Sam Bankman-Fried‘s protection staff has filed a request to incorporate jury directions that ask the jury to contemplate the affect of English legislation on FTX’s phrases of service.
In an uncommon request, Bankman-Fried’s authorized staff has requested the courtroom to reject the concept that FTX and its clients technically had any fiduciary relationship on the grounds that FTX’s Phrases of Service are ruled beneath English legislation.
Lack of fiduciary relationship
The federal government’s essential expenses towards SBF are associated to defrauding FTX clients. In Rely One of many indictment, the prosecution alleges that:
“[SBF] engaged in a scheme to defraud clients of FTX by misappropriating these clients’ deposits, and utilizing these deposits to pay bills and money owed of Alameda to make investments, and for different functions.”
To substantiate this declare, the federal government asserts that such a scheme would require the presence of a belief, fiduciary relationship, or an identical relationship between FTX and its clients.
The protection’s addendum challenges the prosecution’s assertion based mostly on the truth that FTX’s relationship with its clients was ruled by the corporate’s “Phrases of Service,” which had been in proof as “Exhibit GX-558.”
In line with these phrases, they might be “ruled by, and construed in accordance with, English legislation.” The protection argued that this makes the interpretation and authorized penalties of the Phrases of Service a matter of English legislation.
The central argument offered within the addendum is that, beneath English legislation, the Phrases of Service didn’t set up a belief or an identical fiduciary relationship between FTX and its clients. The protection contends that this isn’t a matter of subjective expectations or beliefs however reasonably an goal evaluation of the contractual language.
Authorized precedents
The protection highlighted authorized precedent, citing circumstances equivalent to “Lukoil Asia Pacific Pte Ltd. v. Ocean Tankers (Pte) Ltd” and “Westdeutsche Landesbank Girozentrale v. Islington LBC,” which emphasize that English courts are usually reluctant to deduce the existence of a belief within the absence of specific provisions.
The protection additional argued that in conditions involving each contractual and fiduciary relationships, it’s the contract itself that governs the events’ rights and liabilities.
The submitting additionally factors out that representations or conduct after the execution of a contract haven’t any bearing on whether or not, beneath the contract, a belief or comparable fiduciary relationship exists.
In line with the protection, this aligns with English authorized rules, as elucidated within the case of “James Miller and Companions Ltd v Whitworth Avenue Estates (Manchester) Ltd.”
Below English legislation, an categorical belief (a proper belief) is established when property are positioned beneath one get together’s management for the advantage of one other or a particular function. Nevertheless, subjective intentions are deemed irrelevant, and subsequent statements about intentions are disregarded.
The protection claims that when making use of these rules of English legislation, the Phrases of Service in query don’t set up a belief or comparable fiduciary relationship between FTX and its clients.
Moreover, the Phrases of Service don’t comprise the required authorized terminology or language to create such a relationship and, in some cases, expressly disclaim any fiduciary relationship.
