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 seeking to bring up certain information from the crypto exchange’s terms of service during witness testimonies.
In an Oct. 12 filing in United States District Court for the Southern District of New York, SBF’s legal team said the motion was aimed at addressing “address certain evidentiary issues” in the ongoing criminal trial. The issue at stake involves competing theories by prosecutors and the defense team over the alleged misuse of FTX funds.
According to Bankman-Fried’s lawyers, prosecutors intended to call witnesses and establish their “understanding and expectation” of how their deposits at FTX would be used. Defense lawyers claimed that regardless of users’ understanding of FTX’s terms of service, “compliance with those terms is a defense to the charged offense”.
“[I]t 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,” said the filing, adding:
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.”
Defense lawyers petitioned the court to allow them to question witnesses for the prosecution based on FTX’s terms of service, as well as preclude testimony from “lay fact witnesses”. They cited testimony from Paradigm co-founder Matt Huang, claiming he offered his “expert opinion” rather than “everyday lay experience” on FTX’s services.
“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,” said the filing. “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 criminal trial, for which he has pleaded not guilty to all charges. This week, former Alameda Research CEO and SBF’s ex-girlfriend Caroline Ellison testified, admitting to committing fraud at the direction of Bankman-Fried by providing fraudulent documents and making misleading statements concerning Alameda using FTX funds.
BlockFi founder CEO Zac Prince took the stand late on Oct. 12 and into Oct. 13, testifying on a $400-million credit line the firm provided to FTX US in July 2022 and the ripples caused by the collapse of Terraform Labs and Three Arrows Capital. The trial has been adjourned until Oct. 16.
Magazine: Can you trust crypto exchanges after the collapse of FTX?
Vietnam has passed a sweeping digital technology law that legalizes crypto assets and outlines incentives for AI, semiconductors, and infrastructure.
Brazil scraps crypto tax exemption for small traders, enforces flat 17.5% rate across all gains, including self-custody and offshore holdings.
The return on Donald Trump to the G7 was always going to be unpredictable. That it is happening against the backdrop of an escalating conflict in the Middle East makes it even more so.
Expectations had already been low, with the Canadian hosts cautioning against the normal joint communique at the end of the summit, mindful that this group of leaders would struggle to find consensus.
Canadian Prime Minister Mark Carney carefully laid down an agenda that was uncontroversial in a bid to avoid any blow-ups between President Trump and allies, who of late have been divided like never before – be it over tariffs and trade, Russia and Ukraine, or, more recently Israel’s conduct in Gaza.
But discussions around critical minerals and global supply chains will undoubtedly drop down the agenda as leaders convene at a precarious moment. Keir Starmer, on his way over to Canada for a bi-lateral meeting in Ottawa with PM Carney before travelling onto the G7 summit in Kananaskis, underscored the gravity of the situation as he again spoke of de-escalation, while also confirmed that the UK was deploying more British fighter jets to the region amid threats from Tehran that it will attack UK bases if London helps defend Israel against airstrikes.
Canadian PM Mark Carney is greeted by President Donald Trump at the White House in May. Pic: AP
Really this is a G7 agenda scrambled as world leaders scramble to de-escalate the worst fighting between Tel Aviv and Tehran in decades. President Trump has for months been urging Israel not to strike Iran as he worked towards a diplomatic deal to halt uranium enrichment. Further talks had been due on Sunday – but are now not expected to go ahead.
All eyes will be on Trump in the coming days, to see if the US – Israel’s closest ally – will call on Israel to rein in its assault. The US has so far not participated in any joint attacks with Tel Aviv, but is moving warships and other military assets to the Middle East.
Sir Keir, who has managed to strike the first trade deal with Trump, will want to leverage his “good relationship” with the US leader at the G7 to press for de-escalation in the Middle East, while he also hopes to use the summit to further discuss the further the interests of Ukraine with Trump and raise again the prospects of Russian sanctions.
“We’ve got President Zelenskyy coming so that provides a good opportunity for us to discuss again as a group,” the PM told me on the flight over to Canada. “My long-standing view is, we need to get Russia to the table for an unconditional ceasefire. That’s not been really straightforward. But we do need to be clear about what we need to get to the table and that if that doesn’t happen, sanctions will undoubtedly be part of the discussion at the G7.”
Prime Minister Sir Keir Starmer (R) is greeted by Mark Carney as he arrives in Ottawa ahead of the G7
But that the leaders are not planning for a joint communique – a document outlining what the leaders have agreed – tells you a lot. When they last gathered with Trump in Canada for the G7 back in 2018, the US president rather spectacularly fell out with Justin Trudeau when the former Canadian president threatened to retaliate against US tariffs and refused to sign the G7 agreement.
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Since then, Trump has spoken of his desire to turn Canada into the 51st state of the US, a suggestion that helped catapult the Liberal Party beyond their Conservative rivals and back into power in the recent Canadian elections, as Mark Carney stood on a ticket of confronting Trump’s aggression.
With so much disagreement between the US and allies, it is hard to see where progress might be made over the next couple of days. But what these leaders will agree on is the need to take down the temperature in the Middle East and for all the unpredictability around these relationships, what is certain is a sense of urgency around Iran and Israel that could find these increasingly disparate allies on common ground.
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