‘FTX investments were not reckless and frivolous’: Sam Bankman-Fried’s lawyer

FTX founder's attorney disputes ex-CEO's depiction of expenditures. The company's current management sues K5 over $214 million investment.

Livemint
First Published18 Oct 2023, 08:10 AM IST
Nishad Singh, former director of Engineering at FTX Cryptocurrency Derivatives Exchange, left, exits court with Claire Watanabe, former senior executive at FTX Cryptocurrency Derivatives Exchange, in New York, US, on Tuesday, Oct. 17, 2023. (Bloomberg)
Nishad Singh, former director of Engineering at FTX Cryptocurrency Derivatives Exchange, left, exits court with Claire Watanabe, former senior executive at FTX Cryptocurrency Derivatives Exchange, in New York, US, on Tuesday, Oct. 17, 2023. (Bloomberg)

FTX founder Sam Bankman-Fried's attorney on Tuesday disputed former CEO Nishad Singh's evidence depicting the expenditures of cryptocurrency exchange on marketing and celebrity endorsements as exorbitant, while also claiming the investments made by the now-bankrupt company were not “reckless and frivolous”. 

The company's former engineering chief testified for a second starting day at Bankman-Fried's fraud trial in Manhattan federal court, according to a report published by Reuters. 

“I thought FTX would be able to stay in business upon learning in September 2022 of a $13 billion shortfall in customer funds, potentially bolstering Bankman-Fried's argument that he believed the exchange's troubles were manageable,” Singh told the jury under cross-examination. 

FTX declared bankruptcy on November 11, 2022. On Tuesday, Defense lawyer Mark Cohen asked Singh whether FTX's brand could be useful. 

"I understood it had business benefits and costs," Singh said in testimony that defense lawyers could use to argue that Bankman-Fried was making what he believed to be good-faith business decisions in shelling out funds for marketing and investments even if others disagreed, as per Reuters reports. 

Currently, Bankman-Fried is in the third week of his trial on charges involving the looting the billions of dollars in FTX customer funds to make investments, donate to the US political campaigns, and prop up his hedge fund, Alameda Research. 

Singh said K5 also helped Bankman-Fried invest in a tequila brand run by a "famous celebrity," when asked by Cohen whether the firm was anything more than a relationship broker.

"Yesterday (Monday) we were told these were all reckless and frivolous investments, and I'm entitled to show that there was way more to it than we were told yesterday," Cohen said after a prosecutor objected to his questioning about K5.

FTX's current management, in a lawsuit filed against K5 in June seeking to claw back $700 million, said a Bankman-Fried-controlled shell company used $214 million in FTX funds to buy a stake in celebrity Kendall Jenner's 818 Tequila brand at a time when the tequila company's assets were valued at just $2.94 million. K5 said the lawsuit was without merit, Reuters reported. 

Bankman-Fried has argued that while he made mistakes running FTX, he never intended to steal funds. His lawyers have said he is considering taking the witness stand in his own defense.

 

(With Reuters inputs)

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First Published:18 Oct 2023, 08:10 AM IST
HomeNewsworld‘FTX investments were not reckless and frivolous’: Sam Bankman-Fried’s lawyer

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