Sam Bankman-Fried trial jury sees his profane messages about regulators

[October 19, 2023]  By Luc Cohen

NEW YORK (Reuters) -The prosecution in Sam Bankman-Fried's fraud trial on Wednesday showed jurors a slew of profane messages he sent journalists complaining about regulators, challenging the image the FTX founder cultivated as a proponent of cryptocurrency oversight.

U.S. District Judge Lewis Kaplan overruled objections by Bankman-Fried's lawyers and allowed the jurors in Manhattan federal court to see a profane message he sent to a reporter for the news website Vox days after FTX collapsed in November 2022 complaining that regulators "make everything worse."

Jurors also saw a profanity-laced message Bankman-Fried sent a journalist for crypto news site The Block on Twitter, the social media platform now called X, that made reference to U.S. Securities and Exchange Commission Chair Gary Gensler.

In the message, Bankman-Fried suggested that U.S. lawmakers were "dumb" and "about to hand the industry to Gensler on a silver platter." The SEC is viewed in cryptocurrency circles as more hostile to the industry than another federal agency, the Commodity Futures Trading Commission.

In the trial, which began on Oct. 3, Bankman-Fried stands accused of looting billions of dollars in FTX customer funds to make investments, donate to U.S. political campaigns and prop up his hedge fund, Alameda Research. Prosecutors have said his political donations were meant to promote legislation favorable to cryptocurrency.

The former billionaire has pleaded not guilty to two counts of fraud and five counts of conspiracy. Bankman-Fried, 31, could face decades in prison if convicted.

Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, leaves following a hearing at Manhattan federal court in New York City, U.S. January 3, 2023. REUTERS/Andrew Kelly/File Photo

Bankman-Fried's lawyers had sought to bar prosecutors from introducing the messages with the Vox reporter as evidence, arguing that the defendant sent the "off-the-cuff musings" after the time period at issue in the trial and that the language would bias the jury against him.

In arguing for allowing the jury to see the messages, prosecutor Danielle Sassoon said that they were "highly probative" of his true state of mind at the time, noting that Bankman-Fried later told the reporter he thought the conversation had been off the record.

Vox ultimately published the messages.

Bankman-Fried wrote that his prior statements in favor of regulating cryptocurrency were "just PR," meaning public relations.

"It doesn't reflect his honest intent at the time when he was engaging with regulators," defense lawyer Christian Everdell said outside the jury's presence, arguing against allowing the messages as evidence.

Prosecutors have said they could rest their case as soon as Oct. 26. Bankman-Fried's lawyers have said he is considering testifying in his own defense.

(Reporting by Luc Cohen in New York; Editing by Will Dunham)

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