On Wednesday, Sam Bankman-Fried’s counsel revealed that in his upcoming criminal trial, their client would assert that he did not intend to break the law.
His lawyers are planning on proving this by using the FTX attorneys advising him when he was the chief executive of the now-bankrupt crypto exchange.
Bankman-Fried’s lawyers are planning on calling on members of the FTX in-house counsel, including Ryne Miller, Can Sun and Dan Friedberg, along with attorneys from Fenwick & West.
A court filing shed light on the argument they are making; the lawyers had assured Sam Bankman-Fried that his actions were in good faith when he had been CEO of the crypto exchange before its collapse.
The filing further said that the attorneys had the responsibility of reviewing the elements of the misconduct he is being accused of.
The Department of Justice (DOJ) had filed seven charges against Bankman-Fried and he once again pled not guilty to them earlier this week.
The complaint had been amended by the DOJ to remove the campaign finance violation charges, as they said that they would be filed separately.
Last week, a request had been made to a judge to ask the defense team of SBF to elaborate on their advice-of-counsel defense or eliminate the tactic from the trial.
After the request was granted, the defense attorneys had made the disclosure. According to legal experts, it is a fair defense to claim reliance on counsel advice, as long as its accuracy can be demonstrated.
The government will have to prove beyond a reasonable doubt that Bankman-Fried intended to commit fraud and had unlawful intentions.
Moreover, if the disgraced crypto mogul had made disclosures to his counsel and been assured of the legality of any alleged misconduct, then his defense team would have to prove that he depended on that advice.
Since ‘good faith’ is considered a state of mind, it would mean assessing how much Bankman-Fried had understood his actions.
Therefore, using the advice-of-counsel defense would mean that any attorney-client privilege would be eliminated because the communications with lawyers would have to be revealed.
If this is indeed waived and federal prosecutors are able to get their hands on damning information, then the strategy could end up backfiring for SBF.
This means that there are very slim chances of this being a viable defense. In the filing on Wednesday, his lawyers said that he had been assured of the loans that were made with company cash.
These loans, which were worth billions of dollars had been made to SBF himself, other executives at FTX, and also Alameda Research, the sister company of the crypto exchange.
The bankruptcy filing last November revealed that a loan of $1 billion had been given to Sam Bankman-Fried.
The new management of the exchange recently revealed that loans worth $3.2 billion had been given to insiders.
Bankman-Fried had also received legal assurance on FTX policies, such as automatic erasing of messages, customer agreements of the crypto exchange, and establishing an entity called North Dimension.