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Lawyers for disgraced FTX founder Sam Bankman-Fried (SBF) are moving to expand the scope of their questioning for the prosecution’s next round of witnesses after a bruising two weeks of testimony by members of the mogul’s inner circle.
SBF's lawyers raised concerns with what they said were restrictions on their available lines of questioning with government witnesses that they say block them from making a case for their client. To correct this, the defense asked for more room to explore defense theories through cross-examination—and to bar prosecutors from relying on lay witnesses for expert testimony.
“The government has objected to the defense’s effort to ask questions of government witnesses that strayed from the government’s conception, but the defense should not be precluded from ‘fleshing out’ its theories through cross-examination,” the lawyers wrote in their filing.
This request comes as Bankman-Fried’s trial enters its third week, and following testimony from a parade of witnesses who recounted episodes where they were directed by the FTX chief to mislead investors, clients and auditors on the firm’s health and its relationship with Alameda Research—also founded by Bankman-Fried. Caroline Ellison, Alameda’s CEO and Bankman-Fried’s former lover, emotionally recounted her relief at not having to “lie anymore” after detailing the pressure she said Bankman-Fried put on her to do so.
By shaping the testimony of upcoming witnesses, the defense is likely looking to prevent more damage to Bankman-Fried’s image in the eyes of jurors, said Daniel Silva, a former assistant U.S. attorney and shareholder at Buchalter.
"They don't want more victims," Silva told Decrypt. Victim testimony, he continued, "makes the jury more sympathetic" to the government's case, and Bankman-Fried's legal team may be looking to head that off by creating fences around it. "[Bankman-Fried] is really trying to keep this damaging evidence away from the jury."
The defense is also gunning for another of the pillars of the prosecutors’ case by attempting to argue that FTX stuck to its terms of service, meaning that it can’t be accused of fraud regardless of others’ understanding of what these meant. This, they hold, is a recognized defense in fraud cases: arguing that FTX complied with its own contract’s terms.
In their own response a day later, prosecutors rejected the defense’s notion as "simply wrong," and asserted that the law is not limited to only breaches of a written contract. They added that their evidence has shown that Bankman-Fried misused client funds and repeatedly misrepresented how FTX was handling them at the same time.
Prosecutors also say they have not objected to the defense’s cross-examination of witnesses, but contested that they were opposing questions designed to suggest they were negligent in their dealings with FTX.
"There is thus no basis to exclude evidence or provide any limiting instruction about evidence of customers’ beliefs regarding their understanding and interpretation of how their deposits would be handled by FTX, in the context of the statements which the defendant authorized about how FTX would treat their assets," said the prosecutors in their filing.
Silva said bankman-Fried’s defense team arrived at the trial with steep odds of winning an acquittal, so they are left with a narrower suite of options to attack the government’s case. In contrast, prosecutors still have more room to maneuver to convict Bankman-Fried.
"If there are seven charges right now pending, and three or four different theories on these charges, prosecutors only have to prove one of them, and they can argue for a 20-year max sentence," explained Silva. "In contrast, SBF has to be right on all of them [for acquittal]."