FTX’s SBF Restricted in Blaming Lawyers During Opening Statement

FTX’s SBF Restricted in Blaming Lawyers During Opening Statement

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  • Bankman-Fried can’t blame FTX lawyers in opening statement.
  • “Advice-of-counsel” defense remains an option for later in the trial.
  • DOJ’s witnesses to testify on FTX’s handling of customer funds.

In a recent development, Sam Bankman-Fried, the once-prominent figure in the crypto industry, has faced restrictions from the federal judge overseeing his case. The judge, Lewis Kaplan, has ruled that Bankman-Fried’s defense team cannot use their opening statement to lay blame on FTX’s lawyers for the collapse or operational issues of the cryptocurrency exchange. However, they may still employ the “advice-of-counsel” defense strategy later in the trial.

Bankman-Fried’s defense team had previously indicated their intention to argue that FTX’s legal counsel, including both in-house attorneys and those from the law firm Fenwick & West, played a role in certain critical decisions made by the company. These decisions ranged from the use of auto-deleting messaging services like Signal to the creation of the “North Dimension” entities, FTX’s banking relationship with Silvergate Bank, loans extended to FTX and Alameda Research executives, intercompany agreements, and the terms of service for FTX users.

Judge Kaplan’s Rationale

In his order, Judge Kaplan expressed concerns that the defense team’s vague reference to external counsel without providing specific details might confuse or prejudice the jury. As a result, he made the decision to block any mention of external counsel’s involvement in the opening statement. However, he left the door open for Bankman-Fried’s attorneys to revisit this issue later in the trial if they notify both the judge and the Department of Justice (DOJ) in advance, ensuring that jurors are not present during such discussions.

The “advice-of-counsel” defense is a legal strategy where a defendant argues that they relied on the advice of their legal counsel in making certain decisions and, therefore, should not be held personally responsible for any alleged wrongdoing. While Judge Kaplan’s ruling restricts its use in the opening statement, it could still become a pivotal element of Bankman-Fried’s defense strategy as the trial unfolds.

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Key Questions and Case-by-Case Basis

The judge also raised important questions in his ruling, such as what constitutes an “undue” focus on attorney involvement and what might suggest that attorneys had “blessed” a specific course of conduct. Additionally, he emphasized that the admissibility of evidence related to lawyers’ presence or involvement would depend on the unique circumstances of the case. Judge Kaplan stressed the importance of having sufficient notice to make appropriate rulings on a case-by-case basis, ensuring fairness and clarity in the proceedings.

DOJ’s Witnesses and Testimonies

In a separate development related to the trial, the Department of Justice (DOJ) has expressed its intent to call a range of witnesses, including former FTX customers, investors, and employees, to testify against Sam Bankman-Fried. These witnesses are expected to shed light on their expectations regarding how FTX would handle their funds and their understanding of the purpose behind Bankman-Fried’s statements and actions.

According to Assistant U.S. Attorney Thane Rehn, the anticipated testimonies will directly address the issues in dispute at the trial. They will provide insights into how the witnesses perceived their relationship with Bankman-Fried and his companies, as well as their interpretation of statements made by him and his agents. The testimonies are expected to be probative in demonstrating how reasonable individuals would have interpreted representations made by Bankman-Fried concerning FTX’s treatment of customer assets and other crucial matters.

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Phillip Scarbrough
About Author

Phillip Scarbrough

Phillip Scarbrough, a prominent figure in crypto analysis, brilliantly navigates the labyrinth of blockchain technology. With a knack for distilling complex subjects into comprehensible prose, Phillip's articles enlighten a vast audience about the crypto universe. As digital currencies evolve, his seasoned insights remain invaluable to readers worldwide.

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