Aug 23, 2023

Sam Bankman-Fried intends to argue he was acting in "good faith" in loaning funds to FTX and Alameda executives, in setting Signal messages to auto-delete and in setting up a set of North American entities because he was following the advice of lawyers, including law firm Fenwick & West.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right, some breaking news coming in uh new developments in the FTX founder Sam Bank for its defense strategy. Joining us now to discuss this is coin global policy and regulation. Managing editor Nick Day, who is also of coin state of crypto newsletter. Good morning, Nick. Good morning. All right. So SPF his lawyers, somebody has sent a letter. What does it say? Yeah. So this is from this morning, the FTX uh sorry, the Sam mcree defense team has filed a letter saying that uh you know, as part of their defense, they plan to introduce an advice of council argument. Basically saying that Sam M believed he was acting in quote good faith uh when he was doing various things with FDX, including setting signal messages and other systems to auto delete uh loaning funds to Alameda and FTX executives and setting up North American entities like North Men. Uh basically saying that he was doing all of this after on the belief that lawyers from both Fenwick and West and External law firm as well as in house counsel had reviewed these decisions and uh you know, basically implying that they had signed off on it saying that, you know, he was not doing it out of his own volition, he was doing it, you know, with the understanding that his lawyers told him it was fine. Sorry Nick, what's not clear so far? And perhaps you can add some clarity on this is, has he named the firm, has he named in Council Inside Council or Outside Council? Yeah. So the, the law firm is Fenwick and West. Um This is the same law firm that the defense team previously tried to get more information from but was blocked by uh the judge overseeing the case as well as, you know, prosecutors had objected to it. Um So not a new name, we've seen their name pop up tied to FCX before uh does seem to, you know, I think one way of kind of reading this is, you can say that be M Fred's defense team intends to blame Fenwick and West for at least some of the decisions or some of the process that led to this uh decisions that he's now on trial for. Uh he's also naming in-house counsel like Dan Friedberg and Ryan Miller as well as a couple of others. Um You know, we have not had a chance to reach out to most of these individuals yet we did send a, you know, uh request for comment to Fenwick and West it's, they have not responded yet, although I believe they're on the west coast. So it's very possible they're not even awake yet. Um, but yeah, this is, uh, it's in kind of, we've seen this kind of implied before, but now we have firm confirmation that that is one of the strategies the defense team intends to pursue. Nick. You were in the courtroom yesterday, you were also there when Sam Beman Fried had his bill revoked at that time. You described his parents as being very emotional at being a very charged, uh, courtroom. What was it like yesterday when you were there? Paint a picture for us? Yeah. So, uh, yesterday was, uh, you know, relatively, I'd say a very low key affair. Um, you didn't have as many people in the courtroom as you normally do. Normally the courtroom was packed. You only had a handful of people yesterday. Uh, Sam Bare's mother was present. His father was not, um, bare himself. Uh, you know, he was in a little bit after, uh, you know, 9 a.m. when everyone was already seated, uh, wearing a, you know, appeared to be a prison, you know, uniform, prison, not a jumpsuit. Exactly. But, uh, you know, uh, Jese beach clothes instead of his usual suit. Uh, it looked like his legs were still shackled, you know, the chain that, uh, lets him walk but prevents him from running. Uh, he appeared to, you know, be that, uh, or have those on his legs. Um And yeah, he quickly smiled at his mother walked to the bench and then didn't look back to the rest of the, the hearing itself. All right. Uh Just switching gears. Uh Nate Chasin, the former head of product at Open Sea, he was sentenced to three months of prison time. Uh This is an insider trading case. Could you tell us what happened there? Yeah. So, Nate Chastain and the former Open C executives who was arrested last year on allegations of, uh, basically buying up NFTS and flipping them knowing that they would be, uh featured on Open C's Home page. Uh So he was convicted of, uh, you know, a couple of charges tied to, you know, these inside trading allegations. And, uh yesterday, he was sentenced to three months in jail, three months home confinement, three years of supervised, released a believe it was a $50,000 fine and he has a forfeit the NFTS that, uh he got, you know, during this uh period. Um So, relatively speaking, I think it does not seem to be a very, you know, severe penalty for what he's been accused of. Uh, you know, he'll be home. Uh, he has us under a surrender on November 2nd. He'll be home, you know, early in the New Year and that's a three month sentence. Right? Nick. Right. Three months in prison followed by another three months of home confinement. All right, we're gonna have to leave it there. Nick. Thank you very much for joining us this morning. Thank you. That was Coindesk global policy and regulation managing editor Nick Day. Don't forget to sign up for the state of crypto newsletter on coindesk dot com. Nick is the fabulous editor behind that.

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