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Sam Bankman-Fried Blocked Discussing FTX’s Anthropic AI Investment — Why Are Prosecutors Worried?

Last Updated October 11, 2023 8:08 AM
James Morales
Last Updated October 11, 2023 8:08 AM
Key Takeaways
  • Sam Bankman-Fried’s prosecutors want to block his defense from discussing FTX’s investment in the AI startup Anthropic.
  • In the wake of fresh funding from Amazon and Google, Anthropic could be on course for a 6x valuation boost.
  • Given FTX’s $500M stake in Anthropic, the higher price tag may even be enough to help the bankrupt firm to repay its debts in full.

The AI startup Anthropic is in the middle of a major funding round that could give it a $30B valuation. On top of a $1.25B cash injection from Amazon, Google reportedly wants to up its investment in the firm by a further $2B.

Should the deal go through, FTX creditors could become significant beneficiaries of the massive price tag, which would bump up the value of its $500M stake in the firm. But the crypto exchange’s former CEO Sam Bankman-Fried (SBF) could be barred from discussing Anthropic during his ongoing fraud trial.

SBF Prosecutors Move to Block Defence From Discussing Anthropic Investment

In a letter  to Judge Lewis Kaplan, government prosecutors petitioned the court to bar SBF’s attorneys from “introducing evidence or argument about the current value of certain investments made by the defendant.”

Quoting Judge Kaplan’s earlier opinion that “it is immaterial as a matter of law whether the defendant intended to repay the misappropriated funds,” the prosecution argued that raising the issue of Alameda’s Anthropic investment could distract the jury from the charges at hand.

The introduction of such evidence would be “wholly irrelevant, and present a substantial danger of unfair prejudice, confusing the issues [and] misleading the jury,” the letter stated.

Defense Wants to Use Investment as Counterargument to Government Claims

In response to the government’s attempt to ban the discussion of Alameda’s Anthropic investments in the courtroom, on Tuesday, October 10, SBF’s lawyers wrote  to Kaplan arguing the case for including evidence relating to the Anthropic investment in their defense.

According to the defense, raising the Anthropic deal is necessary because the Government has argued that the firm’s venture-capital investment strategy was wasteful and reckless. “The current value of the Anthropic shares and potentially other investments is relevant to rebutting those claims,” the letter states.

Anthropic Deal May Boost FTX Recovery

News that Anthropic is on course to receive a significant amount of fresh capital was warmly received by FTX creditors.

Back in April 2022, SBF invested approximately $500M in the AI startup, leading a $580M funding round that valued the company at around $4B.

In the wake of FTX’s bankruptcy, the administrators of the estate moved to offload its position in Anthropic and recover the money invested.

However, in June, the FTX estate reversed course and halted  the sale. Four months later, it looks as if they made the right decision.

Should the latest Google deal go ahead, Anthropic’s price tag could multiply more than 6 times over, to the $20B–$30B price range. Facing the prospect of a 6x return on investment, some FTX creditors have even suggested that the deal could lead to the firm repaying its debts in full.

However, regardless of how much money FTX can raise by selling its Anthropic stake, prosecutors have argued that how profitable or not the firm’s investments were is immaterial to the nature of the alleged crimes.

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