While U.S. authorities investigate the collapsed FTX crypto exchange, its founder and former CEO Sam Bankman-Fried has hired Mark S. Cohen, a former federal prosecutor whose law firm represented Ghislaine Maxwell.
Cohen, a partner at the international law firm Cohen & Gresser, recently defended socialite Maxwell in her sex trafficking trial. He is a former New York assistant U.S. attorney for the Eastern District of New York.
Bankman-Fried, who is being investigated by the Securities and Exchange Commission and Department of Justice, has said that he only had $100,000 left of a fortune once estimated by Bloomberg to be worth $26 billion.
SBF has said he didn’t know how he would pay the legal fees and confirmed that he had hired Cohen in a live Twitter Spaces interview.
That raised a lot of comments on Twitter about how SBF could afford an attorney.
That $100,000 “buys about 8 hours of representation.. lol” tweeted @gubbmintcheese
Prosecutors and regulators have not charged Bankman-Fried with a crime but he faces civil lawsuits from FTX customers.
U.S. and Bahamas regulators are investigating the role of top FTX executives including Bankman-Fried in the firm’s implosion. The crypto exchange filed for bankruptcy Nov. 11 after a liquidity crisis made at least $1 billion in customer funds disappear.
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Bankman-Fried and Caroline Ellison, head of the now-defunct FTX trading affiliate Alameda Research, have not been charged with any crime.
Bankman-Fried previously hired attorney Martin Flumenbaum of law firm Paul, Weiss, Rifkind, Wharton & Garrison, but the law firm said in November it was no longer representing him due to conflicts, Reuters reported.
SBF has described his actions at FTX as possibly stupid but not criminal. He was applauded on Nov. 30 during a live-streamed interview with Andrew Ross Sorkin at the New York Times DealBook Summit, in which the former CEO admitted, “look, I screwed up.”
However, the stakes have risen since then, Business Insider reported. Rep. Maxine Waters (D-Calif.) is calling for SBF to testify before Congress next week at the House Committee on Financial Services, which she chairs, where he would presumably be under oath.
Bankman-Fried has been compared to Bernie Madoff, the financier who ran the largest-ever Ponzi scheme — a type of investment fraud in which investors are lured by promises of artificially high rates of return with little or no risk, and earlier investors are paid with funds from more recent investors. A one-time chairman of the NASDAQ stock exchange, Madoff defrauded thousands of investors out $64.8 billion via his firm, Bernard L. Madoff Investment Securities LLC. In 2009 Madoff was sentenced to 150 years in prison and forced to forfeit $170 billion as restitution. He died in prison on April 14, 2021.