Lawyers for Sam Bankman-Fried are seeking to instruct the jury that no trust or fiduciary relationship existed between the crypto exchange and its customers, a key part of the prosecution’s fraud case.
Bankman-Fried’s Attorneys Question Trust Ties
In an addendum to earlier requests, Sam Bankman-Fried‘s attorneys argue that under English law, which governs FTX’s terms of service, no trust relationship arose between FTX and users. “The Terms of Service do not use the words ‘trust,’ ‘trust property,’ or ‘beneficial interest,’” the filing states. It adds that any language about fiduciary duties expressly disclaims such a relationship.
The defense aims to counter the government’s claim that Bankman-Fried “engaged in a scheme to defraud customers” by misappropriating deposits. Prosecutors allege FTX customer funds were improperly diverted to Bankman-Fried’s trading firm Alameda Research.
However, according to the defense, “subjective intentions are irrelevant” in determining if a trust exists under English law. They contend it is based solely on interpreting the contractual terms objectively. Representations outside the contract also cannot establish a trust relationship retroactively.
“Briefly stated, a formal trust, called an express trust in England, is the legal relationship created when assets are placed by someone under one party’s control for the benefit of another or for a special purpose,” Bankman-Fried’s lawyers contend. The attorneys noted:
The mere fact that a person subjectively expected, understood or believed that a trust, fiduciary relationship, or similar relationship existed does not create such a relationship.
The jury instructions follow Bankman-Fried’s recent day on the witness stand on Monday where he had a difficult time recollecting statements and specific decisions. The former FTX CEO faces more than 100 years in prison for the charges levied against him, and he has pleaded not guilty to all of the charges.
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