Sam Bankman-Fried, the former billionaire and founder of the FTX cryptocurrency exchange, is set to defend himself in his upcoming fraud trial. Bankman-Fried will argue that he did not believe his use of customer funds was improper and will challenge the credibility of those who claim otherwise. The defense strategy aims to convince the court that the defendant lacked criminal intent, despite admitting to mistakes that led to FTX’s collapse.
While Bankman-Fried has pleaded not guilty to charges of fraud and conspiracy, there is evidence from others suggesting that he was aware of his hedge fund, Alameda Research, improperly borrowing funds from FTX to cover its debts and make investments. This evidence could undermine his argument of acting in good faith.
Bankman-Fried’s defense lawyers have stated that he had a “good faith belief” that FTX’s handling of customer funds was permissible, as long as withdrawal requests were honored. Prosecutors, however, point to the terms of service, which state that users retain ownership of their digital assets at all times and allege that Bankman-Fried falsely claimed that customer assets were properly maintained.
Former colleagues close to Bankman-Fried, including Caroline Ellison, former CEO of Alameda, and former FTX executives Gary Wang and Nishad Singh, have pleaded guilty and are expected to testify against him. Their testimonies could provide an insider’s perspective on the defendant’s actions and intent.
Bankman-Fried’s defense is likely to argue that his former colleagues have a motive to falsely implicate him in order to secure more lenient sentences. Furthermore, they claim that other players in the cryptocurrency industry also used customer funds in a similar manner, suggesting that Bankman-Fried’s actions were within standard practice.
The trial will determine whether Bankman-Fried committed fraud or not. US District Judge Lewis Kaplan has postponed ruling on whether Bankman-Fried can present evidence of how other cryptocurrency companies utilized customer funds. The case is expected to shed light on the legal boundaries and practices within the cryptocurrency sector.
Sources:
- Reuters