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

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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Judge Expresses Concerns Over Proposed Bail Conditions for Former FTX Founder

Sam Bankman-Fried is a well-known figure in the cryptocurrency industry, having founded FTX in 2019. However, he found himself in legal trouble in 2022, when he was arrested and charged with market manipulation, wire fraud, and other crimes related to his cryptocurrency trading activities.

Bankman-Fried has been released on bail pending trial, but the proposed conditions of his bail have come under scrutiny. Under the proposed conditions, Bankman-Fried would be subject to strict monitoring and restrictions on his electronic communications, including a ban on using encrypted messaging apps like Signal and Telegram.

While these restrictions may seem reasonable, U.S. District Judge Lewis Kaplan has expressed concerns over the effectiveness of such measures. During a hearing on March 10, 2023, Kaplan suggested that Bankman-Fried was a highly inventive individual who could find ways to evade the restrictions and communicate with others electronically in covert ways.

Kaplan’s concerns are not unfounded. Bankman-Fried is known for his technical expertise and is regarded as one of the brightest minds in the cryptocurrency industry. His innovative approach to trading has helped FTX become one of the fastest-growing cryptocurrency exchanges in the world, and he has become a prominent figure in the industry.

Given Bankman-Fried’s technical abilities and knowledge of the cryptocurrency landscape, it is possible that he could find ways to evade the proposed restrictions on his electronic communications. This could potentially put him in violation of his bail conditions and could lead to further legal trouble.

The case against Bankman-Fried is still ongoing, and it remains to be seen what the final outcome will be. However, the concerns raised by U.S. District Judge Lewis Kaplan highlight the challenges of monitoring and restricting the activities of highly inventive individuals like Bankman-Fried in the digital age. As technology continues to evolve, it will become increasingly difficult to enforce traditional legal restrictions on electronic communication and other activities.


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