Sam Bankman-Fried Has Few Pathways to Acquittal, Say Legal Experts

Practically a 12 months after cryptocurrency change FTX went down in flames, the trial of its disgraced founder Sam Bankman-Fried is about to start in a Manhattan federal court docket on Tuesday.

SBF—a once-feted wunderkind who usually solid himself as an embodiment of accountable stewardship in crypto—faces a litany of prices, together with cash laundering, wire fraud, and unlawful political donations. If convicted, SBF faces probably many years in jail for his function within the implosion of FTX, forcibly faraway from the stage as a person who left all the business with lasting scars.

Specialists interviewed by Decrypt say that it’s clear that prosecutors are assured that they will safe a conviction. From the velocity at which the case goes to trial to securing cooperation offers with key figures in SBF’s orbit, they are saying the federal government is ranging from a powerful place.

“I believe it’ll be fairly overwhelming if it is dropped at a jury in the identical means that it was specified by the indictment,” mentioned Daniel C. Silva, a former federal prosecutor. Silva participated in final February’s prosecution of cryptocurrency platform BitConnect, and is a shareholder on the regulation agency Buchalter. 

As with every prison trial, SBF’s will come down as to if or not prosecutors can show his intent to defraud prospects based mostly on his actions—past an inexpensive doubt. To this finish, authorized consultants advised Decrypt that this can put loads of significance on the witnesses assembled by the federal government and the protection’s means to counter them.

Not lengthy after the primary indictments, federal prosecutors introduced that that they had flipped key members of SBF’s inside circle, together with FTX co-founder Gary Wang and former head of engineering Nishad Singh. In addition they revealed that they struck a cooperation cope with Caroline Ellison, former CEO of Alameda Analysis and SBF’s former lover.

Ellison, who has already admitted that she and different executives “knew it was fallacious” to be siphoning FTX buyer funds to repay loans at Alameda Analysis, will seemingly be intently watched due to her proximity to SBF. 

“I definitely suppose Caroline Ellison has the potential to deliver loads of dramatic moments to the trial, and as a prosecutor in a fraud case, that may be actually necessary for telling the story and grabbing the jury’s consideration,” Jordan Estes, a former prosecutor with the Southern District of New York and a associate on the regulation agency Kramer Levin, advised Decrypt. 

If Ellison and others from SBF’s orbit testify for the prosecution, it might probably assist maintain the jury’s consideration on the primary allegations of fraud and away from knottier questions that may confound a jury—questions on how cryptocurrency works, for instance. Such questions can usually be difficult for jurors to grasp and danger distracting from the problems prosecutors need them to concentrate on. 

If questions round crypto are unaddressed, nonetheless, that may muddy the image for jurors, and be one thing “necessary for the protection to remember” for a gap, mentioned Brian Newman, an legal professional on the regulation agency Dykema Gossett. 

“I believe it is probably not potential for the prosecution to win with out giving the jury some understanding about what these tokens are which can be being misappropriated,” Newman advised Decrypt. “If the jury would not know what the prosecution’s speaking about, it is fairly arduous to convict past an inexpensive doubt.”

How SBF’s protection could in the end play out received’t be seen till trial, however they’re dealing with limits after experiencing some setbacks in current weeks. 

On September 6, SBF’s attorneys protested to the decide that the prosecutors’ determination to launch tens of millions of paperwork so near the trial date was hampering their preparations. This was made extra difficult by Decide Lewis Kaplan’s rejection of requests to launch SBF early in order that he might higher put together, and his rejection of the protection’s proposed witnesses. 

With their choices squeezed, SBF’s authorized staff will seemingly must depend on a technique based mostly on sowing doubt across the thought SBF knowingly dedicated any crimes at FTX. SBF has already claimed that FTX’s counsel authorized his choices and did not increase any objections on the time.

Different potential protection methods could contain utilizing the prosecution’s personal witnesses to assist their argument that SBF was appearing in good religion, and by discrediting their witnesses. In July, prosecutors accused SBF of leaking Ellison’s diary as a strategy to discredit her. Estes mentioned if Ellison or different co-conspirators are cross-examined, it might probably widen the opening for the protection. 

“You are undoubtedly going to must discredit a few of their testimony to recommend that they are mendacity about sure issues since you wish to make it appear to be this was a respectable enterprise,” Estes advised Decrypt. 

None of those defenses will likely be simple to make, nonetheless. Decide Kaplan has rejected SBF’s request to get entry to paperwork from the regulation agency Fenwick & West LLP, on which he relied for counsel whereas helming FTX. With out these paperwork to show his case, any “recommendation of counsel” protection to indicate that SBF was appearing in good religion will likely be a more durable promote, mentioned Paul Tuchmann, a associate with regulation agency Wiggin & Dana’s Litigation follow.

“You’d want entry to loads of paperwork” to make this protection work, mentioned Tuchmann, who’s a former federal prosecutor in Brooklyn. With out them to assist his case, the argument turns into “harder to make.”

Attacking Ellison or different prosecution witnesses also can backfire, particularly if the hope is to border FTX’s failure because of their actions and never their shopper’s. The truth that these witnesses admitted accountability—in contrast to SBF—might danger casting him as aloof and irresponsible as an govt, not a misled however well-intentioned one. 

“When you get an unsympathetic jury, they have a look at you virtually with disdain whenever you assault Caroline or another person who pled responsible and admitted accountability,” mentioned Silva, the previous prosecutor. “That may actually trigger them to see proof within the worst potential mild towards you.”