Lawyers representing Sam Bankman-Fried have disclosed their aim to reference FTX’s terms of service while questioning witnesses in the ongoing criminal trial of the collapsed crypto exchange’s founder.
In a new court filing, SBF’s legal team petitioned to ask witnesses about material factors in their decisions to invest or lend funds to FTX and affiliated hedge fund Alameda Research. This relates to disputes over whether customer deposits were misused.
Prosecutors allege SBF knowingly redirected client funds to Alameda in violation of their expectations. But defense lawyers contend compliance with FTX’s terms overrides user understandings, providing a defense against fraud charges.
The filing states, “The defense anticipates asking witnesses who were customers and investors of FTX and lenders to Alameda questions designed to elicit testimony about the factors they considered material in entering the arrangements and transactions at issue in this trial.”
The filing also states that contractual terms, not subjective expectations govern commercial relationships.
SBF’s lawyers, therefore, want to cite the terms during testimony to support arguments around permitted fund usage.
According to the lawyers, references to the terms of service could aid the defense’s narrative in disputing prosecutorial misappropriation claims.
However, the impact will depend on how explicitly the terms address the usage of deposits.
Legal experts say the request is unsurprising as SBF’s lawyers seek wiggle room on fuzzy issues like customer expectations. But prosecutors are still likely to zero in on intent rather than technicalities.
The motion provides a window into defense strategy as the high-stakes trial progresses. How broad a role FTX’s terms play in testimony could significantly shape interpretations of appropriate versus fraudulent activity.
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