Sam Bankman-Fried May Testify to Role of Lawyers, 'Good Faith' Efforts, Filing Says

Wednesday filings by Bankman-Fried's defense team and the DOJ hint at his possible defense arguments.

AccessTimeIconOct 26, 2023 at 4:18 a.m. UTC
Updated Oct 26, 2023 at 3:04 p.m. UTC

Sam Bankman-Fried's defense team wants him to testify about his knowledge of whether lawyers were involved in parts of FTX's operation, his understanding of industry practices, his intentions with FTX's funds as his empire collapsed and his knowledge of FTX and Alameda's financials, filings from his attorneys and the Department of Justice (DOJ) suggest.

A Wednesday defense filing asked Judge Lewis Kaplan, who's overseeing the case, to grant the defense attorneys permission to ask Bankman-Fried about certain aspects of FTX's operation and how the company's counsel were involved in making those decisions. They include FTX's use of auto-deletion policies for Signal and Slack messages, the opening of North Dimension and its bank accounts, loans made from FTX and Alameda Research to its executives and other issues. The DOJ has tried to argue that some or all of these issues were proof of criminal intent, the filing said.

The defense has sought to argue that Bankman-Fried did not intend to defraud his customers or investors and that part of his efforts to run the company depended on advice from his lawyers. While the judge blocked many of these "advice of counsel" arguments, he allowed the defense team to raise a limited version with permission – namely, the permission attorney Mark Cohen is seeking in Wednesday's filing.

Cohen also wrote that he wants to ask Bankman-Fried about his "good faith intentions" in trying to move FTX assets to the Securities Commission of the Bahamas the day after the company filed for bankruptcy to argue that the FTX founder did not think the company's lawyers had customers' best interests in mind.

"At a minimum, Mr. Bankman-Fried should be permitted testify in his defense regarding the involvement of counsel on these topics to counter any implication from the testimony elicited to date that he failed to act in good faith with respect to these matters," Cohen wrote.

A DOJ filing also suggested that the defense wants to use charts detailing Alameda's assets, debts and net asset values when Bankman-Fried (or possibly another witness, but heavily suggesting it's Bankman-Fried) testifies. Prosecutors oppose using these charts because they do not "identify the sources on which they are based."

The defense team has not explained the data sources for the charts for "weeks," the DOJ filing said.

Pushback from the DOJ

The DOJ filing also pushed back on the defense's intent to list the titles of the 13 or so different attorneys who were present in some or all of the group chats that Bankman-Fried was part of.

"There is no relevant purpose to such evidence, and its introduction unnecessarily and in a misleading manner focuses the jury on the presence of attorneys that have no relevance to the case, running afoul of the Court’s pretrial ruling on this issue," the DOJ filing said.

One of the defense's proposed witnesses could also speak to this issue, though Assistant U.S. Attorney Nicholas Roos told the court during a Wednesday teleconference that prosecutors "think the evidence itself is inadmissible," the argument echoed in the filing from later in the day.

The defense wants to call Bahamas attorney Krystal Rolle to testify to Bankman-Fried's conversations with the Bahamas securities regulator – seemingly tied to Cohen's argument that Bankman-Fried was making a good faith effort – but prosecutors' Wednesday filing said it did not have any of the proper paperwork to prepare for cross-examination, asking the judge to order the defense to produce it (which he did). Should these materials not be made available, Rolle's testimony should be blocked, the DOJ filing said.

Special verdict

The DOJ filing and a separate defense filing also addressed Judge Kaplan's request for thoughts on a "special verdict form" for one of the DOJ's charges – wire fraud on FTX customers.

Cohen said the defense opposed using a special verdict, where the judge would create a form with specific questions that the jury must answer, rather than have the jury decide on their own whether the defendant is guilty beyond a reasonable doubt. Kaplan asked whether a special verdict made sense during Wednesday's teleconference, giving the parties time to look into the issue. The motions of a special verdict may prejudice the jury, Cohen said.

In the DOJ filing, prosecutors said they would be willing to modify their proposed jury instructions to clear up language and eliminate the need for a special verdict form.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.