Sam Bankman-Fried’s legal team moves to pursue theory on FTX terms of service


Lawyers representing former FTX CEO Sam “SBF” Bankman-Fried are searching for to carry up sure info from the crypto change’s terms of service throughout witness testimonies.

In an Oct. 12 submitting within the United States District Court for the Southern District of New York, SBF’s legal team mentioned the movement was geared toward addressing “certain evidentiary issues” within the ongoing felony trial. The problem at stake entails competing theories by prosecutors and the protection team over the alleged misuse of FTX funds. 

According to Bankman-Fried’s legal professionals, prosecutors supposed to name witnesses and set up their “understanding and expectation” of how their deposits at FTX could be used. Defense legal professionals claimed that regardless of customers’ understanding of FTX’s terms of service, “compliance with those terms is a defense to the charged offense.”

“It is the defense’s position that the rights and obligations of parties to a commercial relationship are not established by their expectations and understandings for purposes of the misappropriation theory of the federal fraud statutes,” the submitting says, including: 

“The defense anticipates asking witnesses who were customers and investors of FTX and lenders to Alameda questions designed to elicit testimony about the factors they considered material in entering the arrangements and transactions at issue in this trial.”

Oct. 12 submitting by Sam Bankman-Fried’s team in U.S. District Court for the Southern District of New York. Source: PACER

Defense legal professionals petitioned the court docket to permit them to query witnesses for the prosecution based mostly on FTX’s terms of service, in addition to preclude testimony from “lay fact witnesses.” They cited testimony from Paradigm co-founder Matt Huang, claiming he supplied his “expert opinion” quite than “everyday lay experience” on FTX’s companies.

“By seeking to prove misappropriation through testimony from customers and others regarding their beliefs and expectations, the Government is trying to sidestep its burden to prove an essential element of its embezzlement theory beyond a reasonable doubt,” says the submitting. “Indeed, evidence of customers’ belief regarding their legal relationship with FTX would only serve to distract and confuse jurors in considering the facts in light of the meaning of the Terms of Service.” 

Related: Changpeng Zhao’s tweet ‘contributed’ to collapse of FTX, claims Caroline Ellison

Oct. 13 marked the eighth day of Bankman-Fried’s felony trial, for which he has pleaded not responsible to all prices. This week, former Alameda Research CEO and SBF’s ex-girlfriend Caroline Ellison testified, admitting to committing fraud on the course of Bankman-Fried by offering fraudulent paperwork and making deceptive statements regarding Alameda utilizing FTX funds.

BlockFi founder CEO Zac Prince took the stand late on Oct. 12 and into Oct. 13, testifying on a $400-million credit score line the agency provided to FTX US in July 2022 and the ripples attributable to the collapse of Terraform Labs and Three Arrows Capital. The trial has been adjourned till Oct. 16.

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