Legal Advice

Following the jury’s disqualification, former cryptocurrency CEO Sam Bankman-Fried has been testifying before a judge in his trial.

Judge Lewis Kaplan asked the former business owner to confer with him in order to decide which portions of his testimony could be presented to the jury.

The 31-year-old is charged with embezzling money from clients of his now-defunct cryptocurrency exchange, FTX, and lying to lenders and investors.

He argued that he was acting in good faith and in accordance with legal advice.

In order to determine which parts, if any, of Mr. Bankman-Fried’s testimony would be allowed as evidence, the judge sent the jury home.

With this move, Mr. Bankman-Fried and the attorneys were able to rehearse before he might address the jury.

Prosecutors had questioned some of Mr. Bankman-Fried’s decisions, such as having some group chats automatically deleted. He claimed that this was in line with the record-keeping guidelines established by his legal counsel.

In addition to the personal loans he obtained from Alameda, he claimed to have discussed numerous other arrangements with his lawyers, including the latter’s function as a “payments processor” for FTX.

“Did you take comfort from the fact that lawyers had structured the loans?” Mark Cohen, Mr. Bankman Fried’s lawyer, inquired. “Yes, without a doubt,” Mr. Bankman-Fried answered.

He continued by saying that he had trusted his legal counsel to draft bank account applications on his companies’ behalf. “I trusted that they were proper forms,” he stated.

Attorneys’ claims that Mr. Bankman-Fried followed legal advice have been refuted by prosecutors, who contend that it doesn’t matter if the lawyers weren’t fully informed.

Though the judge did not make a decision right away regarding Mr. Bankman-Fried’s admissibility as a witness, he did issue a warning that he was “dubious” about certain of the arguments.

At first, Mr. Bankman Fried spoke with clarity and assurance, but faltered when prosecutor Danielle Sassoon questioned him about when he had consulted lawyers and what he had told them when he had.

Mr. Bankman-Fried was once told by Judge Kaplan to “listen to the question and answer directly.”

When asked if he believed Alameda had the authority to use FTX customer funds, Mr. Bankman Fried said, “I wouldn’t phrase it that way but… yes.”

Ms. Sassoon asked him to cite specific language from a policy between the two firms that gave him that impression, but more than a minute went by. Finally, he indicated that the money could “be held and/or transferred” by pointing to a line.

On what Mr. Bankman-Fried can present to the jury, Judge Lewis Kaplan will make a decision in the morning.

Weighing the risks

Dozens of interested onlookers, including screenwriters and retirees, as well as others captivated by the former billionaire’s stunning ascent and descent, descended upon the courtroom for Mr. Bankman-expected Fried’s appearance.

His court appearance in New York comes after 12 days of prosecution testimony from former close colleagues.

After his attorneys started putting together his case on Thursday, Mr. Bankman-Fried was almost universally predicted to speak in his own defense.

He might receive a life sentence in prison if he is found guilty.

In the United States, defendants are not required to testify during court proceedings; in fact, they are frequently counseled against it because it exposes them to prosecution interrogation.

It also provides an opportunity for the jury members who will render the verdict to form their own opinions, which may not be favorable.

A former federal prosecutor who has been following the trial, Jacob Frenkel, told the BBC earlier this month that “if the jury does not believe him, it’s a guaranteed conviction.”

Despite the dangers, many trial observers predicted Mr. Bankman-Fried would testify to present his own version of what happened and attempt to refute the narrative put forth by the prosecution.

Carl Tobias, a law professor at the University of Richmond, stated that “the prosecutors have put on a pretty strong case.” “I don’t know that there’s much downside in this case for him to testify given what we’ve seen so far.”

Based on confessions from three of his closest former friends and coworkers who have already entered guilty pleas, prosecutors have constructed a strong case against him.

They have connected Mr. Bankman-Fried to choices about the use of funds deposited at FTX to pay back creditors at his cryptocurrency trading company, Alameda Research, purchase real estate, make investments, and give money to political causes.

They allege that he attempted to conceal the close relationship and the transfers between the two firms; attorneys have supported these claims with tweets, spreadsheets, and text messages.

These witnesses, which include his ex-girlfriend Caroline Ellison, the former chief executive of Alameda, have come out of hours of questioning during the trial seemingly relatively unscathed in terms of their credibility.

As Mr. Bankman-Fried’s companies expanded quickly, his defense team claimed he was adhering to “reasonable” business practices.

He acknowledged making managerial errors in interviews with the media, including the BBC, following the failure of his businesses last year, but he insisted that he never intended to commit fraud.

Elizabeth Holmes is just one of many well-known defendants who have chosen to testify on their own behalf.

Theranos’ founder, who maintained that she had no intention of defrauding investors, was ultimately found guilty on four of the eleven charges against her and given a sentence of more than 11 years in prison.

Testifying, however, can be advantageous. In two distinct and unconnected criminal cases, Tom Barrack—a former private equity executive and fundraiser for former President Donald Trump—and Jean Boustani, a businessman from Lebanon, both testified and were found not guilty.

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