Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, arrives in court at a courthouse in New York, U.S., on August 11, 2023, as lawyers push to convince the judge overseeing his fraud case not to let him appear to be sent to prison for trial. Portal /Eduardo Munoz//File Photo Purchase license rights
NEW YORK, Oct 26 (Portal) – Lawyers for FTX founder Sam Bankman-Fried launched their case on Thursday in his fraud trial, following 12 days of testimony from prosecutors in which former colleagues at the now-bankrupt cryptocurrency exchange said he instructed them to divert client money to his hedge fund and lie to investors and lenders.
Bankman-Fried is expected to testify in his own defense after two brief depositions, his lawyer Christian Everdell said in court outside the presence of the jury. Those first witnesses will be Krystal Rolle, Bankman-Fried’s attorney in the Bahamas, and database expert Joseph Pimbley, Everdell said.
For Bankman-Fried, the opinion is a risky move that would give prosecutors a chance to question the 31-year-old former billionaire about statements from former close colleagues that he directed them to commit crimes.
After the prosecution rested its case after 12 days of testimony, U.S. District Judge Lewis Kaplan denied a defense request to acquit Bankman-Fried before the case goes to the jury. Defense attorney Mark Cohen argued that prosecutors had not developed “viable legal theories” about wire fraud, something prosecutor Nicolas Roos disputed.
Bankman-Fried pleaded not guilty to two counts of fraud and five counts of conspiracy. If convicted, Bankman-Fried could face decades in prison. Prosecutors said Bankman-Fried used the embezzled funds to prop up his cryptocurrency-focused hedge fund Alameda Research, make speculative venture investments and donate more than $100 million to U.S. political campaigns.
Kaplan said some of Bankman-Fried’s statements would take place outside the presence of the jury so he could decide whether they would be admissible as evidence.
This also includes testimony about FTX lawyers’ involvement in structuring loans from Alameda to FTX executives, which prosecutors say was a key way for the defendant and others to steal money from unsuspecting customers.
Cohen said in a Wednesday letter to Kaplan that Bankman-Fried’s “knowledge that attorneys were involved in structuring and documenting the loans would be evidence of his good faith belief that nothing improper occurred.”
Prosecutors could ask Bankman-Fried under cross-examination why he did not disclose Alameda’s privileges to FTX customers or stock investors and why, amid a wave of customer withdrawals last November, he posted on social media that FTX was doing “fine” at the time He knew there was a lack of billions of dollars in funding.
Legal experts say Bankman-Fried has little to lose by going against conventional wisdom and testifying, as insiders have been painting an unflattering picture of his personality for weeks.
He has already taken an unusual approach for a defendant. Instead of keeping a low profile after the indictment, he published blog posts explaining what went wrong and met with several journalists.
Bankman-Fried has claimed that while he made mistakes in running FTX, he never intended to steal funds. His lawyers said three of his former colleagues who pleaded guilty and agreed to cooperate with prosecutors framed their statements to incriminate Bankman-Fried in hopes of receiving lenient sentences.
The prosecution’s final witness, FBI agent Marc Troiano, testified about Bankman-Fried’s use of the encrypted messaging application Signal as the trial resumed in Manhattan federal court on Thursday morning after a week-long break.
Troiano said Signal groups where Bankman-Fried was with colleagues were often set to automatically delete messages when jurors saw screenshots from a phone belonging to Caroline Ellison, the former managing director of Bankman-Fried’s Alameda hedge fund Research and his on-and-off girlfriend.
Ellison testified at the start of the trial that Bankman-Fried had instructed his staff to “be careful with what we put in writing and not to write down anything that could get us into legal trouble.”
Cohen said Bankman-Fried’s direct testimony could last nearly five hours.
Reporting by Luc Cohen and Jody Godoy in New York; Edited by Will Dunham, Noeleen Walder and Jonathan Oatis
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