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SBF’s defense pins hopes on Anthropic investment evidence, seeks use in FTX case

TL;DR

  • In the ongoing trial of Sam Bankman-Fried (SBF), his legal team has requested the court’s permission to use evidence related to his investment in Anthropic.
  • The lawyers argue that the value of this investment is relevant in countering the government’s characterization of Alameda’s venture investments as risky.

Sam Bankman-Fried’s (SBF’s) legal team has petitioned the court to authorize the use of evidence concerning his investment in Anthropic, an artificial intelligence startup. In a letter addressed to Judge Lewis A. Kaplan, Bankman-Fried’s counsel contended that the prosecutors’ request on Sunday to omit any reference to Anthropic misrepresents the significance of the evidence.

Anthropic valuation crucial in Bankman-Fried’s defense

According to Bankman-Fried’s attorneys, the evidence of the current value of the Anthropic investment is squarely relevant to rebutting the government’s opening statement and testimony to date, as well as Mr. Bankman-Fried’s good faith. They emphasized that the prosecutors have repeatedly brought up Alameda’s venture investments during the trial, characterizing them as “risky” and “losing money.”

In response, Bankman-Fried’s legal team argued that they should be allowed to present testimony from Caroline Ellison about the nature of venture capital investing, particularly the portfolio approach. They asserted that the significant appreciation in Anthropic since last year reflects this important context and is relevant to testimony that the government has elicited from Ms. Ellison concerning expected value analyses.

The Department of Justice (DOJ), in its Sunday filing, stated that Bankman-Fried invested approximately $500 million in Anthropic in 2022, allegedly using funds that the government contends were taken from FTX customers.

The DOJ argued that presenting evidence regarding the current value of the defendant’s investments would only bolster the argument that FTX customers and/or other victims might eventually be fully compensated. The court, however, has already acknowledged that this line of reasoning is not a permissible purpose in this case. They cited several legal precedents where discussions on whether fraud victims would be fully compensated were deemed irrelevant to the charges. 

Prosecutors argued that introducing such evidence would necessitate a “mini-trial” to assess the value of assets available through the FTX bankruptcy and the extent to which they could cover losses incurred by customers and creditors.

The filing additionally emphasized that the indictment asserts that the defendant engaged in wire fraud by unlawfully diverting FTX customer deposits for investments and other expenses. Whether or not some of these investments eventually turned out to be profitable is considered irrelevant to the charges.

Last week, Anthropic secured additional funding from Google and other investors, potentially elevating its valuation to around $30 billion. This surge in valuation could potentially enable FTX to achieve a “100% recovery rate” in assets as part of the ongoing bankruptcy proceedings, given Sam Bankman-Fried’s stake in the company, as noted by Kunchou Tsai, managing partner of the Taiwan-based Enlighten Law Group.

Wang faces grilling on part in FTX’s fall

Meanwhile, in the ongoing SBF trial, his legal team has requested permission to question FTX co-founder Gary Wang. Specifically, they aim to inquire whether legal advice influenced Wang’s acceptance of loans from the collapsed crypto exchange’s sister fund, Alameda Research.

This request came as the trial enters its second week and follows earlier limitations on Bankman-Fried’s ability to attribute the alleged fraud to his lawyers. Prosecutors have already examined the approximately $200 million to $300 million in loans that Wang received from Alameda Research, which he utilized for various venture investments and to purchase a residence in the Bahamas.

The filing explains that during the government’s direct examination of Wang, the FTX attorneys played a role in organizing and carrying out the loans and that Bankman-Fried was aware of their participation. As a result, the defense is seeking permission to conduct further cross-examination of Wang to delve into his understanding of the extent to which the lawyers were involved. They also seek to ascertain whether the FTX co-founder had any reservations about the loans at the time of their signing.

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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Yvonne Kiambi

Yvonne is a blockchain and crypto enthusiast. She is passionate about writing and looks to effortlessly guide readers through the exciting world of crypto. You'll find her immersed in a good book when she's not writing.

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