Correction: A previous version of this story incorrectly stated that Lawrence Gebhardt was a lawyer representing FTX. He actually represents one of the defendants in the bankruptcy case who was involved in FTX’s business dealings. We also incorrectly mentioned a lawyer who is not involved in the case. We regret the errors.
Attorney for Brandon Williams, one of the defendants in the case of the bankrupt crypto exchange FTX, argued that to figure out how exactly FTX became insolvent, the Delaware bankruptcy court needs to delay the bankruptcy proceedings for "a month or two months."
Brandon Williams was a managing director at Cosima Capital who helped facilitating the acquisition of FTX Europe by FTX and is one of the defendants in the bankruptcy case. Sam Bankman-Fried and FTX paid around $323.5 million for the acquisition of Swiss Company DAAG, which then became FTX Europe and for which FTX overpaid, FTX lawyers argue.
On Wednesday, attorney Lawrence Gebhardt representing Williams asked the court to delay the process because the discovery of the circumstances of the case will be “expensive and requiring a lot of travel,” as important parties of the case are located in different parts of the world.
For example, FTX former attorney Dan Friedberg, who is one of the defendants in the case, is based in Washington, another former counsel Can Sun is in the Bahamas and Sam Bankman-Fried, the former CEO recently convicted of fraud, is in prison, Gebhardt said.
“They all need to be deposed,” he said, explaining that back in November 2022, just days before the bankruptcy, FTX’s own attorneys from Sullivan and Cromwell said FTX was solvent. “We need to find out what happened in that year between November of 2021 and October of 2022 that caused FTX to become insolvent,” Genhardt said.
In response, attorneys for the bankruptcy estate said that the defense had all the time it needed to join the discovery of facts and was notified about all the documents available for processing on September 21.
Denying the motion
Asked by the Judge John Dorsey whether Gebhardt received the letter on Sept. 21, Gebhardt said “I don’t think I got it,” weirdly echoing the testimony Sam Bankman-Fried gave in the New York criminal court two weeks ago, in which he could not recall most of what the prosecutor asked him.
The judge denied the motion. “If the discovery is as complex as it is said to be, it needs to be started now, not delayed,” Dorsey said.
On November 2, former FTX CEO Sam Bankman-Fried was convicted of defrauding the customers, lenders, and investors of FTX as the exchange funneled its users and investors money to its affiliated trading firm Alameda Research.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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