The U.S. Department of Justice (DOJ) revealed an extensive witness list that includes FTX customers in Sam Bankman-Fried’s (SBF) trial. This is coming on the heels of the U.S. Securities and Exchange Commission (SEC) charges against the bankrupt firm auditor, Prager Metis.
On September 30, the DOJ said its witnesses included former FTX customers and other major stakeholders in the defunct firm.
DOJ’s Witness List Against SBF
The DOJ intends to call both retail and institutional investors with substantial assets within the FTX platform. These witnesses will show their expectations and comprehension of FTX’s asset management system.
“[They] will testify that they [held their assets on FTX] with the expectation and understanding that FTX would custody their assets separate from those of the company, would not transfer customer assets to Alameda Research, and would not use their assets for FTX’s or Alameda’s own expenses.”
Due to logistical constraints, the DOJ requested the court’s permission for one of the customers to testify remotely. This Ukrainian customer lost a “substantial portion of his life savings” on FTX.
The DOJ’s list of witnesses will also include some former FTX and Alameda executives who have previously admitted guilt. This group comprises FTX CTO Gary Wang, former FTX Head of Engineering Nishad Singh, and former Alameda Research CEO Caroline Ellison.
SEC Charges FTX Auditor
In a separate development, the U.S. Securities and Exchange Commission (SEC) has initiated legal proceedings against FTX’s auditor, Prager Metis.
According to the financial regulator, Prager Metis violated auditor independence rules and aided and abetted their clients’ violations of federal securities laws. The accounting firm ” improperly included indemnification provisions in engagement letters for more than 200 audits, reviews, and exams.”
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In 2021, Prager Metis conducted audits for both FTX US and FTX. This move was seen as a strategic effort by the exchange to bolster confidence in its operations by leveraging the credibility of the accounting firm’s work.
SBF’s Lawyer Accuses US Government of Biased Jury Questions
Meanwhile, SBF’s lawyer has voiced discontent with the government’s proposed jury questions, saying they are presented in a prejudicial manner and could potentially bias the jurors.
In the September 29 letter, the lawyer accused the government of using improper language to describe his client, referring to him as a “fraudster” rather than an “alleged fraudster,” which he believes could unfairly influence the jury’s perception.
Consequently, the lawyer wants SBF’s proposed jury questions, initially rejected, to be considered.
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