SBF Digs into Lawyers’ Role in Alleged $200M ‘Sham’ Alameda Loans

Sam Bankman-Fried, founder of cryptocurrency exchange FTX, is making a bold move in his ongoing legal battle.

Bankman-Fried is seeking to shed light on the involvement of lawyers in what prosecutors have termed a “$200 million sham” involving Alameda Research, the hedge fund arm of FTX.

Wang’s Testimony Sheds Light on Legal Structure of Alameda Loans

Attorneys representing Sam Bankman-Fried are requesting permission to question FTX co-founder Gary Wang regarding the legal guidance he received when accepting loans from the connected hedge fund Alameda Research.

Wang had previously been questioned about $200-300 million worth of loans received from Alameda. He claimed that he believed the transactions were legitimate loans, structured with the guidance of legal counsel and supported by formal promissory notes.

Wang, who had previously believed that lawyers wouldn’t advise him to sign anything illegal, has been cooperating with investigators after pleading guilty.

Bankman-Fried Denies Misappropriation in Ongoing Trial

At the heart of this legal battle is the prosecution’s allegation that Bankman-Fried misappropriated funds by illegitimately transferring them to Alameda Research. Prosecutors have painted a picture of Alameda as SBF’s “personal piggy bank,” a characterization denied by the defendant.

Bankman-Fried, who has pleaded not guilty to fraud charges, is leveraging the involvement of company counsel in the loan arrangements to support his claim of ignorance regarding any impropriety. However, Judge Lewis Kaplan has previously cautioned against arguments related to advice received from counsel, citing concerns that such arguments could confuse or prejudice the jury.

The trial is expected to continue with Wang’s testimony, which could provide further insight into the inner workings of Alameda Research and FTX. Following Wang, Caroline Ellison, the former head of Alameda Research and Bankman-Fried’s ex-girlfriend, is set to testify.