- Bankman-Fried and Mashinsky’s lawyers face scrutiny over conflicts of interest in representing rival CEOs with opposing interests regarding collapsed financial relationship between FTX and Celsius.
- Judges could waive conflicts if CEOs waive rights to conflict-free counsel, but will assess severity of conflicts in hearings amid ongoing cases.
- Bankman-Fried faces sentencing in March after conviction on 7 felonies while Mashinsky’s trial on 7 fraud charges begins in September after indictment last year.
The collapse of major crypto firms FTX and Celsius, and the subsequent indictments of their former CEOs Sam Bankman-Fried and Alex Mashinsky, have led to complex legal battles. But the lawyers representing them may have conflicts of interest that compromise their ability to provide adequate counsel.
Lawyers Face Scrutiny Over Potential Conflicts
Both Bankman-Fried and Mashinsky have retained lawyers Marc Mukasey and Torrey Young to represent them in their criminal fraud cases. But prosecutors have called for hearings to address possible conflicts of interest, since both lawyers are involved in the cases of the rival CEOs.
The Connection Between FTX and Celsius
The core conflict lies in the financial relationship between FTX’s sister company Alameda Research and Celsius. Celsius lent money to Alameda, which allegedly repaid some loans using customer funds from FTX. Mashinsky has blamed Celsius’ collapse partly on Alameda.
But Bankman-Fried could argue Celsius willingly lent the funds and shouldn’t receive restitution. The CEOs have opposing interests regarding the collapsed lending relationship.
Judges Could Waive Conflicts
Despite the conflicts, judges could waive the issues if Bankman-Fried and Mashinsky agree to waive rights to conflict-free counsel. Allegations against one CEO could aid the other’s defense. The judges will assess the severity of conflicts in hearings.
Ongoing Cases Against the Crypto CEOs
The lawyers’ conflicts emerge amid ongoing prosecutions of both CEOs. Bankman-Fried was convicted on 7 felony counts in late 2022. He potentially faces sentencing this March.
Meanwhile, Mashinsky was indicted on 7 fraud charges in mid-2022 and resigned from Celsius. His criminal trial is scheduled to begin this September. The CEOs legal battles continue, now complicated by representation questions.