Bankman-Fried prepares to blame a law firm for FTX’s fraud

Bankman-Fried’s defense lawyers on Tuesday asked the judge overseeing his criminal case to force prosecutors to hand over documents given to the government by former FTX law firm Fenwick & West. If the government doesn’t agree, Bankman-Fried wants permission to subpoena the Mountain View, California-based firm.

That advice included the use of encrypted messaging apps, the provision of multimillion-dollar loans to FTX executives and the cryptocurrency exchange’s compliance with US banking regulations, the defense said. Those are all key elements of the charges against Bankman-Fried, who’s accused of orchestrating and concealing a yearslong fraud in which he used billions of dollars in FTX customer funds for risky investments, personal expenses and political donations.

The legal advice Fenwick & West provided to FTX and Bankman-Fried between 2017 and 2022 is “material to preparing a defense,” his lawyers said in their Tuesday filing.

Bankman-Fried has pleaded not guilty to his 13-count indictment and is due to stand trial in October.

A so-called advice-of-counsel defense can be used to rebut suggestions a criminal defendant intended to break the law, New York University law Professor Stephen Gillers said.

“In other words, the defendant’s argument is ‘my lawyers told me it was legal, and I thought it was legal,’” said Gillers. That would cut against the government’s contention that the defendant knowingly acted illegally — a necessary element of many criminal charges, including those against Bankman-Fried.

Such a defense would place further scrutiny on the relationship between FTX and Fenwick & West. The firm started representing Alameda Research, the exchange’s hedge fund affiliate and, according to prosecutors, the conduit for much of Bankman-Fried’s fraud, in 2017 and became the main outside counsel to FTX after its 2019 founding. 

Fenwick & West didn’t immediately respond to a request for comment.

Former employees interviewed by federal prosecutors during the investigation have also referred to Fenwick & West legal memos that they claim guided their decisions, according to two people with knowledge of the case. Law enforcement has also sent subpoenas to the law firm, and it…