FTX founder Sam Bankman-Fried’s defense claims he acted in “good faith” when directing funds from the crypto exchange to his hedge fund Alameda, according to a letter published yesterday, 23 August, from his current lawyers
Addressing the judge, the letter said Bankman-Fried was following the advice of in-house lawyers and law firm Fenwick & West when setting up the loans to Alameda.
The lawyers were also blamed for Bankman-Fried’s use of auto-deleted messages, the North American entities that were set up, along with all agreements between FTX and Alameda.
The letter was written in response to the court’s request of an “advice-of-counsel defense”.
It said: “[This] application was based on billing records from Fenwick that were produced in discovery, which showed that Fenwick had provided legal advice to FTX and Alameda on numerous topics.”
It further stated that there is “elicit evidence” that the lawyers “were involved in reviewing and approving decisions related” to the charges put against Bankman-Fried.
The recently published letter also attacked the Department of Justice’s request for more information about the FTX founder’s defense. It said that the government had denied the request for documents regarding Fenwick’s advice.
However, in the original charges announcement from the US Department of Justice, attorney Damian Williams said it was “intentional fraud” orchestrated by the FTX founder.
Similarly, Michael J. Driscoll, FBI Assistant Director, commented: “Bankman-Fried knowingly defrauded the customers of FTX.com through the misappropriation of the customer deposits to pay expenses and debts of a different company he also owned as well as make other investments.”
Bankman-Fried pleads non-guilty
The defunct exchange founder appeared in court on 22 August to plead not-guilty to the latest charges put against him.
Bankman-Fried attended the Southern District of New York courthouse, where a new indictment accused him of using investors’ funds to buy personal real estate and donate over $100m to campaigns ahead of the 2022 US midterm elections.
In total, the new indictment had seven counts of fraud and conspiracy charges.
Denied bail and jailed
The arraignment marked almost two weeks since he was jailed, after his bail was revoked. When the decision was made, the judge said: “There is probable cause to believe that the defendant has attempted to tamper with witnesses at least twice.”
Prosecutors said Bankman-Fried had “crossed a line” when sharing his former colleague and romantic partner Caroline Ellison’s diaries with the New York Times. It was said to be an attempt to discredit Ellison, who will be testifying against him at the upcoming trial.
Bankman-Fried is currently being held at Brooklyn’s Metropolitan Detention Center. The conditions of his stay were another focal point during the latest arraignment.
His attorney Mark Cohen said the prison lacked vegan options and the FTX founder “is only now subsisting on a diet of bread and water”. This was argued to be affecting his ability to prepare for trial, which is set to begin in October this year.
Cohen said that he was being denied medication as well. The prison was said to not be providing Bankman-Fried with the requested ADHD drug Adderall, along with antidepressant Emsam.
The magistrate judge said she would request the US Justice Department’s Bureau of Prisons to address these medication issues.
Bankman-Fried’s upcoming trial
The trial for the ex-CEO of FTX is set to begin on 2 October.
The prosecutors and defense attorneys filed proposed jury instructions on 21 August, which detailed their thoughts on how the judge should explain the charges to the jurors.