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Sam Bankman-Fried to stick with new lawyers despite possible conflict

Published 02/21/2024, 06:07 AM
Updated 02/21/2024, 04:21 PM
© Reuters. FILE PHOTO: Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, leaves the Manhattan federal court in New York City, U.S. March 30, 2023. REUTERS/Andrew Kelly/File Photo
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By Luc Cohen

NEW YORK (Reuters) -Sam Bankman-Fried, the jailed founder of bankrupt cryptocurrency exchange FTX, appeared in court on Wednesday for the first time since his November fraud conviction and confirmed he wanted to stick with new lawyers despite a possible conflict of interest.

Bankman-Fried, 31, in January hired defense lawyers Marc Mukasey and Torrey Young to represent him through his March 28 sentencing. He could face decades in prison after a Manhattan federal court jury found the former billionaire guilty of stealing billions of dollars from FTX customers.

At a brief hearing before U.S. District Judge Lewis Kaplan in Manhattan, Bankman-Fried said he was comfortable hiring Mukasey and Young even though they also represent the founder of bankrupt cryptocurrency lender Celsius Networks, Alex Mashinsky, who has pleaded not guilty to separate fraud charges.

Kaplan asked Bankman-Fried, who wore a tan jail shirt and chains around his ankles, to describe the possible conflict in his own words.

"At a high level, they also represent Alex Mashinsky," said a clean-shaven Bankman-Fried, whose curly hair has grown longer since his monthlong trial last year.

Bankman-Fried described Celsius as "a firm that the firms I ran had business interactions with."

Mukasey, a former federal prosecutor in Manhattan and the son of former U.S. Attorney General Michael Mukasey, was once part of former President Donald Trump's personal legal team.

He also represented electric- and hydrogen-powered truck maker Nikola (NASDAQ:NKLA)'s founder Trevor Milton, who was sentenced last year to four years after being convicted of fraud for lying to investors about the company's technology - well below the 11 years prosecutors suggested.

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Bankman-Fried told Kaplan he had consulted with lawyers Mark Cohen and Christian Everdell, who represented him during his trial, about Mukasey's potential conflict. Bankman-Fried said he also had discussed it with Alexandra Shapiro, another lawyer who will handle his eventual appeal.

Mukasey said Cohen and Everdell will soon request Kaplan's permission to withdraw from the case.

In a Feb. 6 court filing, prosecutors in Bankman-Fried's case said his Alameda Research hedge fund used stolen FTX customer funds to repay money it borrowed from Celsius. The prosecutors said Bankman-Fried and Mashinsky may have different opinions as to whether Celsius was defrauded and entitled to restitution.

Bankman-Fried, held at Brooklyn's Metropolitan Detention Center since August 2023, said on Wednesday he has been taking anti-depressant medication and Adderall, which is used to treat attention deficit hyperactivity disorder. During his trial, Bankman-Fried's lawyers said in October he needed a higher Adderall dose than he had been receiving in jail each morning to focus.

Mashinsky, 59, waived his right to a lawyer without any potential conflicts at a hearing on Tuesday before U.S. District Judge John Koeltl. Mukasey and Young said at that hearing that they could fairly represent both Bankman-Fried and Mashinsky.

Mashinsky is free on bail. His trial on charges of artificially inflating the value of the company's in-house crypto token and earning $42 million from selling his holdings is scheduled for Jan. 28, 2025.

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