government elicited testimony from Mr. Sun that he didn’t imagine that FTX buyer deposits might permissibly be commingled with different funds of the enterprise … and that FTX utilized an omnibus pockets for all buyer digital property,” the doc continues, referring to FTX’s former normal counsel, Can Sun.
“We respectfully submit that Mr. Bankman-Fried’s information of business practices concerning the usage of omnibus wallets is related to his good religion perception that his conduct was permissible,” the letter added.
“Mr. Bankman-Fried’s understanding of whether or not FTX’s actions have been in step with the crypto business practices with regard to make use of of omnibus wallets is probative of his good religion perception that FTX’s (and his personal) actions have been correct.”
