In the ongoing trial of Sam Bankman-Fried, the disgraced crypto mogul’s lawyers are seeking permission to question FTX co-founder Gary Wang.
Specifically, they're seeking answers on whether legal advice played a role in Wang accepting loans from the collapsed crypto exchange’s sister fund Alameda Research.
The defense's request, filed on October 9, comes as the trial enters its second week and follows previous restrictions on Bankman-Fried's ability to attribute the alleged fraud to his lawyers.
During the trial, prosecutors have already inquired into the approximately $200 million to $300 million in loans that Wang received from Alameda Research. Wang used these funds for various venture investments and to purchase a house in the Bahamas.
“The Government's direct examination of Mr. Wang has already elicited that FTX attorneys were present and involved in structuring and executing the loans, and that Mr. Bankman-Fried was aware of their involvement,” reads the filing. "Accordingly, the defense seeks to cross-examine Mr. Wang further about his knowledge of the lawyers' involvement.”
The defense wants to know which attorneys were involved and the extent of their involvement in the loans.
They also want to know the precise terms of Wong's loans, as well as whether the FTX co-founder had any concerns about the loans at the time he signed them.
SBF's defense to introduce Wang's loans promissory notes
Bankman-Fried's legal counsel further indicated that it might introduce promissory notes that documented the loans made to Wang.
Citing FBI 302 reports, which the government uses to memorialize an interview, the filing notes that Wang told the Government in proffer meetings that he did relied on lawyers and "didn't think the loans were designed to hide the fact that money was coming from Alameda [and] didn't think the lawyers would tell him to sign something that was illegal."
“Mr. Wang's understanding that these were actual loans–structured by lawyers and memorialized in formal promissory notes that imposed real interest payment obligations–is relevant to rebut the inference that these were simply sham loans directed by Mr. Bankman-Fried to conceal the source of the funds.”
Wang and Sam Bankman-Fried have been friends since high school and together established FTX. However, Wang generally maintained a lower public profile compared to Bankman-Fried during the crypto exchange’s years of activity.
Unlike Bankman-Fried, Wang along with Alameda’s former CEO Caroline Ellison pleaded guilty to federal charges that include money laundering, wire fraud, securities fraud, and campaign finance violations.
Wang is expected to conclude his testimony later on Tuesday, and he will be followed by Caroline Ellison in the proceedings.