SBF’s defense claims FTX had no fiduciary relationship with customers on technicality SBF’s defense claims FTX had no fiduciary relationship with customers on technicality
SBF's team has appealed to an esoteric element of English law—which, it claims, governs FTX's terms of service—to deny that FTX ever had any fiduciary relationship to its customers at all.
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Updated: Oct. 31, 2023 at 3:39 pm UTC
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Sam Bankman-Fried‘s defense team has filed a request to include jury instructions that ask the jury to consider the influence of English law on FTX’s terms of service.
In an unusual request, Bankman-Fried’s legal team has asked the court to reject the idea that FTX and its customers technically had any fiduciary relationship on the grounds that FTX’s Terms of Service are governed under English law.
Lack of fiduciary relationship
The government’s main charges against SBF are related to defrauding FTX customers. In Count One of the indictment, the prosecution alleges that:
“[SBF] engaged in a scheme to defraud customers of FTX by misappropriating those customers’ deposits, and using those deposits to pay expenses and debts of Alameda to make investments, and for other purposes.”
To substantiate this claim, the government asserts that such a scheme would require the presence of a trust, fiduciary relationship, or a similar relationship between FTX and its customers.
The defense’s addendum challenges the prosecution’s assertion based on the fact that FTX’s relationship with its customers was governed by the company’s “Terms of Service,” which were in evidence as “Exhibit GX-558.”
According to these terms, they would be “governed by, and construed in accordance with, English law.” The defense argued that this makes the interpretation and legal consequences of the Terms of Service a matter of English law.
The central argument presented in the addendum is that, under English law, the Terms of Service did not establish a trust or a similar fiduciary relationship between FTX and its customers. The defense contends that this is not a matter of subjective expectations or beliefs but rather an objective assessment of the contractual language.
Legal precedents
The defense highlighted legal precedent, citing cases such as “Lukoil Asia Pacific Pte Ltd. v. Ocean Tankers (Pte) Ltd” and “Westdeutsche Landesbank Girozentrale v. Islington LBC,” which emphasize that English courts are typically reluctant to infer the existence of a trust in the absence of explicit provisions.
The defense further argued that in situations involving both contractual and fiduciary relationships, it is the contract itself that governs the parties’ rights and liabilities.
The filing also points out that representations or conduct after the execution of a contract have no bearing on whether, under the contract, a trust or similar fiduciary relationship exists.
According to the defense, this aligns with English legal principles, as elucidated in the case of “James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd.”
Under English law, an express trust (a formal trust) is established when assets are placed under one party’s control for the benefit of another or a specific purpose. However, subjective intentions are deemed irrelevant, and subsequent statements about intentions are disregarded.
The defense claims that when applying these principles of English law, the Terms of Service in question do not establish a trust or similar fiduciary relationship between FTX and its customers.
Furthermore, the Terms of Service do not contain the necessary legal terminology or language to create such a relationship and, in some instances, expressly disclaim any fiduciary relationship.
Author 
Assad Jafri
AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
Editor Editor 
Jacob Oliver
Jacob Oliver is a recovering academic and English teacher turned crypto journalist and web3 writer. He holds a Ph.D. from the University of Washington.
