During the criminal trial against Sam Bankman-Fried, the founder of FTX, prosecutors made a comparison between one of the defense’s arguments and a scene from the iconic 1994 film “Dumb and Dumber.” The scene in question involves actor Jim Carrey’s character claiming that IOUs are “as good as money.” In response, assistant U.S. attorneys for the Southern District of New York expressed their disagreement with several jury instructions provided by the defense team to Judge Lewis Kaplan, who is presiding over the trial.
The defense’s jury instruction stated that if FTX customers received a credit to transact on the FTX exchange after depositing funds, it does not establish deprivation of property. Prosecutors find fault with this argument, as much of their case revolves around FTX siphoning billions of dollars from customer accounts to cover losses at Alameda Research, a sister hedge fund, and for personal expenditures. Ultimately, customers were unable to retrieve a significant portion of their funds due to the collapse of FTX and Alameda.
Proponents of the defense claim that customers still had a credit to the funds they deposited, even if the money was being used for other purposes. Prosecutors argue that this claim is detached from the facts of the case and that a credit to obtain funds at a later date is not as valuable as the money or property itself. In an attempt to illustrate their point, the prosecution refers to a briefcase in the movie “Dumb and Dumber.” They mention that a briefcase initially filled with money is not equal to a later fill of IOUs, highlighting the distinction between tangible assets and mere promises.
The Prosecution’s Perspective
The prosecution underscores that the defense’s attempt to equate a credit with actual funds is misguided. They argue that the defense is disregarding the fact that FTX and Alameda used customers’ deposited funds for unauthorized purposes, such as purchasing a $35 million property in the Bahamas and making political contributions. Customers ultimately found themselves unable to retrieve their money when both entities faced collapse.
From the prosecution’s standpoint, the defense’s argument relies on a flawed understanding of the concept of deprivation. They assert that possessing a credit, even if it promises future access to funds, does not carry the same value as possessing the money or property outright. By drawing attention to the 1990s film, the prosecution suggests that the defense’s position is akin to claiming that a briefcase filled with IOUs is just as good as a briefcase filled with actual money.
Lead defense attorney Mark Cohen has yet to comment on the prosecution’s critique. However, it is likely that the defense will emphasize the legal technicalities surrounding the concept of deprivation. The defense will likely argue that since customers retained the right to redeem their credits for funds at a later time, they were not fully deprived of their property. They may contend that the defense’s instruction to the jury is a legitimate interpretation of the law and the facts of the case.
Sam Bankman-Fried, the 31-year-old founder of FTX, is facing seven criminal fraud charges in connection with the collapse of his cryptocurrency empire. If convicted, he could potentially face life in prison. The trial, which has already spanned three weeks, has included testimonies from former colleagues and friends of Bankman-Fried who have turned against him. The trial is set to resume in the coming weeks and continue into November.
Throughout the trial, Judge Kaplan has been attentive to the conduct and demeanor of both the prosecution and defense teams. On different occasions, he has held sidebar meetings with the attorneys to address their behavior in the courtroom. Recently, Judge Kaplan reprimanded both sides, highlighting the prosecution’s expert witnesses’ lack of knowledge about crucial details and their hasty classification of Bankman-Fried’s actions as criminal. The judge reminded both parties to improve their communication and performance.
The prosecutors’ comparison of the defense argument to a scene from “Dumb and Dumber” serves to highlight the disparity between possessing a credit and owning actual money or property. The defense’s claim that customers were not deprived of their funds due to the presence of credits is viewed by the prosecution as divorced from the facts of the case. As the trial progresses, it remains to be seen how the jury will respond to the complex legal arguments put forward by both sides.
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