Sam Bankman-Fried’s attorneys reveal his prepared testimony in FTX fraud demo

Lawyers for Sam Bankman-Fried late Wednesday disclosed facts of his prepared testimony if he usually takes the witness stand at his FTX fraud trial.

Bankman-Fried’s lawful team explained to Judge Lewis Kaplan in a six-page letter that he would handle three critical locations in these types of testimony, like suggesting that he relied on FTX’s former authorized group in making it possible for some steps that later led to the implosion and personal bankruptcy of the cryptocurrency exchange.

Lawyers for the disgraced FTX chief also claimed he would also cite his comprehending of typical industry tactics, as nicely as his intention to comply with Bahamian authorities.

Bankman-Fried faces 7 prison counts, like wire fraud, securities fraud and income laundering, that could land him in jail for additional than 100 a long time if he is convicted at his demo in Manhattan federal courtroom.

Bankman-Fried, the son of two Stanford legal students, has pleaded not responsible in the situation.

The letter to Kaplan seems to forged question on no matter if the disgraced crypto billionaire will consider the witness stand.

Previously Wednesday, one of Bankman-Fried’s two chief demo lawyers, Mark Cohen, mentioned in a meeting phone that his consumer would testify as would 3 other people today.

But in his letter Wednesday night, Cohen wrote, “Accordingly, should really Mr. Bankman-Fried make a decision to testify in his protection, he should be permitted to testify as to his understanding of industry procedures pertaining to use of omnibus wallets to exhibit his excellent religion and deficiency of criminal intent.”

The statement implies Bankman-Fried may well stand down on testifying, should really the defense’s requests be turned down.

Kaplan earlier ruled that Bankman-Fried’s legal professionals could not make a so-termed tips of counsel argument in their opening remarks since it could possibly chance prejudicing the jury.

But Cohen in the new letter explained to Kaplan that whilst prosecutors “previously moved to preclude Mr. Bankman-Fried from supplying proof or argument regarding the involvement of attorneys,” Bankman-Fried’s “information of the involvement of counsel in these matters” is “straight related” to “his point out of intellect and excellent faith at the time.”

Cohen cited precise examples in which, at the steering of FTX legal professionals, Bankman-Fried adopted a plan which prosecutors argued shows his criminality.

One example was corporation-huge coverage on the encrypted messaging application Signal.

Caroline Ellison, Bankman-Fried’s ex-girlfriend who also ran crypto hedge fund Alameda Research, testified SBF directed FTX and Alameda personnel to use the disappearing concept location on Sign. She reported he advised them to be very very careful about what they set in writing since of prospective legal publicity. 

Lesser-identified FTX co-founder and ex-chief engineering officer Gary Wang, as effectively as senior FTX developer Adam Yedidia, also testified to the directive that Signal communications be set to car-delete.

The authorities similarly asserted in its opening argument prior to the jury that the 30-working day vehicle-deletion policy on Signal was due to the fact Bankman-Fried “didn’t want a paper path for his crimes.”

But Cohen wrote that Bankman-Fried’s knowing was that these vehicle-deletion insurance policies have been “instituted below the guidances of legal professionals.”

In an additional instance, Cohen pointed to the billions of pounds value of FTX customer deposits that went specifically into a financial institution account controlled by Alameda.

Prosecutors say consumer hard cash was shuttled to Alameda by means of two channels: users depositing funds directly into accounts held by Alameda and by way of a mystery backdoor that was baked into FTX’s code.

But attorneys for Bankman-Fried allege that SBF’s “knowing as to the involvement of counsel in the formation” of these accounts and in the payment arrangement recognized between FTX and Alameda would be “immediately related” to the defendant’s “great faith belief that there was absolutely nothing incorrect about making use of Alameda-managed entities to take FTX client deposits.”

In these and other examples involving the guidance of previous FTX counsel, protection attorneys for Bankman-Fried return to the exact same rationale that the ex-FTX main was acting in very good religion and not with the felony intent alleged by the governing administration.

Wang has testified that very last Nov. 12, after FTX declared bankruptcy, Bankman-Fried asked that Wang drive with him to the Bahamas Securities Fee for a assembly.

On the drive, Bankman-Fried instructed Wang to transfer property to Bahamian liquidators since he considered they would enable him to preserve manage of the enterprise. Wang claimed he was not in the meeting with the securities authority, however Bankman-Fried’s father was present. Wang stated he returned to the U.S. and met with American prosecutors the subsequent working day.

He faces up to 50 years in prison when he faces a judge for sentencing pursuing this demo. He informed jurors he signed a six-site cooperation settlement that demands him to meet with prosecutors, reply their issues honestly and turn more than evidence.

Feds additional allege that SBF prioritized paying out particular collectors, including Bahamian authorities. In its pretrial motion, the government pointed to Bankman-Fried’s “legal intent,” as effectively as the “fake mother nature of his representations” that he preferred to “do correct by shoppers.”

Cohen writes, “We foresee eliciting testimony from Mr. Bankman-Fried about his excellent faith intentions on November 12, 2022 with regard to compliance with orders by Bahamian authorities to transfer property from FTX to the Securities Fee of The Bahamas over the objections of FTX’s in-property counsel and U.S. bankruptcy counsel.”

“These types of testimony would call for Mr. Bankman-Fried to explore his perception that the Bahamian authorities were performing in the finest pursuits of FTX buyers, while FTX’s in-property counsel and outside the house individual bankruptcy counsel in the United States had conflicts of interest,” the letter carries on.

Bankman-Fried’s comprehension of normally approved market methods may also determine prominently in his testimony.

In the crypto vernacular, an omnibus account is exactly where the electronic belongings of a number of consumers are held collectively in a single account. Cryptocurrency exchanges and other folks in the sector generally use this variety of collective storage tactic into purchase to slash prices and streamline the workflow.

In the circumstance of FTX, the commingling of customer and organization assets has turn out to be a significant position of competition involving the govt and the defense.

Prosecutors argued that FTX’s “use of omnibus wallets is suitable to this case,” the letter stated.

“For example, the Governing administration elicited testimony from Mr. Sun that he did not think that FTX client deposits could permissibly be commingled with other funds of the enterprise … and that FTX utilized an omnibus wallet for all client electronic belongings,” the doc carries on, referring to FTX’s former normal counsel, Can Solar.

“We respectfully submit that Mr. Bankman-Fried’s awareness of business techniques regarding the use of omnibus wallets is related to his superior religion perception that his conduct was permissible,” the letter extra.

“Mr. Bankman-Fried’s understanding of whether FTX’s steps ended up dependable with the crypto industry tactics with regard to use of omnibus wallets is probative of his good faith perception that FTX’s (and his possess) steps have been good.”