FTX founder Sam Bankman-Fried hires Ghislaine Maxwell’s defence lawyer

It is unclear how Mr Sam Bankman-Fried plans to pay for the representation. PHOTO: AFP

NEW YORK – Mr Sam Bankman-Fried, the embattled co-founder of bankrupt crypto exchange FTX, has retained New York defence attorney Mark Cohen to represent him, according to Mr Bankman-Fried’s spokesman.

Mr Cohen was previously part of the team that represented convicted sex trafficker Ghislaine Maxwell.

Separately, Ms Caroline Ellison, head of FTX’s now-defunct trading affiliate Alameda Research, has hired law firm Wilmer Cutler Pickering Hale and Dorr to represent her, a source familiar with the matter told Reuters.

In choosing Mr Cohen, Mr Bankman-Fried said he was “going on advice of counsel and people who are able to understand the situation and the context”, according to a Twitter Spaces during which he appeared on Tuesday. Mr Bankman-Fried’s parents are law professors at Stanford University.

It is unclear how Mr Bankman-Fried plans to pay for the representation. Just weeks ago he was worth more than US$15 billion (S$20 billion), but last week said he only has about US$100,000 and a credit card to his name.

“I don’t necessarily have a long-term plan there yet” in how to pay the legal fees, Mr Bankman-Fried said on Tuesday. “I am not sure that I will be able to pay all the legal fees I need to pay.”

Mr Bankman-Fried and Ms Ellison have not been charged with any crime, but federal prosecutors in Manhattan have begun investigating FTX’s collapse due in part to an unexplained US$8 billion shortfall in customer funds. They are also facing class-action lawsuits and regulatory probes by the US Securities and Exchange Commission and Commodities Future Trading Commission. Mrs Maxine Waters, chairman of the House Financial Services Committee, also wants Mr Bankman-Fried to appear at a hearing on Dec 13.

Mr Bankman-Fried had previously hired Mr Martin Flumenbaum of law firm Paul, Weiss, Rifkind, Wharton & Garrison, but the law firm said last month it was no longer representing him due to conflicts.

In recent weeks, the US authorities have sought information from investors and potential investors in FTX, according to two sources with knowledge of the requests. Federal prosecutors in New York are asking for details on any communications such companies have had with the crypto firm and its executives, including Mr Bankman-Fried, the sources said.

Those sources and attorneys, speaking on condition of anonymity, have said that the US authorities are likely looking for any evidence of material misrepresentations of information to investors.

FTX secretly transferred customer funds to Alameda Research to fill a shortfall at the crypto trading firm, Reuters has previously reported. The Wall Street Journal has previously reported that Ms Ellison and senior FTX officials knew the crypto exchange had dipped into its customer funds to help Alameda meet liabilities.

Speaking via video link at the New York Times’ DealBook Summit on Nov 30, Mr Bankman-Fried said he did not knowingly commingle customer funds on FTX with funds at his proprietary trading firm, Alameda Research.

“I didn’t ever try to commit fraud,” Mr Bankman-Fried said, adding that he does not think he has any criminal liability. REUTERS, BLOOMBERG

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