Lawyers for Sam Bankman-Fried claim the FTX founder, who has fallen from grace, based his business decisions on legal advice from company attorneys before the cryptocurrency exchange’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 maintain he received assurance from both in-house and external lawyers that his actions complied with the law. They contend this indicates Bankman-Fried operated in good faith, without intentions of misleading FTX clients and investors.
Bankman-Fried’s lawyers state:
The defense intends to elicit evidence that Mr. Bankman-Fried was aware that Fenwick lawyers as well as in-house counsel for FTX, including Dan Friedberg, Can Sun, Ryne Miller, and others, were involved in reviewing and approving decisions related to these matters and others, which gave him assurance that he was acting in good faith.
The document notes that the 31-year-old cryptocurrency magnate understood lawyers had examined and endorsed FTX’s policies on data storage, loans to company founders, and contracts between FTX and its associated hedge fund, Alameda Research. The filing also asserts that attorneys guided the creation of shell corporations purportedly used to improperly transfer client 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 filing reads. “These additional disclosures are more than sufficient.”
Mark Cohen, an attorney, emphasized that evidence indicates Bankman-Fried didn’t operate “with criminal intent.” Cohen previously represented Ghislaine Maxwell during her trial for sexual offenses. Cohen’s defense for Maxwell was ultimately unsuccessful, as the jury convicted her on five out of the six charges she faced.
Bankman-Fried has been indicted on charges of wire fraud and conspiracy over alleged misappropriation of billions in FTX client funds prior to the firm’s insolvency last year. He denies the allegations. Earlier this week in court, his defense team highlighted that he has been surviving solely on bread and water while held at the Metropolitan Detention Center in Brooklyn, New York.
Using an advice-of-counsel defense presents both challenges and potential advantages for those accused of white-collar offenses. On one hand, it concedes potentially incriminating information – the defendant sought legal counsel, perhaps hinting at doubts about the legality of their actions. The defense might also surrender attorney-client confidentiality on relevant topics.
Yet, if executed effectively, this strategy can absolve the defendant by illustrating efforts to adhere to legal standards by seeking a lawyer’s counsel, and subsequently acting based on the advice received. This can refute accusations that the defendant deliberately broke the law. In sum, while the defense is dicey, it can highlight a lack of fraudulent intent if reliance on legal advice seems justified.
What do you think about Bankman-Fried’s latest legal strategy? Share your thoughts and opinions about this subject in the comments section below.