The US Department of Justice (DOJ) is scrutinizing the advertising strategy of the now-bankrupt crypto exchange, FTX.
This scrutiny comes in light of advertisements featuring celebrities Larry David and Tom Brady. According to the DOJ, it did not clearly demarcate between the global platform and its US subsidiary, FTX.US.
FTX’s founder, Sam Bankman-Fried, finds himself at the center of a legal maelstrom, vehemently disputing the evidence the government plans to present in the upcoming trial scheduled for Oct. 2.
The array of charges against him includes wire fraud, with Bankman-Fried denying any wrongdoing and accusing the DOJ of indirectly introducing allegations of corruption and campaign finance violations.
Bankman-Fried’s legal representatives argue for a clear separation of the US operations from the current allegations, which they claim are primarily focused on the international business segment.
However, the government contends that the distinction is not as clear-cut, pointing to commercials broadcast shortly before a significant downturn in the crypto market that eventually led to the dismantling of Bankman-Fried’s business empire.
The DOJ filing highlighted that the advertisements depicted FTX as a secure and user-friendly entry point into the cryptocurrency market, showcasing individuals using a device adorned with the FTX logo, not the FTX.US insignia.
This included a Superbowl advertisement featuring Larry David and a separate commercial with Tom Brady alongside his then-wife Gisele Bündchen.
The government further noted that internal documents revealed no evident differentiation between marketing strategies for the international and US platforms.
The DOJ seeks to explore the finer details surrounding FTX’s downfall, asserting that these aspects are closely tied to the alleged misappropriation of customer funds.
Despite Bankman-Fried’s claims of being coerced into relinquishing control of a potentially viable company, the government maintains that the events leading up to the bankruptcy are pertinent to the jury, regardless of the eventual outcome for FTX.
The DOJ asserts that the possibility of future customer restitution is legally irrelevant. They plan to present testimony illustrating that Gary Wang, FTX’s co-founder, assisted Bankman-Fried in transferring assets to the Bahamas on Nov. 11, actions that are purportedly connected to the charged wire fraud scheme.
Extradition controversies and additional charges
Bankman-Fried’s defense has accused the government of bypassing the conditions of his extradition from the Bahamas, where he managed company operations.
They allege that the DOJ is attempting to reintroduce charges related to campaign finance violations and supposed bribery incidents involving Chinese officials, which were not included in the initial extradition request to the US.
The defense team fears that introducing evidence related to these charges may unduly sway the jury, potentially fostering a belief in Bankman-Fried’s criminal propensity.
Bankman-Fried, arrested in December, was recently found to have breached bail conditions by engaging with witnesses and leaking potential evidence to the New York Times. He was later moved to the detention center.
His legal team has voiced concerns that the prevailing prison conditions hamper their efforts to formulate a robust defense.