Judge rules he cannot blame FTX lawyers for collapse

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Judge rules he cannot blame FTX lawyers for collapse

Sam Bankman-Fried cannot blame FTX's lawyers for its collapse or operations in his opening statements, though he can still try and make a so-called 'advice-of-counsel' defense later, the federal judge overseeing his case ruled Sunday.

Bankman-Fried's defense team told the Department of Justice and the court last year that he intended to argue that FTX counsel 'were involved' in certain decisions that the company made. But Judge Lewis Kaplan, who wrote the order, said this argument, without specifics, may confuse or prejudice a jury. While he blocked the defense team referring to external counsel in his opening statement, Bankman-Fried's attorneys can try to raise the issue later if they notify the judge and DOJ first, without jurors in the room.

The defense team said Bankman-Fried plans to argue that both in-house FTX lawyers and lawyers with the firm Fenwick & West were involved in decisions to use auto-deleting messaging services like Signal, creating the entities, FTX entities' banking relationship with Silvergate Bank, loans to FTX and Alameda Research executives, intercompany agreements and FTX's terms of service. The DOJ argued that Bankman-Fried's defense team had not provided enough detail on its argument and should be blocked from making it.

In his ruling, the judge said the phrasing of the various filings raise questions about 'what would constitute 'undue' focus on attorney involvement, 'what could suggest inappropriately that attorneys had blessed a particular course of conduct and what legal theory would allow evidence to meet the first two questions.