As trial begins, Sam Bankman-Fried’s lawyers push to exclude testimony from FTX users

Regulation

The criminal trial of former FTX CEO Sam Bankman-Fried (SBF) is currently underway in New York, and his legal team has filed motions aiming to ban testimony from users and investors in the exchange.

In separate Oct. 2 filings in United States District Court for the Southern District of New York, SBF’s lawyers opposed pre-trial motions from prosecutors requesting FTX customers and investors testify regarding how they believed the cryptocurrency exchange would handle assets. They also sought to block the testimony of a former FTX user — an unnamed Ukrainian national — using a “live two-way video” partly on Sixth Amendment grounds.

“Decisions on specific testimony from specific witnesses relating to their individual understanding of specific statements or aspects of their relationship with FTX or Mr. Bankman-Fried cannot be decided in the abstract,” said the filing on FTX user testimony.

According to SBF’s legal team, prosecutors were trying to “have it both ways” by blocking similar witnesses proposed by the defense as to what they understood about how FTX would handle their funds. Defense lawyers described the motion as “premature”, arguing the subject was a matter for the jury to evaluate.

“[T]he Government seemingly wants evidence regarding how customers (and other putative victims) understood the relationship they chose to enter with FTX to be admissible only if offered by the Government but excluded if offered by the defense.”

Lawyers also argued allowing the Ukrainian witness’ testimony “would apparently reference hardships and individual circumstances created by the Russian invasion of Ukraine” and “elicit the jury’s sympathy and outrage”. The Russian military invaded Ukraine in February 2022 and many areas of the country have faced the constant threat of attack since that time, making international travel difficult.

“Courts routinely exclude relevant evidence that might elicit sympathy among jurors unrelated to the facts of the case,” said the lawyers. “[T]he circumstances under which [the Ukrainian user] would testify and the reason for his absence from the courtroom would themselves be prejudicial […] Jurors would inevitably speculate about why a Ukrainian national (and no other witness) is testifying by video, and the most obvious answers would almost certainly provoke ‘sympathies having no bearing on the merits of the case.’”

Related: DOJ readies witnesses in Bankman-Fried trial, highlights FTX asset management

The motions were filed hours before jury selection for Bankman-Fried’s criminal trial was scheduled to begin in New York City. At the time of publication, Judge Lewis Kaplan was questioning potential jurors on any conflicts they may have which prevent them from serving in the trial, expected to last through November.

Since Kaplan revoked Bankman-Fried’s bail in August, the former FTX CEO has been largely confined to jail despite several unsuccessful attempts by his lawyers for temporary release. He will face two criminal trials in October 2023 and March 2024, for which he has pleaded not guilty to all 12 criminal charges related to alleged fraud at FTX and Alameda Research.

Magazine: Can you trust crypto exchanges after the collapse of FTX?

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