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Judge Denies FTX Co-founder's Plea for Vital Documents in Fraud Case

FTX co-founder, Sam Bankman-Fried, experiences a setback in his ongoing fraud case, as his request for key defense documents is rejected by U.S. District Judge Lewis Kaplan.

Sam Bankman-Fried
Sam Bankman-Fried

Request Rejected in Federal Fraud Case

Sam Bankman-Fried, the co-founder of FTX, suffered a setback in his ongoing federal fraud case when his request to obtain key documents from Silicon Valley law firm, Fenwick & West LLP, was denied by U.S. District Judge Lewis Kaplan. According to Bloomberg, Bankman-Fried planned to use these documents to substantiate his defense that his contested actions were based on legal counsel.

A Halted "Fishing Expedition"

Bankman-Fried's legal team recently petitioned the presiding judge to compel the prosecution to surrender documents from Fenwick & West or to allow their acquisition through a subpoena. However, Judge Kaplan dismissed this request, terming it a "fishing expedition" that lacked sufficient justification.

As part of the defense strategy, Bankman-Fried’s attorneys intended to argue that he acted on legal advice given by Fenwick & West, a common tactic employed by defendants to refute prosecutors’ claims of an intentional law violation. This legal counsel supposedly covered a variety of issues, including the usage of encrypted messaging apps, substantial loans to FTX executives, and compliance with U.S. banking regulations, all of which Bankman-Fried's lawyers consider crucial to the allegations against their client.

Allegations of Complex Fraud Scheme

Bankman-Fried, presently facing two criminal trials, stands accused of masterminding an elaborate fraud operation involving the misappropriation of billions of dollars from FTX customer funds. These funds were allegedly utilized for high-risk investments, personal expenses, and even political contributions.

FTX Seeks Recovery in Lawsuit

On June 22, FTX filed a lawsuit in the U.S. Bankruptcy Court for the District of Delaware, seeking to recover over $700 million from investment firms linked to the company. The lawsuit implicates K5 Global, Mount Olympus Capital, and SGN Albany Capital, as well as their associated entities and K5 co-owners Michael Kives and Bryan Baum. FTX claims that funds were siphoned from its affiliated firm, Alameda Research, to these entities via shell companies and seeks to recover the funds, labeling the transactions as avoidable.