Sam Bankman-Fried’s father, ex-Trump staffer among possible trial witnesses By Reuters

© Reuters. FILE PHOTO: Indicted FTX founder Sam Bankman-Fried leaves the United States Courthouse in New York City, U.S., July 26, 2023. REUTERS/Amr Alfiky/File Photo

By Jody Godoy and Luc Cohen

NEW YORK (Reuters) – Sam Bankman-Fried’s father and brother, as well as Donald Trump’s former spokesman Anthony Scaramucci, are among possible witnesses at the cryptocurrency exchange founder’s fraud trial, according to a list read by a prosecutor in court on Tuesday.

There is no guarantee that Scaramucci, Bankman-Fried’s father Joseph Bankman or his brother Gabriel Bankman-Fried will testify during the trial, which is expected to last six weeks and kicked off on Tuesday with jury selection.

Prosecutor Danielle Sassoon read the list of dozens of names – which included both proposed prosecution and defense witnesses – to see if any prospective jurors knew them.

Scaramucci’s alternative investment firm SkyBridge Capital once owned a stake in FTX, his cryptocurrency exchange which declared bankruptcy in November 2022 amid a flurry of customer withdrawals.

Federal prosecutors say Bankman-Fried embezzled from FTX customers since its founding in 2019 until its bankruptcy in order to prop up his hedge fund Alameda Research, buy luxury properties and donate more than $100 million to U.S. political candidates.

At the outset of proceedings, U.S. District Judge Lewis Kaplan told the 31-year-old former billionaire in open court that it would ultimately be his decision whether to testify in his own defense, and asked Bankman-Fried whether he understood.

“Yes,” Bankman-Fried replied. He was dressed in a suit and striped tie, with his once signature curly, unkempt hair cut into a neater trim.

He stood and smiled for the prospective jurors after Kaplan asked him to rise so they could see if they knew him personally.

During several hours of questioning, Kaplan excused 28 jurors who said they could not serve on the case, many due to professional or personal obligations. He said jury selection would likely finish by the end of the day, paving the way for opening statements on Wednesday.

One prospective juror said the company they worked for, Insight Partners, lost money from investments in FTX and Alameda but believed they could decide the case “on the basis of the facts.” The juror was not dismissed, though further questioning was expected in the afternoon.

Insight Partners, a venture capital firm focused on technology, invested in FTX in 2019, according to private market data provider PitchBook. The company said it was not an investor in Alameda. The now-bankrupt fund is fully owned by Bankman-Fried and former FTX executive Gary Wang, court filings show.

Earlier, prosecutor Nicolas Roos said the two sides never engaged in talks about a potential plea deal and no such offer was made to Bankman-Fried.

Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has acknowledged inadequate risk management, but denied stealing funds. His lawyers have signaled in court papers they plan to argue that FTX’s treatment of customer funds was proper, and that others at FTX and Alameda bore the bulk of the blame for their failure.

The trial will also feature testimony from three former members of Bankman-Fried’s inner circle who have pleaded guilty to fraud charges themselves and agreed to cooperate with the Manhattan U.S. Attorney’s office.

Bankman-Fried’s lawyers have signaled they plan to challenge the credibility of those witnesses – who include former Alameda chief Caroline Ellison and former FTX executives Gary Wang and Nishad Singh – by arguing they are motivated to implicate their client to get a lower sentence, a common strategy in white collar fraud cases.

They have also laid the groundwork to argue that Bankman-Fried believed his exchange was allowed to invest customers’ deposits as long as they were ultimately able to take out their funds, and that a series of business failures – not deliberate fraud – left the exchange without enough money to meet withdrawal requests.

Bankman-Fried has been detained since Aug. 11, after the judge found he had likely engaged in witness tampering – including by sharing Ellison’s personal writings with a reporter. Ellison and Bankman-Fried are former romantic partners.

He will be brought to court early on most days to allow him to prepare with his lawyers.


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