Bankman-Fried’s Lawyers Challenge Core of Fraud Case, Questioning Fiduciary Ties Under English Law

In the ongoing fraud case against Sam Bankman-Fried, his lawyers are contesting the existence of a trust or fiduciary relationship between the crypto exchange, FTX, and its customers. They argue that under English law, which governs FTX’s terms of service, no such relationship was established. The attorneys highlight that the terms of service do not mention the words “trust,” “trust property,” or “beneficial interest,” and any language regarding fiduciary duties explicitly disclaims such a relationship. The defense aims to refute the government’s claims that Bankman-Fried engaged in fraudulent activity by misappropriating customer funds. They assert that subjective intentions are irrelevant, and the determination of a trust hinges solely on interpreting the contractual terms objectively. Bankman-Fried’s lawyers stress that a trust relationship cannot be created based on personal expectations, understanding, or beliefs. The arguments put forth by the defense are crucial in countering the prosecution’s allegations and will be a focal point of the trial’s jury instructions.

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Bankman-Fried’s Attorneys Question Trust Ties

In the ongoing fraud case against Sam Bankman-Fried, his attorneys are challenging the core of the prosecution’s case by questioning the existence of any trust or fiduciary relationship between FTX, the cryptocurrency exchange, and its customers. The defense argues that under English law, which governs FTX’s terms of service, there was no trust relationship established. The defense points out that the terms of service do not use specific language such as “trust,” “trust property,” or “beneficial interest.” Furthermore, any language regarding fiduciary duties expressly disclaims a trust relationship. By challenging the existence of a trust relationship, the defense aims to counter the government’s claim that Bankman-Fried engaged in a scheme to defraud customers through the misappropriation of deposits.

Arguments under English Law

The defense team argues that under English law, the subjective intentions of the parties involved are irrelevant in determining the existence of a trust. Instead, the interpretation of the contractual terms objectively is key in establishing a trust relationship. The defense asserts that representations made outside the contract cannot retroactively create a trust. In English law, a formal trust, known as an express trust, is created when assets are placed under one party’s control for the benefit of another or for a specific purpose. The defense emphasizes that subjective expectations, understanding, or beliefs regarding a trust or fiduciary relationship do not in themselves create such a relationship.

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Counter to Government’s Claims

The defense’s argument directly challenges the government’s claim that Bankman-Fried orchestrated a scheme to defraud customers by diverting funds from FTX to his trading firm, Alameda Research. By questioning the existence of a trust relationship, the defense aims to undermine the prosecution’s narrative of fraudulent conduct. If the defense can establish that no trust existed between FTX and its customers under English law, it could weaken the prosecution’s case and potentially lead to a lesser conviction or even acquittal for Bankman-Fried.

Irrelevance of Subjective Intentions

Under English law, subjective intentions are deemed irrelevant when determining the existence of a trust. The defense emphasizes that the focus should be on the objective interpretation of the contractual terms. This means that regardless of what Bankman-Fried or any other party subjectively expected, understood, or believed regarding a trust or fiduciary relationship, it does not create such a relationship unless the contractual terms objectively establish it. By highlighting this aspect, the defense aims to undermine any arguments made by the prosecution based on subjective intentions or beliefs.

Definition of Express Trust

The defense asserts that English law recognizes an express trust as a formal trust relationship. This type of trust is created when assets are placed under one party’s control for the benefit of another or for a specific purpose. The defense’s argument hinges on establishing that the contractual terms and interactions between FTX and its customers do not meet the criteria to be considered an express trust. By supporting this definition and highlighting the lack of trust-related language in FTX’s terms of service, the defense strengthens their position that no trust relationship existed.

Jury Instructions and Recent Testimony

The recent testimony of Sam Bankman-Fried, the former CEO of FTX, and the jury instructions given by the defense play a crucial role in the case. Bankman-Fried’s difficulty in recollecting statements and specific decisions during his testimony may have implications for the jury’s perception of his credibility. The defense will likely use the jury instructions to reinforce their arguments regarding the irrelevance of subjective intentions and the definition of an express trust under English law.

In conclusion, Bankman-Fried’s attorneys are challenging the core of the fraud case by questioning the existence of a trust relationship between FTX and its customers under English law. By emphasizing the irrelevance of subjective intentions, defining an express trust, countering the government’s claims, and supporting their arguments with jury instructions and recent testimony, the defense aims to weaken the prosecution’s case against Bankman-Fried. The outcome of these arguments will impact the final verdict and potentially determine the level of conviction or acquittal for Bankman-Fried.

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