Sam Bankman-Fried targets Sullivan and Cromwell in appeal against conviction

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Sam Bankman-Fried’s criminal conviction over the FTX crash should be overturned in part because the former cryptocurrency exchange’s attorneys at Sullivan & Cromwell “did tremendous investigative work for the prosecution,” the ex-billionaire’s lawyers have argued.

In a brief filed Friday with the U.S. Court of Appeals for the Second Circuit, Bankman-Fried’s attorney argued that she was denied a fair trial by “fast-track federal prosecutors” who co-opted former colleagues from the elite firm in New York. gathering evidence for the government.

S&C, which advised FTX before advising on the cryptocurrency exchange’s bankruptcy, “worked hand-in-hand with prosecutors to indict and imprison Bankman-Fried in ways that went far beyond normal ‘cooperation,'” they she wrote

In one case, S&C lawyers “proactively recommended new areas of inquiry and helped guide the prosecution strategy,” Bankman-Fried’s lawyers argued, citing a December 2022 email to prosecutors in which the firm of law highlighted data “that resemble a transfer discussed by Sam Bankman. -Fried in Signal chats” about a $45 million hole in an FTX balance sheet.

The firm collected more than 27 million documents for the government and provided prosecutors with notes of interviews with 24 FTX employees, they added.

Bankman-Fried, once one of America’s most celebrated entrepreneurs, was sentenced in March to 25 years in prison for his role in the spectacular collapse of FTX after being found guilty last year of seven counts of fraud and money laundering .

In their appeal against his conviction on Friday, Bankman-Fried’s lawyers argued that FTX “faced a liquidity crisis, not a solvency crisis” at the time of its implosion, and that the government’s claim at trial that $10 billion was “missing” dollars was wrong, given that the former account holders are to receive cash worth more than 100% of their official claims.

“The alleged victims did not ‘lose all their money,'” they wrote, adding that many of the investments Bankman-Fried made with customer deposits, such as a $500 million bet on start- up AI Anthropic, “were prescient.”

They further blamed the conviction on S&C and John Ray III, who was installed to oversee the bankruptcy, saying the law firm was part of a disturbing trend in which prosecutors are handed incriminating evidence “on a silver platter ”, while exculpatory evidence is withheld.

S&C has faced repeated questions about its role as FTX’s bankruptcy adviser, given the legal work it did for the exchange in the months leading up to its implosion in November 2022.

In a paper published in March, two prominent law professors argued that S&C put its own interests ahead of those of the exchange’s stakeholders, writing that the company’s “apparent conflicts of interest permeated FTX’s bankruptcy filing and every aspect of the case”.

The law firm’s alleged conflicts are also being investigated by independent examiner and former prosecutor Robert Cleary, who was asked to look into the matter by the judge overseeing FTX’s bankruptcy.

In the first version of his report in May, Cleary largely absolved S&C of disqualifying conflicts of interest that would have undermined its restructuring advice. He recommended further investigations into other matters, including some pre-bankruptcy transactions involving S&C, and is due to issue a second report later this month.

In an earlier court filing in Bankman-Fried’s criminal case, U.S. prosecutors said debtors FTX and S&C “had no involvement in any significant aspect of the government’s investigation and prosecution.” Sullivan and Cromwell previously called the allegations against him “baseless”.

Sullivan and Cromwell, the FTX debtors, and the U.S. Attorney’s office for the Southern District of New York, which brought the case, declined to comment.