The Challenges Facing Sam Bankman-Fried’s Lawyers

On the second day of Sam Bankman-Fried’s fraud trial this month, one of the lawyers for the cryptocurrency mogul delivered an emphatic message to the jury. Mr. Bankman-Fried is not a criminal, the lawyer declared, and every decision that led to the collapse of his FTX crypto exchange had been made in “good faith.”

That message has since been clouded by more than two weeks of testimony from 15 government witnesses, most of whom have blamed Mr. Bankman-Fried for FTX’s spectacular implosion last year. He lied repeatedly, they said, running roughshod over his top lieutenants and directing them to treat customer deposits as if FTX were a piggy bank.

The testimony has dealt a blow to Mr. Bankman-Fried’s “good faith” defense, which will be put to the test this week. Federal prosecutors are scheduled to rest their case on Thursday morning, and the FTX founder’s lawyers are then set to call four witness in federal court in Manhattan — including Mr. Bankman-Fried, who has pleaded not guilty to seven counts of fraud, conspiracy and money laundering.

At a hearing on Wednesday, Mark Cohen, a defense lawyer, confirmed that Mr. Bankman-Fried, 31, would take the stand. That is a risky move for any defendant. But given the prosecution’s success in building its case, legal experts said, it was all but inevitable that Mr. Bankman-Fried would want to tell the jury his side of the story.

“There is nothing revelatory to say this is an uphill battle,” said Caroline Polisi, a criminal defense lawyer. “The prosecution has done a good job.”

Mark Botnick, a spokesman for Mr. Bankman-Fried, declined to comment.

From the beginning of Mr. Bankman-Fried’s case, he was expected to face major hurdles in court. He was the face of FTX and also founded a crypto trading firm, Alameda Research, where FTX customer deposits were redirected. Prosecutors have charged him with orchestrating a vast scheme to use those deposits to finance venture investments, real estate purchases and other spending.

But so far, his trial appears to have gone even worse for Mr. Bankman-Fried than anticipated, legal experts said. Over the past few weeks, prosecutors have cast the case as a garden-variety fraud investigation. They have stuck to relatively simple concepts and used only a handful of the complicated financial flow charts that can be hard for juries to decipher.

Prosecutors have…