Sam Bankman-Fried, in First Detailed Defense, Seeks to Dismiss Charges

Sam Bankman-Fried, the founder of failed cryptocurrency exchange FTX, is about to dismiss some of the charges in his first detailed legal defense since prosecutors accused him of fraud. A powerful law firm representing bankrupt FTX has made a government bid.

Bankman-Fried’s attorneys filed a court filing late Monday saying that lawyers from FTX and the Sullivan & Cromwell firm have acted as de facto representatives for federal prosecutors in the criminal proceedings against him. said it may have withheld important evidence.

“FTX legal counsel went to the government to accuse Bankman-Fried behind the scenes without knowing the full facts and ultimately forced him to resign as CEO,” the attorney wrote.

Sullivan & Cromwell have been providing documents and other evidence to prosecutors for months, the filing says. Bankman-Fried’s attorneys argued that prosecutors wanted only the most incriminating documents, even though FTX may also be considering materials that could help its defense.

In fact, they “outsourced” the legal requirement that the prosecutor provide materials that might be useful to the defense team, shifting that responsibility to a “private person” who would not oblige Bankman-Fried. claimed to be

Representatives for FTX, Sullivan & Cromwell, and the Federal Attorney’s Office in Manhattan did not immediately respond to requests for comment.

Federal prosecutors have charged Bankman-Fried with orchestrating a large-scale fraud that embezzled billions of dollars of customer money from FTX. Authorities also charged him with money laundering, bribery of the Chinese government, and oversight of an illegal campaign finance scheme that spent tens of millions of dollars on Democratic and Republican candidates.

Bankman-Fried, 31, has pleaded not guilty to these charges. His attorney at the New York firm Cohen & Gresser said he could be ready to stand trial in federal court in Manhattan as early as October.

Bankman-Fried was released on bail in December, but was held at his parents’ home in Palo Alto, California. He faces a difficult legal battle. Three of his colleagues have pleaded guilty and are cooperating with the prosecution. If convicted, he could spend decades in federal prison.

The motion, filed Monday, is one in which Bankman-Fried’s legal team has either asked prosecutors for more documents or persuaded Manhattan U.S. District Court Judge Louis A. Kaplan to dismiss some of the motions. It is most likely the first of many attempts to 13 counts against him.

Overall, Bankman-Fried is seeking dismissal of 10 charges. Four counts, including foreign bribery charges, campaign finance charges and bank fraud charges, violated elements of extradition proceedings between the United States and the Bahamas, where Bankman-Fried was arrested, according to the complaint. In extradition cases, prosecutors are usually restricted from indicting new charges after the defendant has been transferred.

Defense attorneys argued that another six accusations should be dismissed because they were too vague or had other legal flaws. They said prosecutors showed they were “enthusiastic about prosecuting Mr. Bankman-Fried.”

Much of the defense’s early strategy also focused on Sullivan & Cromwell’s role in the case. Bankman-Fried hired lawyers from FTX to help with various legal matters before it collapsed. As the exchange collapsed, Sullivan & Cromwell lawyers took control and named veteran restructuring expert John Jay Ray III to Bankman to replace his Mr. Freed. One of Ray’s first acts was to issue a scathing report that his FTX under the command of Bankman-Fried lacked internal controls.

But in January, the U.S. trustee in the bankruptcy case challenged the law firm’s representation of FTX, arguing that it failed to fully disclose the extent of its previous legal work with the exchange. One of them alleges in court filings that his previous work at Sullivan & Cromwell created a significant conflict of interest.

A judge ultimately ruled that the company could continue to oversee bankruptcy.

Bankman-Fried described in Monday’s court filing that lawyers for Wray, FTX, and Sullivan & Cromwell all had government approval to work against him.

Mr. Ray, FTX and his lawyers “acted as spokespeople for the government” and “assumed the role of prosecutor” by publicly labeling Mr. Bankman-Fried as a “villain,” the filing said. .

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