Bankman-Fried's expert witnesses rejected by judge

FILE PHOTO: Indicted FTX founder Sam Bankman-Fried leaves the United States Courthouse in New York City
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By Luc Cohen

NEW YORK (Reuters) - A U.S. judge on Thursday restricted Sam Bankman-Fried's ability to call expert witnesses to testify at his criminal fraud trial, in a blow to the FTX cryptocurrency exchange founder.

Bankman-Fried wanted to call seven experts on topics such as cryptocurrency markets and English contracts, to convince jurors to acquit him of stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund.

But in a written order, U.S. District Judge Lewis Kaplan said three proposed witnesses cannot take the stand, because their testimony was irrelevant or could confuse the jury.

He also said Bankman-Fried may seek to call the remaining four experts, but only to rebut prosecution witnesses.

Among the witnesses Kaplan rejected was Peter Vinella, a consultant who intended to testify about "FTX's use of widely-accepted practices in the financial services industry." Kaplan found the testimony irrelevant.

Bankman-Fried also cannot call English barrister Lawrence Akka to testify about FTX's terms of service, which were governed by English law, because only a judge could tell jurors what the law is, Kaplan said.

Court papers suggest Bankman-Fried may argue that the terms of service did not prevent the use of customer funds to make investments - much as banks use deposits to fund loans - and the practice had been common in the cryptocurrency industry.

Bankman-Fried, a 31-year-old former billionaire, has pleaded not guilty. He has acknowledged inadequate risk management at FTX prior to its November 2022 collapse, but denied stealing funds.

It is common in U.S. criminal trials for prosecutors and defendants to call experts to help jurors understand complex issues.

Prosecutors have said they plan to call three former FTX and Alameda executives, who have all pleaded guilty, to testify at Bankman-Fried's trial, which may last up to six weeks.

(Reporting by Luc Cohen in New York; Editing by Daniel Wallis)