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US Court rejects FTX subpoena request for supporting documents; fraud “fishing expedition” foiled

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TL;DR

  • FTX co-founder denied access to documents from Fenwick & West in federal fraud case defense.
  • FTX files lawsuit to reclaim over $700 million from investment firms.

Sam Bankman-Fried has been denied his request to obtain documents from Silicon Valley law firm Fenwick & West LLP as part of his defense strategy in his federal fraud case, according to a court order from Friday. Bankman-Fried had sought these documents to support his claim that he relied on legal advice while engaging in the activities for which he is currently facing prosecution.

Bankman-Fried’s legal team approached U.S. District Judge Lewis Kaplan, who oversees the case, urging the prosecution to hand over the documents obtained from Fenwick & West or to allow them to be got directly through a subpoena. However, Judge Kaplan dismissed the request, stating that it would be a “fishing expedition” without sufficient justification.

The defense team had planned to argue that Bankman-Fried had relied on the advice provided by Fenwick & West to counter the prosecutors’ claims of intentional lawbreaking. The counsel from the law firm covered various topics, including the use of encrypted messaging apps, multimillion-dollar loans to FTX executives, and compliance with U.S. banking regulations, which Bankman-Fried’s lawyers believe are crucial to the charges against their client.

Bankman-Fried is facing two criminal trials related to his alleged involvement in a complex fraud scheme. The scheme is said to have involved the misappropriation of billions of dollars in FTX customer funds, allegedly used for high-risk investments, personal expenses, and political donations. These criminal charges have brought significant scrutiny to FTX and its operations.

FTX files lawsuit to recover millions from investment firms

In a separate legal move, FTX has initiated a lawsuit in the U.S. Bankruptcy Court for the District of Delaware in an attempt to recover over $700 million from investment firms linked to the company. The lawsuit targets K5 Global, Mount Olympus Capital, SGN Albany Capital, their affiliated entities, and K5 co-owners Michael Kives and Bryan Baum.

FTX alleges that funds were transferred from its affiliated firm, Alameda Research, to these entities through shell companies. The exchange seeks to reclaim the funds as avoidable transactions. This lawsuit comes as FTX is currently undergoing bankruptcy procedures in Delaware due to the dramatic collapse of the exchange.

The collapse of FTX raised concerns among investors and regulators, prompting a closer examination of its operations. The involvement of high-profile figures like Bankman-Fried and the alleged misappropriation of customer funds added to the scrutiny surrounding the case.

In response to the mounting legal challenges, Fenwick & West, the law firm previously associated with Bankman-Fried, has sought legal assistance from Gibson, Dunn & Crutcher to address its scrutiny over its relationship with FTX.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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