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Sam Bankman-Fried’s lawyer rebuts claims of frivolous FTX spending

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Sam Bankman-Fried’s spending on the collapsed FTX cryptocurrency change was not “frivolous”, his defence lawyer argued in a courtroom cross-examination of former govt Nishad Singh. 

Bankman-Fried is on trial in New York on prison fees of defrauding traders, lenders and clients at his change and funnelling billions of {dollars} to his affiliated crypto buying and selling agency. Singh, FTX’s former head of engineering, is the final of three central witnesses co-operating with federal prosecutors within the trial.

FTX had promoted itself extensively earlier than failing final November. Mark Cohen, Bankman-Fried’s lead defence lawyer, mentioned in court docket on Tuesday that the prosecution had used Singh’s testimony the day earlier than to depict billions of {dollars} that FTX dedicated to celeb sponsorship and different bills as “all reckless and frivolous”. 

“I am entitled to show that there was way more to it,” Cohen mentioned, justifying a line of questioning probing the worth of these offers to FTX’s enterprise. 

Cohen identified that enormous headline figures, such because the greater than $130mn FTX paid for the naming rights to the house area for the NBA’s Miami Heat, have been typically long-term offers. The Miami deal was to final 19 years and value solely $14mn in 2021.

Singh, who has pleaded responsible to fraud and marketing campaign finance violations, mentioned he had disagreed with some of Bankman-Fried’s spending choices however that others had been beneficial for increase the FTX enterprise.

Cohen delivered a extra forceful cross-examination that he had with the opposite witnesses who have been members of the previous billionaire’s interior circle, Caroline Ellison and Gary Wang. He tried to rebut the prosecution’s efforts to painting Bankman-Fried as somebody who used buyer cash to take pleasure in celeb connections and a high-flying way of life. 

Questioned on a dispute with Bankman-Fried about whether or not the greater than $30mn Bahamas penthouse they occupied was too costly, Singh acknowledged that he in the end moved into the main bedroom.

“I considered moving out many times,” Singh mentioned. Cohen countered: “But you didn’t.”

The jury heard how Singh purchased a $3.7mn dwelling in Washington state in October 2022 with a mortgage from FTX, at the same time as he mentioned on the witness stand that he “knew it was drawing on customer funds”.

“My spending on it was egregious, unnecessary and selfish,” Singh mentioned. The property has since been forfeited.

Singh additionally acknowledged that he initially thought some of the particular therapy Bankman-Fried’s buying and selling agency Alameda Research acquired on FTX was meant to guard clients by permitting it to extra successfully “backstop” some trades.

“My view at the time [was that] it would be helpful for customers,” Singh mentioned.

Cohen additionally quizzed Singh on his assertion that he solely grew to become totally conscious that Alameda had tapped billions in FTX buyer belongings in September 2022, regardless of taking part in an accounting train the earlier June that confirmed Alameda had a big detrimental place on the change.

Singh mentioned that in June he “suspected there was wrongdoing . . . [but] took cues from people around me and didn’t pursue it further”.

The cross examination of Singh has centered consideration on whether or not Bankman-Fried will take the stand when the defence begins its case as early as subsequent week. In a letter to the decide, Bankman-Fried’s legal professionals hinted that their consumer may testify, however raised concern that he was not receiving doses of Adderall, a drug used to deal with attention-deficit hyperactivity dysfunction, whereas he’s in court docket.

“As we approach the defence case and the critical decision of whether Mr Bankman-Fried will testify, the defence has a growing concern that . . . he has not been able to concentrate at the level he ordinarily would,” Cohen wrote.

Judge Lewis Kaplan rejected the defence’s request to delay court docket proceedings this week to resolve the difficulty. Cohen instructed the court docket the defence was “still working through” whether or not they would “put on a case and if so of what nature”, for instance by calling their very own witnesses.

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