By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

US prosecutors yesterday raised objections to a Bahamian KC testifying in defence of embattled FTX founder, Sam Bankman-Fried, over his meetings with local regulators as the crypto exchange imploded.

The US attorney’s office for southern New York, which is prosecuting Mr Bankman-Fried, told the judge overseeing the former FTX chief’s trial that his lawyers had failed to comply with federal court procedures over plans to call Krystal Rolle KC as a witness.

Mr Bankman-Fried’s attorneys, according to court documents obtained by Tribune Business, said Mrs Rolle, who was among those defending the FTX founder in previous Bahamian court proceedings. She is to testify “about conversations the defendant had with regulators in The Bahamas in November 2022”.

That was the month when FTX collapsed into provisional liquidation and Chapter 11 bankruptcy protection in The Bahamas and Delaware, respectively. The “conversations” referred to would likely have been with the Securities Commission, the crypto exchange’s primary Bahamian regulator, as well as with the joint provisional liquidators of FTX Digital Markets following their Supreme Court-approved appointment.

International media yesterday also reported that Mark Cohen, Mr Bankman-Fried’s lead defence attorney, told a telephone hearing that Christina Rolle, the Securities Commission’s executive director, is also among the witnesses they plan to call. That could not be confirmed before press time last night, and Christina Rolle did not respond to this newspaper’s message seeking comment.

This raises the possibility that multiple Bahamian and Bahamas-based witnesses may be summoned to appear at Mr Bankman-Fried’s trial. However, US federal prosecutors yesterday objected to Krystal Rolle testifying unless the defence produced her witness statement to them - as purportedly required by court rules - to them by 5pm yesterday. It is unclear if this deadline was met.

“Yesterday, for the first time, defence counsel disclosed as a witness Krystal Rolle, who appears to have been a defence attorney for the defendant in The Bahamas,” US prosecutors asserted.

“While the defence has not provided any written disclosure, exhibits or Rule 26.2 material for this witness, last night and this morning, defence counsel indicated that they intend to call Mrs Rolle to testify about conversations the defendant had with regulators in The Bahamas in November 2022.”

Noting that such material was supposed to have been produced by September 18, 2023, prosecutors added that they would seek to exclude Krystal Rolle’s testimony unless it was provided to them yesterday.

“So as to permit the government sufficient time to prepare for cross-examination, and to ensure the trial moves efficiently, the government respectfully requests that all Rule 26.2 materials be produced to the government by 5 pm today. Failure to produce Rule 26.2 material would be a basis for excluding their testimony,” prosecutors added.

Besides investigating FTX’s implosion, the Securities Commission has previously argued it had little choice but to engage with Mr Bankman-Fried, and his close associates, to safeguard some $456m in digital assets from potential hacking and losses in the aftermath of the exchange’s collapse because they were the only ones who possessed the keys to the digital wallets where they are stored.

Confirming that it obtained a Supreme Court order approving its actions, the Securities Commission said: “Based on information provided by Sam Bankman-Fried to the Commission concerning the cyber attacks that took place on the systems of FTX Digital Markets, the restricted access by the employees of FTX Digital Markets to its AWS system, and other available information, the Commission determined that there was a significant risk of imminent dissipation as to the digital assets under the custody or control of FTX Digital Markets to the prejudice of its customers and creditors.

“As a result, in the exercise of its regulatory powers, the Commission requested and obtained a court order to safeguard the digital assets owned by or under the custody or control of FTX Digital Markets or its principals by transferring them to secure digital wallets under the exclusive control of the Commission.”

The regulator added: “Accordingly, on November 12, 2022, the Commission, in the exercise of its powers as regulator acting under the authority of an order made by the Supreme Court of The Bahamas, took the action of directing the transfer of all digital assets of under the custody or control of FTX Digital Markets or its principals, valued at more than US $3.5bn, based on market pricing at the time of transfer, to digital wallets controlled by the Commission, for safekeeping.

“While certain token protocols may require the burning of old tokens and the simultaneous minting of new replacement tokens to effect transfer, in no case did the process involve the creation of any additional tokens.”