Prosecutors raise concerns over lawyers defending SBF, Mashinsky

U.S. prosecutors have requested a special hearing to delve into potential conflicts of interest involving lawyers representing two notable figures in the crypto world: Sam Bankman-Fried (SBF), the former CEO of FTX, and Alex Mashinsky, the former head of Celsius Network.

Both individuals are currently facing criminal charges related to fraud after their respective companies collapsed due to mismanagement.

The request for a Curcio hearing, aimed at addressing these potential legal conflicts, was made in letters sent to the judges presiding over the cases against SBF and Mashinsky on Feb. 6.

Curcio hearing

At the heart of the concern are attorneys Marc Mukasey and Torrey Young, who have registered their appearances in both cases, raising questions about the potential for conflicting interests.

The intertwining of FTX and Celsius, as outlined by prosecutors, highlights the complex web of financial transactions and relationships that define this legal saga.

Notably, Celsius had engaged in financial dealings with Alameda Research, an entity closely associated with SBF, with some transactions reportedly involving the use of customer funds. This intricate relationship between the two companies has led to concerns over whether the legal representation of SBF and Mashinsky could be compromised.

Prosecutors have pointed out that the narrative surrounding the collapse of Celsius has included allegations by Mashinsky that  Alameda Research played a role in the downfall, potentially implicating SBF’s actions.

This situation presents a scenario where the legal arguments of one defendant could inadvertently impact the defense of the other. The government’s letters to the court suggest that, despite these potential conflicts, the issues may not be insurmountable.

The judges can waive these concerns if they deem them manageable, allowing SBF and Mashinsky to proceed with their current legal representation, provided they are fully informed of the risks and consent to it.

Legal troubles

SBF’s legal troubles began with his indictment in 2022 following the collapse of FTX. After being extradited from the Bahamas to the U.S., he faced a jury trial that concluded with his conviction on multiple felony fraud charges.

His sentencing is scheduled for March 28, amid speculation that he may not face a second trial originally set for March 2024 due to his prior conviction.

Alex Mashinsky faces his own set of charges, including securities fraud, wire fraud, and conspiracy to commit fraud, stemming from his tenure at Celsius. He stepped down as CEO in September 2022 and is currently out on bail, with his trial set for Sept. 17.

As the U.S. government intensifies its scrutiny of cryptocurrency-related crimes, the outcomes of these cases could set significant precedents for legal standards and enforcement in the digital currency space.