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  • Sam Bankman-Fried and the DOJ are engaged in a contentious dispute over the admissibility of evidence for his upcoming fraud trial scheduled for October.
  • The veracity of information pertaining to FTX's bankruptcy, its U.S. operations, and alleged campaign finance violations has come under scrutiny.

 

FTX advertisements, which prominently feature comedian Larry David and American football player Tom Brady, have raised concerns regarding the blending of the cryptocurrency exchange's U.S. and international operations, as stated in a Friday evening disclosure by the U.S. Department of Justice.

Sam Bankman-Fried, the founder and former CEO of FTX, is currently engaged in a contentious debate over the specific evidence that the government can present to support various charges, including wire fraud. He has also accused the Department of Justice (DOJ) of sneakily introducing allegations related to corruption and campaign finance. Bankman-Fried has entered a plea of not guilty, and the trial is scheduled to commence on October 2nd.

Bankman-Fried's legal team argues that the U.S. operations, which are legally distinct, should be isolated from the accusations, as they pertain primarily to the international business. However, the government contends that the demarcation is not as straightforward as claimed, pointing to a series of widely-publicized advertisements that aired just months before a major cryptocurrency collapse, ultimately leading to the downfall of Bankman-Fried's financial empire.

“Celebrities are featured in advertisements describing ‘FTX’ as ‘a safe and easy way to get into crypto’ and showing customers using a device displaying the FTX logo, not the FTX.US logo,” said the DOJ filing, citing a Superbowl ad featuring David and a separate spot with Brady and his then-wife Gisele Bündchen. “Internal documents indicate that FTX made no distinction between advertising for the international platform and for FTX.US.”

The DOJ is also keen on thoroughly examining the intricate aspects related to FTX's downfall, contending that they are closely connected to the purported mishandling of customer funds.

Although Bankman-Fried has contended that he was pressured into relinquishing control of a company that had the potential to recover financially, the government maintains that the circumstances surrounding the bankruptcy are relevant to the jury, regardless of FTX's ultimate fate.

“Whether customers could be made whole in the future ‘is immaterial as a matter of law,’” the DOJ said. Testimony will show that FTX co-founder Gary Wang helped Bankman-Fried move assets to the Bahamas on Nov. 11, which were “plainly acts in furtherance of the charged wire fraud scheme,” the government said.

Bahamas

Bankman-Fried's legal team has alleged that the government has essentially found a way to bypass the conditions of his extradition from the Bahamas, where he managed the company's affairs. The Department of Justice (DOJ) has recently dropped charges associated with campaign finance regulations and the purported bribery of Chinese authorities, citing their absence from the initial extradition request to the U.S.

In bringing in evidence related to those charges, the government is “seeking to claw back the Government’s earlier narrowing of the case and to try Mr. Bankman-Fried on the severed and withdrawn counts,” Bankman-Fried’s filing said. “The sole discernible impact on this trial of admitting evidence of the alleged bribery would be to risk improperly inducing the jury to believe Mr. Bankman-Fried had a criminal propensity.”

Bankman-Fried faced arrest in December and just last month, was found to have violated his bail conditions by reaching out to witnesses and disclosing potential evidence to the New York Times. His legal team has vehemently argued that the conditions of his imprisonment are rendering it exceptionally challenging to adequately prepare his defense.