Sam Bankman-Fried Claims He Relied on Legal Advice in FTX Scandal

Lawyers for Sam Bankman-Fried declare the FTX founder, who has fallen from grace, based mostly his enterprise choices on authorized recommendation from firm attorneys earlier than the cryptocurrency trade’s downfall.

FTX Founder Bankman-Fried Claims Actions Were Based on Legal Advice, Denies Fraudulent Intent

In a court document filed Wednesday, attorneys for Bankman-Fried from Cohen & Gresser LLP preserve he obtained assurance from each in-house and exterior attorneys that his actions complied with the legislation. They contend this means Bankman-Fried operated in good religion, with out intentions of deceptive FTX purchasers and traders.

Bankman-Fried’s attorneys state:

The protection intends to elicit proof that Mr. Bankman-Fried was conscious that Fenwick attorneys in addition to in-house counsel for FTX, together with Dan Friedberg, Can Sun, Ryne Miller, and others, had been concerned in reviewing and approving choices associated to those issues and others, which gave him assurance that he was appearing in good religion.

The doc notes that the 31-year-old cryptocurrency magnate understood attorneys had examined and endorsed FTX’s insurance policies on information storage, loans to firm founders, and contracts between FTX and its related hedge fund, Alameda Research. The submitting additionally asserts that attorneys guided the creation of shell firms purportedly used to improperly switch shopper funds.

“Mr. Bankman-Fried’s awareness that counsel was involved in the matters listed above and others is relevant to rebut the government’s claim that Mr. Bankman-Fried acted with criminal intent to defraud,” the submitting reads. “These additional disclosures are more than sufficient.”

Mark Cohen, an legal professional, emphasised that proof signifies Bankman-Fried didn’t function “with criminal intent.” Cohen beforehand represented Ghislaine Maxwell throughout her trial for sexual offenses. Cohen’s protection for Maxwell was in the end unsuccessful, because the jury convicted her on 5 out of the six fees she confronted.

Bankman-Fried has been indicted on fees of wire fraud and conspiracy over alleged misappropriation of billions in FTX shopper funds previous to the firm’s insolvency final 12 months. He denies the allegations. Earlier this week in court docket, his protection group highlighted that he has been surviving solely on bread and water whereas held on the Metropolitan Detention Center in Brooklyn, New York.

Using an advice-of-counsel protection presents each challenges and potential benefits for these accused of white-collar offenses. On one hand, it concedes probably incriminating info – the defendant sought authorized counsel, maybe hinting at doubts concerning the legality of their actions. The protection may also give up attorney-client confidentiality on related subjects.

Yet, if executed successfully, this technique can absolve the defendant by illustrating efforts to stick to authorized requirements by searching for a lawyer’s counsel, and subsequently appearing based mostly on the recommendation obtained. This can refute accusations that the defendant intentionally broke the legislation. In sum, whereas the protection is dicey, it might probably spotlight an absence of fraudulent intent if reliance on authorized recommendation appears justified.

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