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Sam Bankman-Fried stated he consulted with attorneys about crucial choices round passing consumer 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 courtroom 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 by way of 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 after they return.
The previous entrepreneur stands accused of defrauding prospects 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 prices together with wire fraud and cash laundering. He has pleaded not responsible.
Defence lawyer Mark Cohen stated that the defence desires 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 in regards to 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 instances appeared exasperated by his lengthy, convoluted and caveated solutions to questions from prosecutor Danielle Sassoon.
The choose additionally pressed him a number of instances to offer extra direct solutions and commented that he had “an fascinating manner of responding to questions”.
Bankman-Fried took lengthy pauses and bowed his head as he appeared to wrestle for solutions at instances, comparable 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 embody that,” he replied, despite the fact that 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 recommended that the defence would elicit from the defendant how he fairly relied on authorized recommendation.
Nonetheless, the authorized avenue for such an argument is slender, as counting on recommendation of counsel “requires a excessive diploma of specificity” in regards to the particular counsel sought, based on Brendan Quigley, a former prosecutor who’s now a accomplice at Baker Botts.
“It will 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 alternate’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 alternate 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 likely to advise purchasers towards testifying, petrified 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 creator Michael Lewis from his mother and father’ California residence earlier than he was jailed for breaching his bail circumstances this summer time.
Earlier on Thursday, the jury heard from the federal government’s last 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 professional.