FTX founder Sam Bankman-Fried begins defense in fraud trial.
By Luc Cohen and Jody Godoy
October 26, 2023 – 3:56 PM UTC
FTX Founder Sam Bankman-Fried’s Fraud Trial Begins
Lawyers for FTX founder Sam Bankman-Fried kicked off their case at his fraud trial on Thursday following 12 days of prosecution testimony.
Bankman-Fried is expected to testify in his own defense after two brief witnesses, his lawyer Christian Everdell said in court outside the jury’s presence. Those first witnesses will be Krystal Rolle, Bankman-Fried’s lawyer in the Bahamas, and database expert Joseph Pimbley, Everdell said.
For Bankman-Fried, taking the stand is a risky move that would give prosecutors the chance to cross-examine the 31-year-old former billionaire about testimony from former close colleagues that he directed them to commit crimes.
After the prosecution rested its case after presenting 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 lawyer Mark Cohen argued that prosecutors had not set forth “viable legal theories” of wire fraud, which prosecutor Nicolas Roos disputed.
Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy. If convicted, Bankman-Fried could face decades in prison. Prosecutors have said Bankman-Fried used the misappropriated funds to prop up his crypto-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 testimony would take place outside the jury’s presence so he can decide whether it is admissible as evidence.
That would include any testimony about the involvement of FTX lawyers in structuring loans from Alameda to FTX executives, which prosecutors have said was a key way the defendant and others took funds from unwitting customers.
Cohen said in a Wednesday letter to Kaplan that Bankman-Fried’s “knowledge that lawyers were involved in structuring and documenting the loans would be probative of his good-faith belief that there was nothing inappropriate.”
Prosecutors may ask Bankman-Fried on cross-examination about why he did not disclose Alameda’s privileges to FTX customers or equity investors, and why he posted on social media in the midst of a wave of customer withdrawals last November that FTX was “fine” when he knew it was short billions of dollars in funds.
Legal experts have said Bankman-Fried has little to lose by bucking conventional wisdom and testifying, given weeks of testimony against him by insiders painting an unflattering portrait of his character.
He has already taken an unusual approach for a criminal defendant. Instead of laying low after he was charged, he published blog posts on his view of what went wrong and met with several journalists.
Bankman-Fried has maintained that while he made mistakes running FTX, he never intended to steal funds. His lawyers have said three of his former colleagues, who have pleaded guilty and agreed to cooperate with prosecutors, tailored their testimony to implicate Bankman-Fried in the hopes of receiving lenient sentences.
The final prosecution witness, FBI agent Marc Troiano, testified about Bankman-Fried’s use of the encrpyted messaging application Signal when the trial resumed on Thursday morning in federal court in Manhattan after a week-long break.
Troiano said Signal groups that Bankman-Fried was in with colleagues often were set to delete messages automatically, as jurors saw screenshots from a phone belonging to Caroline Ellison, the former chief executive of Bankman-Fried’s Alameda Research hedge fund and his on-and-off girlfriend.
Ellison testified earlier in the trial that Bankman-Fried directed employees to “be careful with what we put in writing, and not put into writing something that could get us into legal trouble.”
Cohen said Bankman-Fried’s direct testimony could last close to five hours.
Reporting by Luc Cohen and Jody Godoy in New York; Editing by Will Dunham, Noeleen Walder and Jonathan Oatis
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What specific allegations have been made against Sam Bankman-Fried by his former close colleagues regarding his involvement in committing crimes?
FTX Founder Sam Bankman-Fried’s Fraud Trial Begins
By Luc Cohen and Jody Godoy
October 26, 2023 – 3:56 PM UTC
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The fraud trial of FTX founder Sam Bankman-Fried has commenced with the defense lawyers presenting their case after twelve days of prosecution testimony. Bankman-Fried is expected to testify in his own defense, following the brief testimonies of Krystal Rolle, his lawyer in the Bahamas, and Joseph Pimbley, a database expert. However, this decision comes with inherent risks, as it allows prosecutors the opportunity to cross-examine Bankman-Fried regarding allegations made by former close colleagues that he instructed them to commit crimes.
The prosecution concluded its case by presenting twelve days of testimony, after which U.S. District Judge Lewis Kaplan denied a defense request to acquit Bankman-Fried before the case goes to the jury. Defense lawyer Mark Cohen argued that the prosecution had not provided viable legal theories of wire fraud, but this was disputed by prosecutor Nicolas Roos. Bankman-Fried is facing two counts of fraud and five counts of conspiracy, and if convicted, he could potentially face decades in prison. Prosecutors claim that Bankman-Fried misappropriated funds to support his cryptocurrency-focused hedge fund, Alameda Research, make speculative venture investments, and donate large sums to U.S. political campaigns.
Judge Kaplan has determined that some of Bankman-Fried’s testimony will be heard outside the jury’s presence so that he can determine its admissibility as evidence. This includes any testimony regarding the involvement of FTX lawyers in structuring loans from Alameda to FTX executives, as prosecutors allege this was a key method in which Bankman-Fried and others misappropriated funds from unsuspecting customers.
Prosecutors may cross-examine Bankman-Fried regarding his failure to disclose Alameda’s practices to FTX customers or equity investors and his posts on social media during a period of significant customer withdrawals where he claimed that FTX was “fine,” despite knowing that it was lacking billions of dollars in funds.
Legal experts have suggested that Bankman-Fried has little to lose by testifying, considering the negative portrayal of his character presented by former colleagues during weeks of testimony against him. Bankman-Fried has already taken an unconventional approach by publishing blog posts and meeting with journalists to express his perspective on what went wrong.
Bankman-Fried maintains that he made mistakes in running FTX but denies any intention to steal funds. His defense lawyers argue that the testimonies of three former colleagues, who have pleaded guilty and are cooperating with prosecutors, were tailored to implicate Bankman-Fried in the hopes of receiving lenient sentences.
The final prosecution witness, FBI agent Marc Troiano, testified about Bankman-Fried’s use of the encrypted messaging application Signal. It was revealed
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