Former FTX lawyer testifies against founder Bankman-Fried in high-stakes fraud trial

FTX’s ex-top lawyer, Can Sun, testified on Thursday during the ongoing fraud trial of the cryptocurrency exchange’s founder, Sam Bankman-Fried.

Sun disclosed that Bankman-Fried had assured him that the now-bankrupt company had diligently safeguarded its customer funds, keeping them distinct from the firm’s own assets. The revelation has the potential to undermine Bankman-Fried’s claim that he genuinely believed FTX’s treatment of customer funds was legitimate, especially since the company’s legal team was reportedly involved in key decision-making.

Furthermore, Sun vehemently denied ever authorising the lending of FTX customer funds to Alameda Research, Bankman-Fried’s cryptocurrency-focused hedge fund. When pressed by prosecutor Danielle Sassoon on whether he had approved such loans, Sun’s response was emphatic: “Absolutely not.”

These revelations have unfolded in the midst of Bankman-Fried’s trial, now in its third week, taking place in Manhattan federal court. Prosecutors have alleged that Bankman-Fried diverted billions of dollars from FTX’s customer funds to support Alameda Research, engage in speculative ventures, and contribute over $100 million to various U.S. political campaigns. Bankman-Fried, a former billionaire, has entered a plea of not guilty to two counts of fraud and five counts of conspiracy, potentially facing a lengthy prison sentence if convicted.

In his own defence, Bankman-Fried acknowledged that he had made errors while managing FTX but has consistently maintained that his actions were not intended to defraud customers. The defence is scheduled to initiate its case on October 26, and there is speculation that Bankman-Fried may testify in his own defence.