In late August, lawyers for the U.S. Department of Justice filed a motion to exclude all witnesses suggested by Bankman-Fried.

In a setback for Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, a US judge limited his ability to present expert witnesses in his criminal fraud trial.

Bankman-Fried had tried to call seven experts on issues related to cryptocurrency markets and English contracts in an effort to convince the jury to acquit him of charges of stealing billions of dollars in FTX client funds. to cover losses at his Alameda Research hedge fund.

U.S. District Judge Lewis Kaplan issued a written order excluding three of the proposed experts, deeming their testimony irrelevant or potentially confusing to the jury.

Sam Bankman-Fried’s Experts Cannot Testify, Judge Says

Among these witnesses was Peter Vinella, a consultant who intended to discuss “FTX’s use of widely accepted practices in the financial services industry.” Judge Kaplan found this testimony irrelevant to the case.

Additionally, Bankman-Fried was prohibited from calling English lawyer Lawrence Akka to testify about FTX’s terms of service, which were governed by English law. Kaplan reasoned that only a judge could instruct juries on questions of law.

According to the court, Akka’s testimony does not serve to help the jury understand FTX’s terms of service. Rather, it is considered an expression of “legal opinions” regarding the interpretation of the contractual terms in question.

The defense also sought testimony about FTX’s finances, software and document metadata from consultants Thomas Bishop and Joseph Pimbley, as well as data analytics specialist Brian Kim. Based on Rule 16, which requires the government to disclose specific evidence it intends to use during trial, the court rejected all of his potential testimony.

The Government Can Block All Requests

Sam Bankman-Fried may file a request to allow certain witnesses to testify if his attorneys believe they will be able to refute the testimony of the government witnesses. However, the government could oppose the presentation.

Court documents suggest Bankman-Fried may argue that the terms of service did not explicitly prohibit the use of client funds for investments, drawing a comparison with how traditional banks use deposits to fund loans. It can be claimed that this practice was common in the cryptocurrency industry.

It is customary in American criminal trials for both prosecutors and defendants to use expert witnesses to help clarify complex issues. In this case, prosecutors plan to present three former FTX and Alameda executives, all of whom have pleaded guilty to their roles in the alleged fraud, as witnesses at Sam Bankman-Fried’s trial. The trial is expected to extend for a period of up to six weeks as it develops.

Bankman-Fried, a 31-year-old former billionaire, has pleaded not guilty to the charges against him. While he acknowledged deficiencies in risk management at FTX before its collapse in November 2022, he vehemently denies any wrongdoing in the misappropriation of funds.

The Bankman-Fried Family Resorts to a Risky Strategy

According to a report in Fortune magazine, the Bankman-Fried family has taken a risky approach in their legal battle, shifting the blame to the prominent law firm Sullivan & Cromwell. They argue that the company did not act in their best interest, downplaying its role in FTX’s downfall.

According to the report, the family’s strategy may backfire, as it could provide prosecutors with access to new evidence by waiving attorney-client privilege. The effectiveness of the strategy therefore remains uncertain.

By Leonardo Pérez


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