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Sam Bankman-Fried wants to argue lawyers’ involvement shows he didn’t realise company loans were improper.
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He’s asked Judge Lewis Kaplan for permission to quiz FTX co-founder Gary Wang about the issue.
Lawyers for Sam Bankman-Fried want to quiz FTX co-founder Gary Wang about his reliance on legal advice when agreeing to a series of loans from linked hedge fund Alameda Research, according to a legal filing made late Monday night.
The letter, sent as Bankman-Fried’s trial enters its second week, seeks carve-outs from a judge who’s previously proved reluctant to let the crypto tycoon blame the alleged fraud on his lawyers.
Prosecutors have already probed Wang about around $200-300 million of loans he received from Alameda, which he used to make venture investments and buy himself a house in the Bahamas.
Wang’s “understanding that these were actual loans – structured by lawyers and memorialized in formal promissory notes that imposed real interest payment obligations – is relevant to rebut the inference that these were simply sham loans directed by Mr. Bankman-Fried to conceal the source of the funds,” the filing said.
Wang has previously said he “didn’t think the lawyers would tell him to sign something that was illegal,” the filing said.
The relationship between FTX and its hedge fund arm has proved crucial to the criminal case that followed the collapse of the crypto exchange in November 2022, as the prosecution has argued Bankman-Fried used funds illegitimately transferred to Alameda as his “personal piggy bank.”
Bankman-Fried has pleaded not guilty to fraud charges, and his lawyers say the involvement of company counsel in loan arrangements suggests that he didn’t realize it was improper. Judge Lewis Kaplan has previously ruled that arguments over the advice received from counsel could confuse or prejudice the jury, and can’t be made in the defense’s opening statement.
Wang is expected to finish his testimony later Tuesday, to be followed by Caroline Ellison, the former head of Alameda Research who is also Bankman-Fried’s ex-girlfriend. Both Wang and Ellison have pleaded guilty and are cooperating with investigators.
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