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Legal Team of Samuel Bankman-Fried Seeks to Question Involvement of FTX Lawyers in $300 Million Loans

by Blockchain NewsOctober 11, 2023

On October 9, 2023, the legal team of Samuel Bankman-Fried, represented by COHEN & GRESSER LLP, submitted a letter to U.S. District Judge Lewis A. Kaplan. The letter was filed in response to the court’s October 1 order, which provisionally restricted the defense from discussing the involvement of FTX lawyers in the case without prior notice to the court and the government.

Defense Seeks to Question Gary Wang

The defense is specifically interested in cross-examining Gary Wang, a former FTX co-founder, about the involvement of FTX lawyers in structuring loans issued to him by Alameda Research. During the initial cross-examination on October 9, Wang revealed that he had received personal loans worth approximately $200-$300 million from Alameda Research. These loans were used to fund venture investments by FTX and to purchase a house in the Bahamas.

Topics for Cross-Examination

The defense aims to question Wang on several topics, including:

1. Which attorneys were involved in the loans?

2. What was the nature of their involvement?

3. What documents did they prepare?

4. What were the terms of the loan and Wang’s obligations under it?

Implications for the Case

The defense argues that Wang’s understanding of the lawyers’ involvement is directly relevant to establishing Bankman-Fried’s good faith and lack of criminal intent. The government has alleged that Bankman-Fried took steps to conceal the origin of investments and expenditures funded by transfers originating with Alameda Research.

The indictment further alleges that Bankman-Fried accomplished this by borrowing over $1 billion from Alameda and overseeing “similar borrowing by other FTX executives.” Wang’s understanding that these were actual loans, structured by lawyers and memorialized in formal promissory notes, is relevant to rebut the inference that these were simply sham loans directed by Mr. Bankman-Fried to conceal the source of the funds.

The defense’s request to question the involvement of FTX lawyers aims to counter the government’s allegations and establish Bankman-Fried’s lack of criminal intent. The court’s decision on this matter could significantly impact the ongoing case, particularly in relation to the money laundering charges. If the court grants the defense’s request, it may open the door for further questioning that could potentially exonerate Bankman-Fried.

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U.S. Prosecutors Aim to Sideline Asset Recovery Talks in Bankman-Fried Trial

by Blockchain NewsOctober 10, 2023

The U.S. prosecution team has issued a formal request to the United States District Court, Southern District of New York, seeking to preclude the defense from introducing arguments or evidence concerning the current value of specific investments in the trial against Samuel Bankman-Fried, the erstwhile CEO of cryptocurrency exchange FTX. This request follows allegations that Bankman-Fried misappropriated FTX customer deposits for a substantial investment in the artificial intelligence startup Anthropic, an investment whose value might have significantly appreciated amid recent fundraising endeavors by Anthropic.

In a move that captured industry attention, Bankman-Fried invested an approximate amount of $500 million in Anthropic in April 2022. This investment is now under the legal microscope as the prosecution claims it was funded by misappropriated FTX customer deposits. The narrative gains complexity as Anthropic recently disclosed its attempts to secure additional capital from potential investors, including industry behemoths Amazon and Google, at a valuation ranging between $20 billion and $30 billion. The potential appreciation of Bankman-Fried’s investment could play a pivotal role in the recovery of assets for FTX customers and other creditors embroiled in the FTX bankruptcy scenario.

The crux of the prosecution’s argument is to avoid any discussions in court regarding the increased valuation of Anthropic, suggesting that such discussions are aimed at proposing that FTX customers and other victims could eventually be compensated for their losses – a notion previously tagged by the court as an “impermissible purpose.” The government remains steadfast in its position that the focus should remain on the alleged wire fraud, emphasizing that the potential profitability of the investments made with misappropriated funds is immaterial to the charges being deliberated upon.

As the trial unfolds, both legal teams have been engaged in dialogues concerning various evidentiary matters. The prosecution’s current request underscores its intent to maintain a trial ambiance focused solely on the alleged misappropriation and fraud, devoid of financial technicalities concerning the current or future value of assets entwined in the legal proceedings. This development encapsulates a broader narrative pitting the quest for justice for the alleged victims against the financial ramifications stemming from the defendant’s actions.

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Tagged : Amazon / ANTHROPIC / ASSET RECOVERY / Bankruptcy / FTX / Google / MISAPPROPRIATED FUNDS / News / SAMUEL BANKMAN-FRIED / Trial

DOJ Targets SBF’s Jets for Forfeiture

by Blockchain NewsOctober 6, 2023

According to a document that was submitted by the United States Department of Justice (DOJ) on October 4, 2023, two luxury aeroplanes worth several millions of dollars that are held by Samuel Bankman-Fried are now potentially vulnerable to forfeiture. The petition states that the foundation for the action to forfeit the property belongs to “offences described in Counts One through Four and Seven of Indictment 22 Cr. 673 (LAK)” committed by Bankman-Fried. Both a Bombardier Global 5000 BD-700-1A11 and an Embraer Legacy EMB-135BJ are named as the aircraft in question here.

Controversy Regarding Ownership It was revealed on September 21 in documents submitted to the United States Bankruptcy Court for the District of Delaware that the planes are at the centre of a controversy regarding ownership. The parties concerned are the federal government of the United States, FTX, and Island Air Capital, which is the aviation business that operates the planes. While the government maintains that the aircraft were acquired via the use of illegitimate finances, FTX is of the opinion that the loans that were used for the acquisition were not properly recorded.

The United States Commodity Futures Trading Commission (CFTC) initiated legal action against Bankman-Fried, FTX, and Alameda Research in the month of December 2022. The complaint claims that the defendants violated the Commodity Exchange Act and that Bankman-Fried exploited customer cash from FTX for personal expenses, including the purchase of private planes. Additionally, the lawsuit claims that the defendants violated the terms of their employment.

At this time, Bankman-Fried is on trial for several offences that are connected to the failure of FTX in November of 2022. The proceedings of the trial, which were presided over by Judge Lewis Kaplan, got underway on October 3, 2023 with the selection of the jury. On October 4th, the court heard opening statements in the case. In its opening statement, the Department of Justice (DOJ) depicted Bankman-Fried as intentionally misrepresenting clients and investors. In contrast, the defence contended that he is a young entrepreneur whose business ideas “didn’t work out.”

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Tagged : Asset Forfeiture / Commodity Exchange Act / Department Of Justice / FTX / ISLAND AIR CAPITAL / LEWIS KAPLAN / LUXURY JETS / News / SAMUEL BANKMAN-FRIED / Sbf / SEC

DOJ Plans to Call Former FTX Consumers, Investors, and Employees as Witnesses in Upcoming Samuel Bankman-Fried Trial

by Blockchain NewsOctober 2, 2023

The judicial spotlight is soon to be on Samuel Bankman-Fried, the former CEO of FTX, as the U.S. Department of Justice (DOJ) outlines its strategy for the upcoming trial. On September 30, 2023, the DOJ disclosed through a letter motion in limine, the array of witnesses it intends to call upon. These individuals, hailing from different interactions with the cryptocurrency exchange FTX, are expected to provide crucial testimonies concerning the company’s handling of customer funds under Bankman-Fried’s watch.

A significant part of the trial will hinge on the testimonies from a variety of individuals who had differing relationships with FTX. Initially, the government intends to call upon some customers of FTX, who deposited funds on the platform. Their testimony will aim at shedding light on their expectations and understandings regarding how the company would manage and safeguard their deposits.

Following that, investors who purchased shares in FTX are expected to testify about the representations made by Bankman-Fried concerning FTX’s role as a “custodian” of customer funds. Their insights will delve into how these representations influenced their understanding and decisions in investing in FTX.

Moreover, certain cooperating witnesses, who have already pled guilty to conspiring to commit fraud with the defendant, are anticipated to testify about their interactions and understandings of certain actions and statements made by Bankman-Fried during the period under scrutiny.

Among the witnesses, a notable mention is an individual from Ukraine, referred to as “FTX Customer-1.” Given the ongoing unrest in Ukraine, traveling to the U.S. to testify presents a significant challenge. The DOJ, recognizing this hurdle, has suggested the use of video conferencing as a viable alternative to ensure the witness’s testimony is recorded and considered.

On the other side of the aisle, the defense team of Bankman-Fried argues that these interrogations could implicitly show guilt on Bankman-Fried’s part, which could be prejudicial and undermine the “innocent until proven guilty” principle.

With the process of jury selection scheduled to begin on October 3, the upcoming trial has garnered significant attention. The spotlight on this high-stakes legal showdown is expected to intensify as the trial date nears. The case is not only pivotal for the involved parties but is also likely to have broader implications on the regulatory landscape surrounding cryptocurrency exchanges, particularly concerning the safeguarding of customer assets.

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Tagged : CUSTOMER FUNDS / Doj / FTX / News / SAMUEL BANKMAN-FRIED / Trial / Ukraine / VIDEO CONFERENCING / WITNESSES

Attorneys for Ex-FTX CEO Samuel Bankman-Fried Challenge Proposed Jury Questions Ahead of Fraud Trial

by Blockchain NewsOctober 1, 2023

In a recent legal document filed, attorneys for the former CEO of cryptocurrency exchange FTX, Samuel Bankman-Fried, have raised objections regarding the proposed jury questions for the upcoming fraud trial. The document asserts that the government’s proposed jury questions could elicit biased responses against Bankman-Fried, which might lead to an unfair trial.

Mark S. Cohen and Christian R. Everdell, representing Bankman-Fried, submitted a letter on September 29, 2023, to the Honorable Lewis A. Kaplan of the United States District Court, Southern District of New York, expressing concerns over the government’s proposed voir dire (jury questioning process). They argue that the proposed questions discourage full disclosure from potential jurors and fail to provide sufficient information for the defense to assess potential juror bias. The defense further maintains that the phrasing used in some questions already suggests a biased image, assuming Bankman-Fried’s guilt in fraud and money laundering charges.

In specific terms, Cohen and Everdell point out that paragraph 3 of the government’s summary of charges and Question 33 improperly phrase “his fraud” instead of “his alleged fraud” or simply “fraud,” which they argue suggests that Bankman-Fried’s involvement in fraud is an established fact, undermining the presumption of innocence.

The defense team suggests using a voir dire proposed by Bankman-Fried, which they believe will provide a fair opportunity to expose any bias or prejudice on the part of potential jurors. This, they argue, will enable both parties to intelligently exercise challenges for cause and peremptory challenges during the jury selection process.

On the other hand, the United States government opposes Bankman-Fried’s proposed questions, deeming them unnecessary and time-consuming. They particularly criticize questions concerning pretrial publicity, the philosophical movement of effective altruism, political donations and lobbying, and attention-deficit/hyperactivity disorder (ADHD).

The trial is set to commence on October 4, 2023, with the jury selection process beginning on October 3. According to the trial calendar, there will be a total of 15 full trial days in October, followed by six more in November. Meanwhile, Bankman-Fried has been detained at the Metropolitan Detention Center since August 11.

As the fraud trial approaches, the defense and prosecution are locking horns over the jury selection process. The outcome of these pretrial discussions could significantly impact the proceedings and ultimately the verdict in the case against the former FTX CEO.

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Tagged : CHRISTIAN R. EVERDELL / FRAUD TRIAL / FTX / JURY QUESTIONS / LEWIS A. KAPLAN / MARK S. COHEN / News / SAMUEL BANKMAN-FRIED / UNITED STATES DISTRICT COURT / VOIR DIRE

Legal Team Requests Temporary Release of Samuel Bankman-Fried for Upcoming Trial

by Blockchain NewsSeptember 26, 2023

Key Takeaways

Samuel Bankman-Fried’s legal team has submitted a letter to Judge Lewis A. Kaplan, requesting temporary release for their client.

The request is based on the need for adequate preparation for the upcoming trial, citing the case’s complexity.

The letter outlines proposed conditions for Bankman-Fried’s temporary release, including restricted access to electronic devices and a gag order.

Introduction

In a letter dated September 25, 2023, attorneys Mark S. Cohen and Christian R. Everdell of COHEN & GRESSER LLP have submitted a request to Judge Lewis A. Kaplan of the United States District Court, Southern District of New York, for the temporary release of their client, Samuel Bankman-Fried (SBF). The request is made under 18 U.S.C. § 3142(i), stating that the release is “necessary for preparation of [his] defense.”

The Complexity of the Case

The letter emphasizes the complexity of the case, stating that it is “highly technical” and requires Bankman-Fried’s input for adequate preparation. The defense argues that third-party experts cannot replicate Bankman-Fried’s unique knowledge and insight into the facts of the case.

Previous Court Rulings

The letter also references a ruling on September 12, 2023, where the court did not rule out the possibility of a future application for temporary release. Additionally, it mentions that the Second Circuit affirmed the Court’s decision to revoke Bankman-Fried’s bail on September 19, 2023.

Proposed Conditions for Release

The legal team has proposed specific conditions for Bankman-Fried’s temporary release, which include:

Being in the company of his attorneys or a security guard when not in court.

A gag order restricting his communication to only his legal team and immediate family.

No access to electronic devices during the temporary release.

Concerns Over Medication

The letter also notes that Bankman-Fried is currently receiving only half of his prescribed dose of Adderall, despite a court order, and does not have access to his preferred allergy medication, Zyrtec.

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Tagged : JUDGE LEWIS A. KAPLAN / LEGAL TEAM / News / SAMUEL BANKMAN-FRIED / Sbf / TEMPORARY RELEASE