Sam Bankman-Fried opts for new legal representation amid conflict of interest concerns

100
Former FTX CEO Sam Bankman-Fried

22nd February 2024 – (New York) Sam Bankman-Fried, the former CEO of the now-defunct cryptocurrency exchange FTX, has signalled a shift in his legal defence team during a recent federal court appearance in Manhattan. Bankman-Fried, who is facing a multitude of fraud charges following the collapse of FTX in November, has expressed his intention to continue with a new set of attorneys, despite potential conflicts of interest.

The embattled crypto executive, appearing in court in a beige prison uniform and restrained by ankle chains, indicated his preference for the legal representation of Marc Mukasey and Torrey Young. His current lawyers from Cohen & Gresser, namely Mark Cohen and Christian Everdell, are expected to step down from the case, as per various reports.

Bankman-Fried’s chosen legal duo also currently represents another figure in the cryptocurrency industry, Alex Mashinsky, the former CEO of Celsius Network. This dual representation has prompted U.S. prosecutors to question the possible conflicts that could arise. Earlier in February, U.S. prosecutors approached U.S. District Judge Lewis Kaplan, recommending a hearing to examine these concerns, particularly since both executives’ companies have filed for bankruptcy in the aftermath of the FTX collapse.

The potential for conflict stems from the financial entanglements between Bankman-Fried’s Alameda Research and Mashinsky’s Celsius Network. Evidence presented during Bankman-Fried’s trial revealed that loans made by Celsius to Alameda were repaid using customer funds from FTX. The implication is that both parties could have opposing arguments in future proceedings; Bankman-Fried may assert that Celsius was not defrauded, while Mashinsky could claim otherwise.

Prosecutors have highlighted that the connections between Alameda Research and Celsius Network present several dimensions of potential conflict. In the event of an appeal, which Bankman-Fried has anticipated, he has discussed the matter with appellate counsel Alexandra Shapiro.

The decision for a change in counsel marks a new chapter in the legal saga surrounding the once-prominent figure in the cryptocurrency world. Bankman-Fried’s acknowledgment of the shared counsel situation with Mashinsky indicates an awareness of the complexities his case presents. As the proceedings unfold, the legal strategies of both former CEOs will be scrutinised, particularly in how they navigate the intricacies of their interconnected bankruptcies and alleged misuse of funds.