Sam Bankman-Fried Is a Terrible Client

Within the weeks after Sam Bankman-Fried’s FTX crypto change started to crumble final November, he selected to disregard probably the most fundamental piece of authorized recommendation: Say nothing, or danger incriminating your self. He took media interviews. He appeared on podcasts. He tweeted incessantly. He started his own Substack. He promised to testify in entrance of Congress, although he was arrested earlier than he bought the possibility.

Beginning at the moment, Bankman-Fried will stand trial in a New York courtroom, accused of seven separate counts of fraud towards clients, traders, and lenders. FTX collapsed after customers tried to withdraw their cash from the change however have been unable to as a result of, the Division of Justice alleges, Bankman-Fried had funneled the cash right into a sibling enterprise, Alameda Analysis, the place it was spent on high-risk crypto trades, debt repayments, private loans, luxurious purchases, and different firm bills.

The trial, whose consequence will imply little for crypto companies or the individuals who misplaced cash in FTX, has already garnered loads of public consideration. The prosecution’s witnesses will embrace victims of the change’s collapse and Bankman-Fried’s one-time paramour, former Alameda CEO Caroline Ellison. It might appear intuitive that Bankman-Fried, the protagonist, ought to have a talking function. However his legal professionals would possibly nicely advise him to plead the Fifth Modification and decline to testify.

In his public appearances earlier than his arrest, Bankman-Fried characterised the scenario as one huge mistake. There was negligence, he admits, however no legal intent to defraud. However his makes an attempt to clarify away the allegations may create complications for his authorized staff in courtroom. Because the protection, the target is to “create an immaculate narrative,” says Jason Allegrante, chief authorized officer at crypto custody agency Fireblocks, to “current the most effective narrative the info will assist.” However when Bankman-Fried started “defending himself within the media and courtroom of public opinion,” he risked “introducing into the general public report a whole lot of info and materials that can be utilized towards him.”

Because the trial progresses, Bankman-Fried’s protection staff might want to take those self same dangers into consideration in deciding who to position on the stand.

Bankman-Fried’s trial will final 4 to 6 weeks. First, the prosecution will lay out its case, calling all its witnesses—from FTX clients to traders to alleged “coconspirators.” Then the protection will select learn how to reply. Beneath the US justice system, the prosecution should show guilt past an inexpensive doubt. Due to this fact, a viable protection technique, says Jordan Estes, companion at regulation agency Kramer Levin, is to “simply poke holes within the authorities’s case” and decline to supply up any further witnesses.

Whether or not Bankman-Fried takes the stand or not will solely be determined, says Estes, as soon as the energy of the prosecution’s case turns into clear. He’s under no circumstances required to testify. “It’s his resolution. We’ll simply have to attend and see,” she says. “If the federal government’s case isn’t going nicely—in the event that they name witnesses that don’t seem very credible or the cross-examination goes terribly—there’s a risk the protection will really feel it doesn’t must do something.”

In any legal case, the choice to place the defendant on the stand is a “high-stakes second,” says Allegrante. Doing so exposes them to questioning by the prosecution that they’d in any other case keep away from, but additionally to the best way particular jurors would possibly interpret their testimony. It introduces further variables to an surroundings the protection hopes to fastidiously management.