Sam Bankman-Fried, the founder of collapsed cryptocurrency exchange FTX, has released his first comprehensive legal defense since prosecutors accused him of fraud. Government is doing the bidding.
In court filings late Monday, Mr. Attorneys for Bankman-Fried said FTX and its attorneys at Sullivan & Cromwell became de facto agents of federal prosecutors building a criminal case against him and were withholding key evidence.
“FTX’s legal counsel went to the government to accuse Mr. Bankman-Fried behind his back without knowing the full facts, ultimately forcing him to step down as CEO,” the lawyers wrote.
For months, Sullivan & Cromwell has been subpoenaing documents and other evidence, the filings say. Mr. Bankman-Fried’s attorneys said prosecutors were only looking for the most incriminating documents, adding that FTX could be sitting on materials that could help its defense.
As a result, they argued, lawyers were “outsourcing” the legal requirement to provide helpful material to the defense team, a responsibility Mr. Transferred to “private party” with no obligation to Bankman-Fried.
Representatives for FTX, Sullivan & Cromwell and the US Attorney’s Office in Manhattan did not immediately respond to requests for comment.
Federal prosecutors accused Mr. Bankman-Fried has been charged. Authorities have charged him with money laundering, bribing the Chinese government and overseeing an illegal campaign finance scheme that showered tens of millions of dollars on Democratic and Republican candidates.
Mr. Bankman-Fried, 31, has pleaded not guilty to those charges. His lawyers, from the New York firm Cohen & Kresser, have said they are ready to go to trial in federal court in Manhattan as soon as October.
Mr. Bankman-Fried was released on bail in December but is being held at her parents’ home in Palo Alto, California. He faces an uphill legal battle. Three of his key colleagues have pleaded guilty and are cooperating with prosecutors. If convicted, he could spend decades in a federal prison.
The motions, filed Monday, asked Judge Louis A. To persuade Kaplan, Mr. Bankman-Fried’s legal team was the first of many ventures. He has 13 votes against him.
Overall, Mr. Bankman-Fried seeks to have 10 counts dismissed. The filings argue that the four counts — including a foreign bribery charge, a campaign finance charge and a bank fraud charge — violate elements of the extradition process between the United States and the Bahamas, where Mr. Bankman-Fried was arrested. In extradition cases, prosecutors are generally limited to bringing new charges after a defendant has been transferred.
Defense attorneys argued that six more charges should be dismissed because they are too vague or contain other legal defects. They said prosecutors had expressed “an interest in bringing charges against Mr. Bankman-Fried.”
Much of the defense’s early strategy focused on Sullivan & Cromwell’s role in the case. Mr. Bankman-Fried hired lawyers from the company to help with a range of legal work before FTX collapsed. When the exchange broke out, Sullivan & Cromwell’s lawyers took control and Mr. Bankman-Fried was replaced by veteran restructuring specialist John Jay Ray III. Mr. One of Ray’s first acts was Mr. Under Bankman-Fried was to make a strong statement that FTX lacked internal controls.
But in January, the U.S. trustee in the bankruptcy case raised objections to the law firm’s representation of FTX, arguing that it did not fully disclose the extent of its previous legal work for the exchange. One of FTX’s former in-house attorneys has filed a court filing that Sullivan & Cromwell’s previous jobs created major conflicts of interest.
A judge ultimately ruled that the company could continue to monitor bankruptcy.
In court filings on Monday, Mr. Bankman-Fried, Mr. Ray portrays the lawyers at FTX and Sullivan & Cromwell as working against him with the government’s blessing.
Mr. Ray, FDX and lawyers have “acted as the government’s public mouthpiece” and “generally assumed an advocacy role by branding” Mr. Bankman-Fried is a “‘villain,'” the filings say.
