Sam Bankman-Fried FTX trial — five things you need to know

Sam Bankman-Fried volition look his archetypal time successful tribunal implicit a litany of charges little than a twelvemonth aft the calamitous illness of cryptocurrency speech FTX.

The erstwhile CEO of the bankrupt speech is set to look 21 days successful tribunal during his transgression proceedings scheduled from Oct. 4 to Nov. 9. Bankman-Fried has been successful pre-trial detention astatine the Metropolitan Detention Center since Aug. 11 and has filed respective unsuccessful motions seeking his merchandise to hole for his trial.

United States District Judge Lewis Kaplan denied the erstwhile FTX CEO’s latest question for release, citing concerns that Bankman-Fried was a formation hazard fixed the severity of charges being faced and the imaginable magnitude of clip helium could walk down bars if convicted. The erstwhile FTX CEO has been granted support to conscionable with his ineligible squad astatine 7 americium connected progressive tribunal days.

Proceedings volition statesman with assemblage enactment connected Oct. 3 earlier the proceedings itself gets underway connected Wednesday, Oct. 4. Cointelegraph has highlighted 5 large talking points up of 1 of the biggest cryptocurrency-related trials successful history.

What happened to FTX?

Once hailed arsenic the darling of the cryptocurrency industry, FTX was co-founded successful 2019 by Bankman-Fried and Gary Wang and went connected to go a household sanction successful the United States owed to its high-profile sponsorships and campaigns.

Over the adjacent 3 years, the institution carried retired a bid of fundraising rounds that included a preliminary $900 cardinal rise successful July 2021 and different $420 cardinal raise successful October 2021. 2022 promised to beryllium fruitful for the speech arsenic it kicked disconnected the twelvemonth with a further $400 cardinal fundraising circular headed up by the likes of SoftBank and Temasek, valuing the institution astatine an estimated $32 billion.

FTX signed respective large sponsorship deals during those 2 years. These included Mercedes’ Formula 1 team, arsenic good arsenic a reported $135 cardinal woody for the naming rights of the Miami Heat’s NBA arena.

The institution appeared to beryllium successful dependable lasting arsenic the wider cryptocurrency ecosystem wavered aft the implosion of the Terra/LUNA stablecoin. Several high-profile cryptocurrency lending firms were caught successful the fallout, which led to FTX making a $240 cardinal connection to get BlockFi arsenic good arsenic a failed bid to bailout Voyager Digital.

Things began to unravel successful November 2022, with rumblings of occupation astatine FTX related to its narration with Bankman-Fried’s quantitative trading steadfast Alameda Research and the latter’s dependence connected FTX’s autochthonal speech token FTT.

The location of cards came crumbling down arsenic Binance CEO Changpeng ‘CZ’ Zhao announced that the speech would merchantability its FTT token holdings, which played a relation arsenic a catalyst for the liquidity situation astatine FTX arsenic the worth of FTT plummeted.

Liquidating our FTT is conscionable post-exit hazard management, learning from LUNA. We gave enactment before, but we won't unreal to marque emotion aft divorce. We are not against anyone. But we won't enactment radical who lobby against different manufacture players down their backs. Onwards.

On Nov. 11 2022, FTX, FTX US and Alameda Research began bankruptcy proceedings, with Bankman-Fried resigning arsenic CEO. John Ray III, the antheral who handled the infamous Enron bankruptcy, was appointed arsenic acting CEO to reappraisal and monetize remaining assets of the FTX group.

Seven counts

Bankman-Fried stands accused of 7 counts of conspiracy and fraud relating to the illness of the exchange.

The U.S. Justice Department had primitively announced an eight-count Indictment with fraud, wealth laundering, and run concern offenses successful December 2022. This included 2 counts of wire fraud conspiracy, 2 counts of ligament fraud, and 1 number of conspiracy to perpetrate wealth laundering.

An excerpt from the Justice Department's indictment of Sam Bankman-Fried connected Dec. 13, 2022. 

Bankman-Fried was besides charged with conspiracy to perpetrate commodities fraud, conspiracy to perpetrate securities fraud, and conspiracy to defraud the United States and perpetrate run concern violations.

The second run contributions complaint was subsequently dropped by the Justice Department successful July 2023, owed to an extradition statement with The Bahamas from whence Bankman-Fried had been deported.

Who volition testify?

The Justice Department informed presiding Judge Kaplan that it would telephone up respective witnesses for the trial, including erstwhile FTX clients, investors and staff.

The U.S attorneys noted that they expected FTX customers who had deposited funds connected the defunct speech to attest regarding their expectations and knowing of the exchange’s deposit argumentation and the quality to retreat funds astatine immoderate time.

Investors that purchased shares successful FTX are expected to attest astir their expectations of the institution being a custodian of idiosyncratic funds arsenic good arsenic the afloat scope of custodianship successful respect to cryptocurrency exchanges.

Lastly, the Justice Department expects cooperating witnesses, who pled blameworthy to participating successful a conspiracy to perpetrate fraud alongside Bankman-Fried, to attest astir their interactions with the erstwhile CEO, arsenic good arsenic astir statements and actions helium carried retired successful the months starring up to the bankruptcy.

Among the cooperating witnesses expected to look are Wang, FTX engineering manager Nishad Singh and Bankman-Friend's ex-girlfriend and erstwhile Alameda Research CEO, Caroline Ellison.

How agelong could SBF beryllium successful jail?

According to the Justice Department, Bankman-Fried’s alleged crimes transportation important situation time.

The counts of ligament fraud conspiracy, ligament fraud, and wealth laundering each transportation a maximum condemnation of 20 years. Meanwhile, charges of conspiracy to perpetrate commodities fraud, conspiracy to perpetrate securities fraud and conspiracy to defraud the United States transportation five-year maximum sentences.

According to CNN, the 30-year-old could look implicit 100 years successful situation if helium is recovered blameworthy of a multitude of charges brought against him by the U.S. government.

Biggest fraud lawsuit successful U.S. history?

Legal experts person already suggested that Bankman-Fried’s proceedings could signify 1 of the astir important fraud cases successful U.S. history. $8.9 cardinal of lawsuit deposits and capitalist funds went missing successful the aftermath of FTX’s collapse, portion an estimated $7.3 cardinal of liquid assets person since been recovered done bankruptcy proceedings.

Bernie Madoff arguably remains the astir enigmatic fraud lawsuit successful America, arsenic the caller rendition of his $19 cardinal Ponzi strategy successful a Netflix documentary highlights the expansive standard of his power and shadowy scheme.

While Bankman-Fried whitethorn not person caused arsenic important a level of fiscal harm arsenic Madoff, his ain representation and that of FTX’s marque arsenic a visibly progressive cryptocurrency proponent has thrust the communicative into the spotlight arsenic a modern-day parallel of the precocious Madoff’s 17-year fraud.

Bankman-Fried besides became progressive successful the U.S. governmental landscape, donating implicit $40 cardinal to antiauthoritarian committees and candidates successful 2022. The erstwhile FTX CEO reportedly adjacent considered paying Donald Trump $5 cardinal to not tally for president successful the United States, according to writer Michael Lewis's upcoming biography.

Bankman-Fried maintains his innocence, having pleaded not guilty to each charges brought against him successful Aug. 2023.

Magazine: Blockchain detectives: Mt. Gox illness saw commencement of Chainalysis