Almost a year ago, popular crypto exchange FTX went crashing down, causing customers to lose millions. Tomorrow, the company’s then-CEO Sam Bankman-Fried’s trial is expected to start in a US court.
Bankman-Fried, who was once a crypto billionaire, is accused of committing several criminal offenses, including wire fraud, money laundering, and making illegal donations to politicians. If the judges found him guilty, the former FTX CEO could be sentenced to jail for decades.
Meanwhile, a number of legal experts have come out to claim that prosecutors have a massive chance of securing a conviction, given that they have already sealed cooperation deals with some of Bankman-Fried’s key partners.
Ex-federal prosecutor Daniel Silva says the US government is beginning the trial from a considerably strong position. Silva, who holds a stake in prominent law firm Buchalter, was among the prosecutors who brought charges against crypto platform BitConnect in February 2022.
For prosecutors to convince the jury that Bankman-Fried is guilty of all the accusations against him, they will have to prove how his actions led to the loss of user funds. To achieve this, Silva says they will rely heavily on the witnesses who have expressed willingness to testify.
Bankman-Fried’s Close Allies to Testify Against Him
Among those witnesses are three close allies of the former CEO. They were also charged by the federal prosecutors and pleaded guilty. They then agreed to cooperate with the officials in the investigation into FTX’s downfall, along with testifying. These individuals are Nishad Singh, the former FTX head of engineering; Gary Wang, the FTX-co-founder; and Caroline Ellisson, Alameda Research ex-CEO.
It is worth mentioning that Ellison and Bankman-Fried had a romantic relationship. So, it is likely that she will be watched closely due to her proximity to the FTX’s ex-CEO. Ellison already told the prosecutors that she and the other accused were aware misappropriating user funds to place risky bets through Alameda Research was wrong.
Former prosecutor Jordan Estes says if Bankman-Fried’s key partners testify in his trial, they will help to maintain Judges’ attention on fraud allegations and away from distractive questions like wanting to know how crypto assets work.
However, Brian Newman, a lawyer at Dykema Gossett law firm, says it is impossible for prosecutors to win the case without shedding light on what these misappropriated tokens are all about. He adds that the prosecution’s failure to address crypto-related questions could help Bankman-Fried build a defense.
Court Dismisses Bankman-Fried’s Petitions
The attorneys of the accused are facing several limitations, which may affect their ability to mount a strong defense, according to legal experts.
At the start of last month, Bankman-Fried’s lawyers moved to the court to protest prosecutors’ move to release multiple documents only a few days before their client’s trial starts. They argued that the prosecution was making it difficult for them to prepare for the case.
The defense lawyers also saw their requests to have Bankman-Fried released early to prepare for his trial dismissed by Judge Lewis Kaplan. He also rejected a list of witnesses that the lawyers proposed. Before that, Kaplan had thrown out Bankman-Fried’s request to access documents from Fenwick and West, a law firm he relied on for legal counsel while managing FTX.
What Defense Strategies Can Bankman-Fried’s Lawyers Apply?
Meanwhile, Estes says that since Bankman-Fried’s lawyers have limited options, they are likely to create a defense strategy that aims to prove their client did not commit the alleged crimes deliberately. The former CEO previously told the court that FTX’s counsel passed his decisions and never raised concerns at the time.
However, lawyer Paul Tuchmann is afraid that none of the defense strategies will work, given that Bankman-Fried’s attorneys were denied access to crucial documents by Judge Kaplan, which would help them support their arguments.
Moreover, Tuchmann says if the former CEO’s lawyers attempt to blame their client’s allies for the failure of FTX, the move may backfire, considering that the trio has already admitted their wrongdoings. He claims that the judge will see Bankman-Fried as an irresponsible leader.
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