Prosecutors in the criminal trial against Sam Bankman-Fried, the founder of FTX, have made an unusual comparison in their argument. They likened one of the defense’s arguments to a scene from the 1994 movie “Dumb and Dumber,” where actor Jim Carrey claims that IOUs are “as good as money.” In a written brief to Judge Lewis Kaplan, the assistant U.S. attorneys for the Southern District of New York expressed their disagreement with several jury instructions provided by the defense team.
The defense’s directive stated that if FTX customers received a credit on the exchange after depositing funds, which allowed them to withdraw an equivalent amount at a later time, it does not establish that they were deprived of their property. This particular instruction drew the prosecutors’ attention, as they believe it is not based on the facts of the case. They argue that having a credit for future funds is not the same as having the actual money or property available.
FTX’s Alleged Misuse of Customer Funds
Much of the government’s case relies on the allegation that FTX, Bankman-Fried’s crypto exchange, siphoned billions of dollars out of customer accounts. This money was supposedly used to cover up losses at Alameda Research, a sister hedge fund, following a significant drop in cryptocurrency prices. The funds were also allegedly used for personal expenses, such as the purchase of a $35 million property in the Bahamas and political donations. Consequently, customers were unable to retrieve their deposits as both FTX and Alameda faced financial difficulties.
The defense’s argument revolves around the claim that even if the money was not available due to other uses, customers still held a credit for the funds they deposited. Prosecutors assert that this argument is not supported by the facts of the case. They emphasize that receiving a credit for future funds, which may or may not be available, is not equivalent to having the money or property itself.
The “Dumb and Dumber” Analogy
In a footnote, the prosecution refers to a popular scene from the movie “Dumb and Dumber” to reinforce their point. They draw a parallel between a briefcase filled with money in the film and a briefcase filled with IOUs. The character Lloyd Christmas, played by Jim Carrey, claims that the IOUs are as good as money. The prosecution contends that this analogy supports their argument that a credit for future funds does not hold the same value as having the money or property directly.
Mark Cohen, Bankman-Fried’s lead defense attorney, has not yet responded to the prosecution’s statement. The trial, which began a few weeks ago, has seen testimonies from Bankman-Fried’s former close friends and top executives at FTX and Alameda. These individuals, who have now turned on Bankman-Fried, have provided insights into the collapse of his crypto empire. Bankman-Fried, who has pleaded not guilty, faces seven criminal fraud charges and, if convicted, could potentially spend life in prison.
Judge Kaplan, who is presiding over the trial, has taken issue with the demeanor of both the government attorneys and Bankman-Fried’s lawyers during the proceedings. He has held multiple sidebar meetings with them to discuss their conduct in the courtroom. Most recently, Judge Kaplan criticized the prosecution’s expert witnesses for lacking specific knowledge about crucial details while condemning Bankman-Fried’s behavior as criminal. Both sides were admonished to improve their communication and performance.
In the ongoing criminal trial against Sam Bankman-Fried, prosecutors have raised objections to certain jury instructions provided by the defense team. They argue that the defense’s claim of customers holding a credit for future funds, despite the money not being immediately available, is not supported by the facts of the case. To illustrate their point, the prosecution made a reference to the movie “Dumb and Dumber,” where IOUs are humorously depicted as being equal to cash. As the trial continues, both sides will need to prove their arguments, and Judge Kaplan will closely monitor their conduct in the courtroom.