You probably base “Even though this use of funds was unintentional and sounds extremely sketchy, FTX’s general counsel testified that FTX’s terms of service did not prohibit it” on:
The government didn’t want to focus you on that. Why? Again, the only witness who said he had read the terms of service was Can Sun, the general counsel who had helped to draft it. Even though he was very careful in what he told you, he admitted that nowhere do the terms of service contain language that prevents FTX from loaning customer fiat deposits to Alameda or anyone else.
Can Sun didn’t think so. (Unless I misunderstand something.) He said that there was the margin lending program that did allow that but that had a few hundred million USD in it, so by far not enough to explain Alameda’s borrowing. He didn’t think that FTX or Alameda could’ve borrowed from capital outside the margin lending program because it was owned by the customers.
So I think what the defense lawyer is trying to do here is to say that the ToS did not explicitly prohibit such borrowing, but he omits that the borrowing is still implicitly prohibited just like it is generally prohibited to borrow other people’s fund without their permission.
Great summary!
You probably base “Even though this use of funds was unintentional and sounds extremely sketchy, FTX’s general counsel testified that FTX’s terms of service did not prohibit it” on:
Can Sun didn’t think so. (Unless I misunderstand something.) He said that there was the margin lending program that did allow that but that had a few hundred million USD in it, so by far not enough to explain Alameda’s borrowing. He didn’t think that FTX or Alameda could’ve borrowed from capital outside the margin lending program because it was owned by the customers.
So I think what the defense lawyer is trying to do here is to say that the ToS did not explicitly prohibit such borrowing, but he omits that the borrowing is still implicitly prohibited just like it is generally prohibited to borrow other people’s fund without their permission.
Thanks! I updated the summary and included a link to this comment – let me know if you think it’s inaccurate.
Jason’s comment and my response here are relevant.