Bankman-Fried prepares to blame a law practice for FTX’s scams

FTX co-founder Sam Bankman-Fried is preparing for a defense that argues he trust the recommendations of a popular Silicon Valley law office in taking much of the actions for which he is now dealing with scams charges.

Bankman-Fried’s defense attorney on Tuesday asked the judge supervising his criminal case to require district attorneys to turn over files offered to the federal government by previous FTX law office Fenwick & West. If the federal government doesn’t concur, Bankman-Fried desires authorization to subpoena the Mountain View, California-based company.

That recommendations consisted of using encrypted messaging apps, the arrangement of multimillion-dollar loans to FTX executives and the cryptocurrency exchange’s compliance with United States banking guidelines, the defense stated. Those are all crucial elements of the charges versus Bankman-Fried, who’s implicated of managing and hiding a yearslong scams in which he utilized billions of dollars in FTX consumer funds for dangerous financial investments, individual expenditures and political contributions.

The legal recommendations Fenwick & West supplied to FTX and Bankman-Fried in between 2017 and 2022 is “material to preparing a defense,” his attorneys stated in their Tuesday filing.

Bankman-Fried has actually pleaded innocent to his 13-count indictment and is because of stand trial in October.

A so-called advice-of-counsel defense can be utilized to rebut recommendations a criminal accused planned to break the law, New York University law Professor Stephen Gillers stated.

“In other words, the defendant’s argument is ‘my lawyers told me it was legal, and I thought it was legal,’” stated Gillers. That would cut versus the federal government’s contention that the accused purposefully acted unlawfully — a needed aspect of lots of criminal charges, consisting of those versus Bankman-Fried.

Such a defense would put even more analysis on the relationship in between FTX and Fenwick & West. The company began representing Alameda Research, the exchange’s hedge fund affiliate and, according to district attorneys, the channel for much of Bankman-Fried’s scams, in 2017 and ended up being the primary outdoors counsel to FTX after its 2019 starting. 

Fenwick & West didn’t right away react to an ask for remark.

Former staff members spoken with by federal district attorneys throughout the examination have actually likewise described Fenwick & West legal memos that they declare assisted their choices, according to 2 individuals with understanding of the case. Law enforcement has actually likewise sent out subpoenas to the law office, and it has actually been implicated by financiers in a class action claim of helping Bankman-Fried’s scams. 

Dan Friedberg, FTX’s previous primary regulative officer, signed up with the exchange in 2020 after formerly representing it as an outdoors attorney with Fenwick & West. As the cryptocurrency exchange started to break down in early November, Friedberg approached federal district attorneys providing his support, according to an individual knowledgeable about exchange. FTX’s previous basic counsel Can Sun was likewise poached from the company.

Some product Bankman-Fried’s attorneys are requesting for connects to a charge that he lied to Silvergate Bank to open an account in 2020 to get consumer deposits for FTX’s global exchange. The bank stated at the time that he couldn’t open such an account if FTX wasn’t accredited as a cash services service in the United States. 

Fenwick & West supplied legal recommendations to FTX about such registration. The exchange’s United States platform was signed up as a cash services service in 2020, however the law office encouraged Friedberg in February 2020 that FTX’s global department didn’t require to sign up in the United States as it didn’t accept United States consumers, according to a legal memo submitted in court. 

To navigate Silvergate’s conditions, district attorneys declare, Bankman-Fried integrated a brand-new business, North Dimension, and informed the bank he wished to open a trading account linked to Alameda. Alameda staff members, supposedly at Bankman-Fried’s request, submitted an application to the bank with this incorrect details. Charges associated to a conspiracy to devote bank scams were contributed to Bankman-Fried’s indictment previously this year. 

Bankman-Fried stated in Tuesday’s filing that Fenwick & West supplied “real-time advice” on the opening of the North Dimension account.


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