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Sam Bankman-Fried stated he consulted with attorneys about important selections round passing consumer cash from his FTX trade to his personal 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 legislation agency Fenwick & West when deciding on whether or not to retain inner paperwork, fund enterprise capital investments through loans to executives, or permit Alameda to obtain FTX buyer deposits.
The testimony was heard with out the jury current. Choose Lewis Kaplan, who’s overseeing the case, will resolve on Friday morning what proof might be repeated in entrance of jurors once they return.
The previous entrepreneur stands accused of defrauding clients by dipping into $10bn of their deposits with out permission, leaving an $8bn gap in FTX’s stability sheet on the time of its collapse final November.
He faces the prospect of a lifetime behind bars if convicted on fees together with wire fraud and cash laundering. He has pleaded not responsible.
Defence lawyer Mark Cohen stated that the defence needs to indicate jurors that the FTX founder “consulted with counsel” and “took consolation” from these conversations.
However prosecutors tried to indicate that attorneys 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, until he can leverage the bizarre 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 decide additionally pressed him a number of occasions to present extra direct solutions and commented that he had “an attention-grabbing approach of responding to questions”.
Bankman-Fried took lengthy pauses and bowed his head as he appeared to wrestle for solutions at occasions, equivalent 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.
“Sure, it could embrace that,” he replied, although his attorneys had objected to the query. “I felt the necessity to reply that one,” he added.
Though Cohen stated his consumer wouldn’t in the end search to invoke a “formal” recommendation of counsel defence, he steered that the defence would elicit from the defendant how he fairly relied on authorized recommendation.
Nevertheless, the authorized avenue for such an argument is slender, as counting on recommendation of counsel “requires a excessive diploma of specificity” concerning the particular counsel sought, based on Brendan Quigley, a former prosecutor who’s now a companion at Baker Botts.
“It might be tough for SBF to say, ‘I requested my legal professional about . . . each one among these theories of fraud’,” he added.
Bankman-Fried additionally testified that he believed he managed FTX in accordance with the trade’s phrases of service, and that these phrases allowed Alameda to borrow FTX buyer cash “in lots of 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 trade founder comes after a New York jury heard a number of days’ price of damning testimony from his former colleagues and mates, in addition to from his ex-girlfriend Caroline Ellison, who pleaded responsible final 12 months and agreed to co-operate with the federal government.
Defence attorneys are inclined to advise shoppers towards testifying, terrified of direct questioning from prosecutors.
However Bankman-Fried has been eager to current his aspect of the story ever since FTX collapsed final November with a multibillion-dollar gap in its stability sheet. He had granted a number of interviews to journalists and the writer Michael Lewis from his mother and father’ California dwelling earlier than he was jailed for breaching his bail situations this summer time.
Earlier on Thursday, the jury heard from the federal government’s closing witness — an FBI agent who testified that a number of Sign 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.
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