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Sam Bankman-Fried stated he consulted with legal professionals about vital choices round passing shopper cash from his FTX alternate to his non-public buying and selling agency Alameda, in a preview of the previous billionaire’s deliberate defence within the prison trial over the collapse of his cryptocurrency empire.
Taking the witness stand in Manhattan federal court docket on Thursday afternoon, Bankman-Fried, 31, repeatedly asserted that he had adopted the counsel of former FTX lawyer Dan Friedberg and California regulation agency Fenwick & West when deciding on whether or not to retain inside paperwork, fund enterprise capital investments by way of loans to executives, or enable Alameda to obtain FTX buyer deposits.
The testimony was heard with out the jury current. Judge Lewis Kaplan, who’s overseeing the case, will determine on Friday morning what proof will be repeated in entrance of jurors once they return.
The former entrepreneur stands accused of defrauding clients by dipping into $10bn of their deposits with out permission, leaving an $8bn gap in FTX’s steadiness sheet at the time of its collapse final November.
He faces the prospect of a lifetime behind bars if convicted on costs together with wire fraud and cash laundering. He has pleaded not responsible.
Defence lawyer Mark Cohen stated that the defence needs to point out jurors that the FTX founder “consulted with counsel” and “took comfort” from these conversations.
But prosecutors tried to point out that legal professionals the FTX founder consulted didn’t have the total image, together with understanding concerning the supply of cash, which might make their recommendation much less related as a possible defence.
Thursday’s testimony foreshadowed a tough cross examination, except he can leverage the weird alternative for a dry run to enhance his efficiency. Kaplan at occasions appeared exasperated by his lengthy, convoluted and caveated solutions to questions from prosecutor Danielle Sassoon.
The choose additionally pressed him a number of occasions to provide extra direct solutions and commented that he had “an interesting way of responding to questions”.
Bankman-Fried took lengthy pauses and bowed his head as he appeared to battle for solutions at occasions, akin to when Sassoon requested him to level to the part in a contract between Alameda and FTX that allowed the buying and selling agency to spend buyer cash deposited to its accounts.
Sassoon requested him whether or not his understanding of “safeguarding” buyer funds would come with “not embezzling” the cash.
“Yes, it would include that,” he replied, although his legal professionals had objected to the query. “I felt the need to answer that one,” he added.
Although Cohen stated his shopper wouldn’t in the end search to invoke a “formal” recommendation of counsel defence, he instructed that the defence would elicit from the defendant how he moderately relied on legal recommendation.
However, the legal avenue for such an argument is slender, as counting on recommendation of counsel “requires a high degree of specificity” concerning the particular counsel sought, based on Brendan Quigley, a former prosecutor who’s now a companion at Baker Botts.
“It would be difficult for SBF to say, ‘I asked my attorney about . . . every one of these theories of fraud’,” he added.
Bankman-Fried additionally testified that he believed he managed FTX in accordance with the alternate’s phrases of service, and that these phrases allowed Alameda to borrow FTX buyer cash “in many circumstances”.
Fenwick & West didn’t instantly reply to a request for remark. A lawyer for Friedberg, who was sued by the FTX debtors in June over his position as an alleged “fixer” for Bankman-Fried and his associates, additionally didn’t instantly reply.
The testimony from the crypto alternate founder comes after a New York jury heard a number of days’ value of damning testimony from his former colleagues and associates, in addition to from his ex-girlfriend Caroline Ellison, who pleaded responsible final yr and agreed to co-operate with the federal government.
Defence attorneys are likely to advise shoppers in opposition to testifying, frightened of direct questioning from prosecutors.
But Bankman-Fried has been eager to current his facet of the story ever since FTX collapsed final November with a multibillion-dollar gap in its steadiness sheet. He had granted a number of interviews to journalists and the writer Michael Lewis from his mother and father’ California house earlier than he was jailed for breaching his bail situations this summer season.
Earlier on Thursday, the jury heard from the federal government’s closing witness — an FBI agent who testified that a number of Signal group chats inside FTX had been set to auto-delete, earlier than listening to from two defence witnesses, together with a Bahamian lawyer for Bankman-Fried and a coding skilled.