Sam Bankman-Fried will soon have his first day in court as he faces a litany of charges less than a year after the calamitous collapse of cryptocurrency exchange FTX.
The former CEO of the bankrupt exchange will face 21 days in court during his criminal trial scheduled for October 4 to November 9. Bankman-Fried has been held in pretrial detention at the Metropolitan Detention Center in New York City since August 11 and has filed several unsuccessful motions seeking temporary release to prepare for his trial.
U.S. Judge Lewis Kaplan denied the former FTX CEO’s latest motion for release, citing concerns that Bankman-Fried was a flight risk given the severity of the charges he faces and the possible length of time he could spend behind bars. if found guilty. The former FTX CEO has been granted permission to meet with his legal team at 7 a.m. ET on active court days.
Proceedings will begin with jury selection on October 3 before the trial begins on Wednesday, October 4. Cointelegraph has highlighted five important talking points ahead of one of the largest cryptocurrency-related trials in history.
What happened to FTX?
FTX, once hailed as the darling of the cryptocurrency industry, was co-founded in 2019 by Bankman-Fried and Gary Wang and became a household name in the US due to its high-profile campaigns and sponsorships.
Over the next three years, the company held a series of fundraising rounds, including a preliminary raise of $900 million in July 2021 and crypto-exchange-ftx-raises-420-million-at-25-billion.html” target=”_blank” rel=”noopener nofollow”>other $420 million in October 2021. The year 2022 promised to be fruitful for the exchange as it began with an additional $400 million fundraising round led by the likes of SoftBank and Temasek, valuing the company at an estimated $420 million. 32 billion dollars.
FTX signed several major sponsorship deals during those two years. These included the Mercedes AMG Petronas Formula One team and a $135 million deal for the naming rights to the Miami Heat’s National Basketball Association stadium.
The company appeared to be on solid footing as the broader cryptocurrency ecosystem faltered following the implosion of the Terra ecosystem. Several high-profile cryptocurrency lending companies were caught in the fallout, leading to FTX making a $240 million bid to acquire BlockFi and a failed bid to rescue Voyager Digital.
Things began to fall apart in November 2022 when rumors of trouble at FTX surfaced related to its relationship with Bankman-Fried’s quantitative trading firm, Alameda Research, and the latter’s reliance on FTX’s native FTX Token (FTT).
1) Hello everyone:
Today, I filed FTX, FTX US, and Alameda for voluntary Chapter 11 proceedings in the US.
– SBF (@SBF_FTX) November 11, 2022
The house of cards collapsed when Binance CEO Changpeng “CZ” Zhao announced that the exchange would sell its FTT token holdings, which was a catalyst for the liquidity crisis on FTX due to the falling value of FTT.
Clearing our ITF is simply post-exit risk management, learning from LUNA. We gave him support before, but we will not pretend to make love after the divorce. We are not against anyone. But we will not support people who lobby against other industry players behind their backs. Forward.
– CZ Binance (@cz_binance) November 6, 2022
On November 11, 2022, FTX, FTX US, and Alameda Research filed for bankruptcy and Bankman-Fried resigned as CEO. John Ray III, the man who handled the infamous Enron bankruptcy, was named interim CEO to overhaul and monetize the remaining assets of the FTX group.
seven beads
Bankman-Fried is charged with seven counts of conspiracy and fraud related to the exchange’s collapse.
Initially, the United States Department of Justice (DOJ) had announced an eight-count indictment for fraud, money laundering, and campaign finance crimes in December 2022. This included two counts of wire fraud conspiracy, two of wire fraud, and one of conspiracy to commit money laundering.
Bankman-Fried was also charged with conspiracy to commit commodity fraud, securities fraud, and conspiracy to defraud the United States and commit campaign finance violations.
The Justice Department dropped the campaign contribution charge in July 2023 due to an extradition agreement with the Bahamas, from where Bankman-Fried had been deported.
Who will testify?
The Justice Department informed Kaplan that it would call several witnesses for the trial, including former clients, investors and FTX staff.
The American lawyers noted that they expected FTX customers who had deposited funds on the defunct exchange to testify about their expectations and understanding of the exchange’s deposit policy and the ability to withdraw funds at any time.
Investors who purchased FTX shares are expected to testify about their expectations that the company be a custodian of user funds, as well as the full extent of custody with respect to cryptocurrency exchanges.
Finally, the Department of Justice expects cooperating witnesses who pleaded guilty to participating in a fraud conspiracy with Bankman-Fried to testify about their interactions with the former CEO and the statements and actions he took in the months prior to bankruptcy.
Cooperating witnesses expected to appear include Wang, former FTX engineering director Nishad Singh, and Bankman-Friend’s ex-girlfriend and former Alameda Research CEO Caroline Ellison.
A court of October 1 decision Before the trial has also mitigated any possible intention of Bankman-Fried to blame FTX’s lawyers, since they were aware of many of the company’s dealings that are now part of the alleged crimes committed:
“The government denies this, at least in the sense in which the defendant claims it. It seeks to prevent the defendant from “unduly focusing on the fact of the lawyers’ involvement” in such matters or “suggesting that the lawyers blessed, for example, loans, banking documents or the deletion of messages.”
Kaplan granted the government’s motion to prohibit Bankman-Fried from referencing the involvement of attorneys in her opening statement while also requiring any future evidence, arguments or testimony without notifying the court in the jury’s absence.
How long could SBF be in jail?
According to the Department of Justice, Bankman-Fried’s alleged crimes carry a significant prison sentence.
The charges of wire fraud conspiracy, wire fraud and money laundering each carry a maximum sentence of 20 years. Meanwhile, charges of conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to defraud the United States carry maximum sentences of five years.
According According to CNN, the 30-year-old man could face more than 100 years in prison if convicted of the numerous charges brought against him by the US government.
The biggest fraud case in US history?
Legal experts have already suggested that the Bankman-Fried trial could represent one of the largest fraud cases in US history, with $8.9 billion in customer deposits and investor funds missing after the FTX collapse. Some $7.3 billion in liquid assets have since been recovered through bankruptcy proceedings.
While Bankman-Fried may not have caused as much financial damage as Madoff, his image and that of the FTX brand as a visibly active proponent of cryptocurrencies has put the story in the spotlight as a modern parallel to the 17 fraud. years of the late Madoff.
Bankman-Fried also became involved in the American political landscape, donating more than $40 million to Democratic Party committees and candidates in 2022. The former FTX CEO even reportedly considered paying Donald Trump $5 billion. dollars so that he would not run for president in the United States, according to the author. Upcoming biography of Michael Lewis.
Bankman-Fried maintains his innocence and pleaded not guilty to all charges brought against him in August 2023.
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