© Reuters. FILE PHOTO: Former FTX CEO Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, leaves Manhattan federal court in New York City, US, on March 30, 2023. REUTERS/Andrew Kelly/File Photo
By Luc Cohen
NEW YORK (Reuters) – Sam Bankman-Fried, the imprisoned founder of failed cryptocurrency exchange FTX, will return to court on Wednesday for the first time since his fraud conviction in November for a hearing in Manhattan over the potential conflict of interest of your new lawyer.
Bankman-Fried, 31, hired defense attorney Marc Mukasey in January to represent him during his sentencing and likely appeal. A federal court jury found the former billionaire guilty of stealing billions of dollars from FTX clients.
Mukasey also represents the founder of bankrupt cryptocurrency lender Celsius Networks, Alex Mashinsky, accused of artificially inflating the value of the company's internal crypto token and making $42 million from the sale of his holdings. Mashinsky pleaded not guilty.
In a Feb. 6 court filing, prosecutors in Bankman-Fried's case said Mukasey and his partner Torrey Young had potential conflicts of interest because Bankman-Fried's Alameda Research hedge fund used funds stolen from FTX clients to repay the money he had borrowed from Celsius.
“Bankman-Fried may wish to argue at sentencing or upon appeal that Celsius and similar lenders were not defrauded and are not entitled to restitution,” prosecutors wrote. “Celsius, and potentially Mashinsky, may take a contrary position.
They said Bankman-Fried should be allowed to continue with Mukasey as long as she understands the potential conflict.
Bankman-Fried, who has been held at the Brooklyn Metropolitan Detention Center since August 2023, will be sentenced on March 28 and could face decades in prison.
Mukasey, a former Manhattan federal prosecutor and son of former US Attorney General Michael Mukasey, was part of former US President Donald Trump's personal legal team.
He also represented the founder of electric and hydrogen truck maker Nikola (NASDAQ:), Trevor Milton, who was sentenced last year to four years after being found guilty of fraud for lying to investors about the company's technology, very below the 11 years of the prosecutors. the suggested.
At a hearing scheduled for Wednesday, U.S. District Judge Lewis Kaplan is expected to ask Bankman-Fried whether she would waive her right to raise objections to the potential conflict in the future. Mashinsky, 59, waived that right at a hearing 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.
Bankman-Fried was represented during his month-long trial by Mark Cohen and Christian Everdell, who continue to represent him along with Mukasey and Young.
Mashinsky is free on bail. His trial is scheduled for January 28, 2025.
