(Bloomberg) -- Lawyers for Archegos founder Bill Hwang and former chief financial officer Patrick Halligan offered a preview of their defense strategy, attacking the US government’s allegations that the two deceived Wall Street’s biggest banks and engaged in market manipulation.

Archegos Capital Management, Hwang’s family office, and the banks were like “Shaq and LeBron,” said Mary Mulligan, who represents Halligan, at a pretrial hearing Wednesday in federal court in Manhattan. In the NBA, she said, everybody plays with “sharp elbows.” 

“These banks are sophisticated and have outside counsel,” she told US District Judge Alvin Hellerstein. When it came to interactions between Halligan and the banks, she said, “everybody knows the rules of the game.”

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Hwang’s lawyer Lawrence Lustberg said the government’s case featured an “unprecedented, extraordinary, never-before-seen theory of stock manipulation.” Lustberg said manipulation depends on someone sending false signals to the market and that there were no such signals from Hwang. 

“Is it not lawful to trade with a price in mind?” he asked, referring to allegations that Hwang was aware that his buying and selling could affect the prices of securities.

Hwang was arrested April 27 and charged with fraud over the events leading to last year’s collapse of Archegos, which at one point held market positions valued at $160 billion, according to the US. Prosecutors claim Hwang and Halligan “repeatedly made materially false and misleading statements about Archegos’s portfolio of securities to numerous leading global investment banks and brokerages,” inflicting steep losses on Credit Suisse Group AG, Nomura Holdings Inc. and Morgan Stanley. 

The fall of Archegos cost banks $10 billion and exposed huge problems in how risk is managed.

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The two have pleaded not guilty and face the possibility of decades in prison if convicted.

It was the first hearing before Hellerstein, who was assigned the case after the previous judge stepped aside over ties to JPMorgan Chase & Co.

Hellerstein scheduled the next hearing for Aug. 9 but didn’t set a trial date. 

The case is US v. Hwang, 22-cr-00240, US District Court, Southern District of New York (Manhattan).

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