FTX: ‘Crypto King’ tells judge he acted on legal advice

  • By Natalie Sherman & Daniel Thomas
  • BBC News

Image supply, Getty Images

Image caption,

Sam Bankman-Fried in May 2022

Former crypto boss Sam Bankman-Fried has been testifying to a judge at his trial after the jury was despatched residence.

The former entrepreneur was requested to talk to Judge Lewis Kaplan to find out which components of his testimony may be put to the jury.

The 31-year-old is accused of mendacity to traders and lenders and stealing cash from prospects of his now-bankrupt cryptocurrency alternate, FTX.

He put ahead arguments that he was appearing on legal advice in good religion.

The judge despatched the jury residence so he may determine which parts of Mr Bankman-Fried’s testimony, if any, can be admissible as proof.

The transfer gave Mr Bankman-Fried and the legal professionals a follow run earlier than he probably speaks in entrance of the jury.

Mr Bankman-Fried defended choices that had been questioned by prosecutors, together with setting some group chats to delete routinely. He stated this complied with document maintaining insurance policies arrange by his legal crew.

He stated he had mentioned many different preparations along with his legal professionals, together with private loans he acquired from Alameda, and its function as a “payments processor” for FTX.

“Did you take comfort from the fact that lawyers had structured the loans?” Mr Bankman Fried’s lawyer Mark Cohen requested. “Yeah, of course,” Mr Bankman-Fried responded.

He added he had trusted his legal crew to arrange functions for financial institution accounts for his corporations. “I trusted that they were proper forms,” he stated.

Prosecutors have objected to Mr Bankman-Fried’s arguments that he acted on legal advice, arguing that it’s irrelevant if the attorneys weren’t totally knowledgeable.

The judge didn’t instantly rule on what testimony Mr Bankman-Fried may give, however warned that he was fairly “dubious” about a number of the arguments.

Mr Bankman Fried spoke clearly and confidently at the beginning, however wavered below a barrage of questions from prosecutor Danielle Sassoon, quizzing about when he had consulted legal professionals and what he had informed them when he did.

Asked if it was his understanding of Alameda was permitted to spend FTX buyer funds, Mr Bankman Fried responded: “I wouldn’t phrase it that way but … yes.”

More than a minute handed after Ms Sassoon requested him to level to language in a coverage between the 2 companies that gave him that impression. He ultimately pointed to a line that stated the funds may “be held and or transferred”.

Judge Lewis Kaplan will rule within the morning on what Mr Bankman-Fried can put earlier than the jury.

Mr Bankman-Fried’s anticipated court docket look drew dozens of curious members of the general public to the court docket, together with screenwriters, retirees and others sucked in by the previous billionaire’s dramatic rise and fall.

His look on the New York court docket follows 12 days of prosecution testimony during which shut former colleagues gave proof.

Mr Bankman-Fried had been extensively tipped to talk in his personal defence on Thursday after his legal professionals started presenting his case.

If he is discovered responsible he may face a life sentence in jail.

Defendants within the US are usually not obliged to testify throughout trials – and are sometimes suggested towards doing so, because it opens them as much as questioning by prosecutors.

It additionally offers members of the jury that may determine the case an opportunity to kind their very own impressions, which could not be beneficial.

“If the jury does not believe him, it’s a guaranteed conviction,” Jacob Frenkel, a former federal prosecutor who has been following the trial informed the BBC earlier this month.

Despite the dangers, many analysts following the trial predicted Mr Bankman-Fried would take the stand to supply his personal model of occasions and attempt to undermine the story introduced by prosecutors.

“The prosecutors have put on a pretty strong case,” stated Carl Tobias, regulation professor on the University of Richmond. “I don’t know that there’s much downside in this case for him to testify given what we’ve seen so far.”

Prosecutors have constructed their case on statements from three of his closest former pals and colleagues, who’ve already pleaded responsible.

They have tied Mr Bankman-Fried to choices to take cash deposited at FTX and use it to repay lenders at his crypto buying and selling agency, Alameda Research, purchase property, and make investments and political donations.

They say he tried to cover the transfers between the 2 companies and their shut relationship – and legal professionals have buttressed their allegations with textual content messages, spreadsheets and tweets.

During the trial, these witnesses, who embrace his ex-girlfriend and former Alameda chief government Caroline Ellison, have emerged from hours of questioning with their credibility seemingly largely unscathed.

Mr Bankman-Fried’s defence crew has argued he was following “reasonable” enterprise practices, as his corporations grew quickly.

After the collapse of his corporations final yr, he admitted in media interviews, together with to the BBC, to managerial errors however stated he by no means meant fraud.

Elizabeth Holmes is amongst different high-profile examples of defendants who’ve opted to testify in their very own defence.

The founding father of blood-testing start-up Theranos, who argued that she didn’t intend to defraud traders, was in the end convicted of 4 out of 11 counts and sentenced to greater than 11 years in jail.

But testifying may also repay. Tom Barrack, a former personal fairness government and fundraiser for former President Donald Trump, and Lebanese businessman Jean Boustani, each took to the stand in separate, unrelated felony circumstances and had been acquitted.

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