A federal judge issued a key evidentiary ruling on Tuesday that sheds light on the strategies the Justice Department and Sam Bankman-Fried will employ in the forthcoming trial of the disgraced FTX founder, which is set to begin next week.
In a 16-page order, U.S. District Judge Lewis Kaplan agreed to let the prosecution present evidence to the jury that Bankman-Fried sought to bribe a Chinese official in hopes of getting access to $1 billion in funds the country had frozen. While the government has not charged Bankman-Fried with a crime in relation to the alleged incident in the upcoming trial, Kaplan found evidence about the bribe could support allegations about his motive for looting customer funds.
The China-related allegations are, however, the subject of a later trial based on a superseding indictment.
In another setback for Bankman-Fried, the judge also cited rules of criminal evidence to rule that the defendant could not tell the jury about his philanthropic work and charitable donations. According to Kaplan, any desire by the defense to paint Bankman-Fried as a good person is outweighed by potential jury confusion.
The judge also sided with the prosecution when it came to introducing evidence from FTX’s television commercials, rejecting Bankman-Fried’s claims the ads should be excluded because they pertained to the exchange’s U.S. division.
In another potentially damning conclusion, Kaplan held that the Justice Department could introduce evidence to suggest Bankman-Fried had ordered the CEO of his hedge fund and his onetime girlfriend, Caroline Ellison, to amass digital tokens like FTT and Serum that Bankman-Fried had created and endorsed.
The judge, however, didn’t side with the prosecution’s request to stop Bankman-Fried’s legal team from cross-examining witnesses—likely Ellison and other top lieutenants—about their recreational drug use. The Justice Department had argued that doing was not relevant to the “witness’s truthfulness and would serve only to harass the witness and prejudice the jury against them.”
The overall ruling, however, appears to narrow Bankman-Fried’s potential defense strategies. This included Kaplan stating he might later exclude evidence from the FTX founder that his actions were consistent with what other crypto exchanges were doing. In the meantime, the judge said there was legal support for the government’s proposition that it “is no defense to a speeding ticket that the police did not pull over every car traveling at the same rate of speed.”
Kaplan also tentatively agreed with the Justice Department’s request to prevent Bankman-Fried from blaming regulators and his lawyers for his predicament. The latter conclusion could be a critical one as Bankman-Fried has laid the groundwork for such a strategy, but, as Kaplan noted, he has yet to formally raise an “advice of counsel” defense—likely because doing so would forfeit claims to attorney-client privilege and let the government call his former attorneys as witnesses.
Jury selection in the trial is slated to begin Oct. 3. In the meantime, Bankman-Fried remains locked up at a Brooklyn jail despite repeated motions to be freed prior to the trial.
