By Luc Cohen

NEW YORK (Reuters) – Since his December arrest on fraud prices, FTX founder Sam Bankman-Fried and his legal professionals have prompt a part of his protection will probably be looking for to distance himself from the day-to-day operations of the now-bankrupt cryptocurrency trade.

However new accusations in opposition to him and a 3rd former member of his inside circle in latest weeks might complicate that technique, some consultants mentioned.

Federal prosecutors in Manhattan unveiled new prices on Feb. 23 that appeared to undermine a few of Bankman-Fried’s public claims because the collapse of FTX, and later revealed the responsible plea and cooperation of the trade’s former engineering chief Nishad Singh.

Former FTX expertise chief Gary Wang and Caroline Ellison, previously the CEO of Bankman-Fried’s Alameda Analysis hedge fund, had every beforehand pleaded responsible and are cooperating.

Bankman-Fried beforehand pleaded not responsible to stealing billions of {dollars} in FTX buyer funds to plug losses at Alameda.

The 31-year-old former billionaire and his legal professionals have prompt they’ll try and shift blame onto Ellison and dispute her anticipated testimony at his Oct. 2 trial.

It’s common for defendants to problem the credibility of cooperating witnesses, typically arguing that they’re motivated to lie and implicate others in a bid to win leniency.

Doing so is tougher when a number of witnesses level the finger on the similar particular person, consultants mentioned.

“The defendant goes to say, ‘No, you probably did it, you are the one who was essentially the most accountable, and now you are making an attempt in charge me,'” mentioned Rebecca Mermelstein, a former Manhattan federal prosecutor.

Spokespeople for Bankman-Fried and for the U.S. Legal professional’s workplace in Manhattan declined to remark.

‘VERY DIFFERENT VIEW’

At her plea listening to in December, Ellison admitted she and Bankman-Fried conspired to mislead Alameda’s lenders, with Alameda offering secret loans to Bankman-Fried which the hedge fund then hid on its steadiness sheets.

Bankman-Fried appeared to contradict that in a Jan. 12 weblog submit, saying he was not working Alameda and “was informed” – with out saying by whom – that its steadiness sheets have been correct.

Bankman-Fried’s protection lawyer Mark Cohen additionally challenged one other of Ellison’s statements to prosecutors: in accordance with U.S. District Decide Lewis Kaplan, she informed them that Bankman-Fried had instructed FTX workers it was “greatest to not have paperwork” as a result of they could possibly be used as proof.

“We’ve a really completely different view of what occurred,” Cohen mentioned at a Feb. 16 courtroom listening to. “That is for trial, your Honor, however that is not what occurred.”

Ellison’s lawyer didn’t reply to requests for remark.

In unveiling the brand new prices in a superseding indictment, prosecutors dismissed the concept that Bankman-Fried was at nighttime about his former colleagues’ crimes. Prosecutors mentioned he directed Ellison to mislead collectors in regards to the cash Alameda borrowed, and that he remained Alameda’s “final decisionmaker” regardless of stepping down as CEO.

“The superseding indictment appears designed to undercut the defenses that he has floated in public,” mentioned Mark Kasten, counsel at Buchanan Ingersoll & Rooney in Philadelphia.

It additionally complicates Bankman-Fried’s protection as a result of it accommodates references to an electronic mail Bankman-Fried obtained from Ellison, in addition to messages between him and Singh, who’s referred to within the indictment as CC-1. Prosecutors described the dialog between the 2 males as a plot to hide a scheme to make unlawful political marketing campaign donations.

Past the content material of the actual messages, the mere revelation that prosecutors have them could possibly be troubling for Bankman-Fried, since contemporaneous statements by a defendant could make it more durable to refute witness testimony, consultants mentioned.

Regardless of the hurdles, consultants mentioned Bankman-Fried will nonetheless seemingly dispute that he knew former members of his inside circle have been breaking the legislation, Kasten mentioned.

“He nonetheless goes to need to assault the federal government witnesses,” Kasten mentioned, summing up one doable protection: “Sure, he was the general public face of the corporate, however he trusted his confidantes to run the enterprise, and he thought that they have been doing it lawfully.”