Home / Sam Bankman-Fried FTX Trial: SBF Prosecution Day 18
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Sam Bankman-Fried FTX Trial: SBF Prosecution Day 18

Last Updated November 3, 2023 8:39 AM
Teuta Franjkovic
Last Updated November 3, 2023 8:39 AM
Key Takeaways
  • Sam Bankman-Fried’s found guilty on all seven criminal fraud counts.
  • Jury will now decide what happens to the founder of FTX.
  • Bankman-Fried entered a not guilty plea.
  • Key witnesses for the prosecution were former members of Bankman-Fried’s close group.

Sam Bankman-Fried was a crypto superstar living in the Bahamas less than a year ago, running a firm supported by celebrities and surrounded by admirers and friends who thought he was the genuine deal: a math wiz from MIT. A visionary who veered away from the Wall Street path to forge his own path. The philanthropist was amassing wealth and regularly declared his intention to give it all away.

Bankman-Fried went from a dangerous gamble to a near-certainty in less than a month, with a conviction on seven counts and a possible 115-year jail term.

What comes next for FTX is still unknown, even though a jury of his peers has already sealed Bankman-Fried’s future. Similarly, the Bahamas relied on the cryptocurrency sector to support its economy, with FTX and its employees’ ostentatious hobbies at its core. The island nation’s citizens may find some comfort in the guilty conviction rendered by 12 strangers more than 1,000 miles away, despite the fact that FTX’s collapse has left a super yacht-sized hole in their hopes.

Day 18 – SBF Found Guilty Of Fraud

Following a five-week trial for the founder and former CEO of FTX, Sam Bankman-Fried was found guilty by a New York jury of defrauding his lenders and consumers.

On March 28, 2024, a provisional sentencing date was established. Bankman-Fried may serve up to 115 years in prison, which is decades of time.

Following the guilty convictions on all seven counts, US Attorney Damian Williams declared  outside the courthouse that Sam Bankman-Fried had committed one of the largest financial scams in American history.

“This type of corruption and deception dates back thousands of years. We can’t stand it anymore.”

An appeal appears probable: Defence lawyer Mark Cohen released a statement in which he said that while Bankman-Fried respects the jury’s verdict, he still maintains his innocence and would “vigorously fight the charges.”

The jury’s deliberations started just after 3 p.m. ET. The judge announced that a decision had been made shortly before 7:40 p.m. Shortly after the lawyers and Bankman-Fried returned to the crowded courtroom, the guilty verdict was read out.

Bankman-Fried remained motionless while hearing the verdict. The judge had commanded him to look towards the jury box, and jurors were advised to look towards the judge and court clerk.

The statement from the twelve New Yorkers who voted guilty on all seven counts was, “The verdict unanimous, your honor.” The jury’s service was appreciated by the judge.

Jurors were tasked with deciding whether Bankman-Fried had committed a crime when he took money from FTX customers and used it for venture capital, real estate, corporate sponsorships, political contributions, and Alameda losses following the previous year’s sharp decline in cryptocurrency prices.

During his closing statement on Wednesday, Assistant U.S. Attorney Nicolas Roos informed the court that there was “no serious dispute” regarding the disappearance of $10 billion in customer funds that were stored in FTX’s cryptocurrency exchange. He claimed that the question is whether Bankman-Fried knew it was improper to take the money.

Roos stated:

“The defendant conned and lied to obtain money, which he then spent.”

Currently, Bankman-Fried is awaiting sentencing. His situation has been likened to that of Elizabeth Holmes , the creator of Theranos, a medical device firm that shut down in 2018.

Day 17 – “A Pyramid Of Lies”

In United States v. Sam Bankman-Fried, the trial concerning the multibillion-dollar collapse of FTX, the prosecution and defense attorneys presented their closing arguments. Prosecutors claim that the creator of FTX constructed his cryptocurrency empire on a “pyramid of lies.”

The case is sent to the jury for consideration on November 2, according to Senior District Judge Lewis A. Kaplan. Bystanders at the trial speculated that a verdict might be declared sooner rather than later.

The government’s case was succinctly outlined by Assistant United States Attorney (AUSA) Nicholas Roos, who told InnerCityPress  that the defendant, Bankman-Fried, had duped and defrauded thousands of FTX consumers who had placed billions of dollars in the now-defunct cryptocurrency exchange.

Long before Ellison joined as head of trading, Bankman-Fried allegedly set up FTX as a feeder organization for Alameda. After Sam Trabucco quit, Bankman-Fried was named sole CEO.

The prosecution cited Bankman-Fried’s evasive remarks during the trial and his complete awareness of actions made at Alameda Research, the cryptocurrency trading company of which he owned 90%. According to some accounts, the creator of FTX said in court “I don’t recall” almost 140 times.

AUSA Roos reported that three-star witnesses Caroline Ellison, Gary Wang, and Nishad Singh affirmed the MIT graduate’s preference for the likelihood of robbing consumers and getting away with it.

According to the prosecution, Bankman-Fried deliberately organized criminal operations behind closed doors, attracting clients with deceptive marketing methods and celebrity endorsements while courting world leaders and policymakers to support his public image as a respectable corporation.

Federal prosecutors maintained that only the creator of FTX had the necessary access to approve actions that ultimately caused his twin cryptocurrency businesses to go bankrupt and that Bankman-Fried’s claims of ignorance and advice of counsel fell short of meeting the burden of proof.

Roos proceeded, pleading with the jury to disregard narrative devices in favor of the evidence, saying that Bankman-Fried escalated his spending and embezzlement of customer cryptocurrency when his team alerted him to the growing hazards.

The founder of FTX is accused on seven counts, which are based on four crimes: money laundering, cheating FTX investors, FTX customers, and Alameda’s lenders, as AUSA Roos reminded the court.

Defense: The FTX Catastrophe Is The Fault Of Other Executives

During Bankman-Fried’s final argument, defense lawyer Mark Cohen framed the case as a story of two cases: one in which the defendant was a victim of the defendant’s rapidly expanding cryptocurrency business, and the other in which the government demonized the former CEO of FTX.

Cohen stated that Bankman-Fried acted honorably when he chose to repay lenders rather than running off with millions of dollars. Drawing attention to the fact that government witnesses testified primarily to get plea deals and avoid jail time, the defense attorney argued that Ellison and other former executives should not have been concerned until FTX had collapsed.

Day 16 – SBF Credibility Weakens Over $8B Customer Funds

Sam Bankman-Fried’s testimony ended on October 31, when defense attorneys cited poor managerial choices made by other executives, such as FTX co-founder Gary Wang and former CEO of Alameda Research Caroline Ellison, and prosecutors pointed out contradictions in his testimony.

Following FTX’s collapse, prosecutors presented numerous exhibits that described Bankman-Fried’s publicity campaign. It was reported that the former cryptocurrency billionaire had distanced himself from Alameda Research and maintained that his trading company was independent of the FTX cryptocurrency exchange.

Contradictions in the defendant’s allegations regarding his twin organizations, Alameda and FTX, were brought to the attention of government attorneys through private discussions that were later transcribed into court records.

A New York district court judge, Lewis A. Kaplan, made a reference to the likelihood of a decision by Friday, November 3.

When the Bahamian Prime Minister Philip Davis was given courtside tickets at the FTX Miami Arena and was given the option to withdraw cryptocurrency when the exchange went bankrupt, Bankman-Fried was questioned about the hospitality shown to him.

Attorneys for the government retrieved an email that the founder of FTX had sent approving withdrawals for users in the Bahamas.

Bankman-Fried responded to inquiries under oath on everything from Alameda’s utilization of $8 billion in fiat put by FTX customers through the North Dimension account at Silvergate Bank to FTX’s unique code and hundreds of millions invested in companies like K5 Global and Anthropic.

Bankman-Fried denied any knowledge of the code fault that gave Alameda access to customer funds and cryptocurrency, although he did confirm that he approved the purchase of one $35 million flat.

While the head of FTX lobbied lawmakers in Washington, D.C., executives at the corporations claimed to be handling the matter through Bankman-Fried’s account, and he in turn believed his colleagues.

Executives from FTX and Alameda contemplated raising $3.9 billion in liquidity by either selling off their interests in Modulo Capital and Robinhood or taking out loans against their equities, according to chat logs that federal lawyers provided.

In one text, Bankman-Fried implied that even with a capital infusion of over $4 billion, Alameda would be unable to close the gaps in FTX client balances.

“We had not been aware of it, the $8 billion liability. Had Alameda never had any relation with FTX, we would have had better systems in place,” Bankman-Fried said .

Ellison’s remarks on the stand were supported by the FTX founder’s testimony regarding the seven balance sheets and the roughly $20,000 worth of Bitcoin hedges. Although Bankman-Fried denied seeing certain spreadsheets, he acknowledged that he agreed with the suggestions made by the former CEO of Alameda.

According to Bankman-Fried, a proposal to provide FTX’s bankrupt estate $600 million in Robinhood shares acquired through loans from Alameda sparked a battle for control of the company. Later on, this action sparked an Antigua lawsuit.

Mark Cohen, the lead defense attorney, ended questioning, and no rebuttal witnesses were called by the government. Judge Kaplan refused Bankman-Fried’s attorneys’ move for acquittal and scheduled closing arguments for November 1.

Day 15 – AUSAs Grill SBF, Shift Blame To Ellison

On the 15th day, direct questioning of the FTX founder’s attorneys produced responses that virtually placed the blame for Alameda Research’s unauthorized use of FTX client money and cryptocurrency on Caroline Ellison.

Bankman-Fried claimed  Ellison, the former CEO of Alameda, submitted her resignation after acknowledging poor hedging at the cryptocurrency trading company. In the end, the two proceeded to manage FTX and its sister company Alameda with the goal of turning the companies around. 

In September, I asked her again about hedging. I asked what the scale was. She gave me some numbers. I told her I was glad but that it should be a bigger number, at least twice as much. She also sent me some spreadsheets,” he stated .

Earlier, Ellison gave testimony regarding her involvement in creating approximately seven to eight deceptive spreadsheets. These spreadsheets were used while Alameda and FTX executives negotiated with crypto lenders and attempted to conceal substantial deficiencies in their balance sheets.

In the period from November 2, when Alameda’s financial records became public, to November 7, following Ellison’s proposal to purchase Binance’s $2 billion FTT holdings at $22 per token, net withdrawals, as reported by the defendant and as noted by InnerCityPress , surged from $1 billion to $4 billion.

Explaining his justification for the “assets are fine” messages on what was then Twitter, Bankman-Fried stated that FTX was solvent to the best of his knowledge and had not taken customer cryptocurrency. Bankman-Fried claimed to have removed his articles after witnessing the collapse of Binance’s buyout of FTX and Ellison’s hedges at Alameda. 

The creator of FTX recalled  discussing a multibillion-dollar rescue plan with the private equity firm Apollo, but the firm declined to invest after doing due research on Bankman-Fried’s cryptocurrency exchange. 

When his defence attorneys asked Bankman-Fried the last questions of the direct, he said, “I was trying to help in any way I could.”

Attorneys Question Bankman-Fried’s Veracity

Prosecutors’ first questions during Bankman-Fried’s cross-examination soon revealed that, although owning 90% of the trading company and having Sam Trabucco and Caroline Ellison named as co-CEOs, he had a significant influence in Alameda’s trading decisions.

A few weeks after FTX collapsed, in December 2022, Bankman-Fried was questioned regarding a Twitter Spaces with Mario Nawfal. A federal court in New York presented an audio clip of the exchange in which Bankman-Fried described his tactics for seeming to have no involvement in Alameda’s operations because of conflicts of interest. 

“That sounds like me,” the accused said. Prosecutors also cited Bankman-Fried’s earlier statement that he was “walled off” from Alameda in an interview with the Financial Times. Disparities between FTX’s testimony given under oath and remarks made following his bankruptcy filing were brought up by federal attorneys.


The prosecution presented proof that Bankman-Fried had pushed FTX as a secure platform where users actually controlled their assets—a core tenet of blockchain technology and cryptocurrency. 

In response, the defendant said he had memory problems since his evidence had been called into question in interviews and tweets that had been recorded.

Bankman-Fried acknowledged that although the exchange was marketed as a “neutral piece of infrastructure,” Alameda had unique rights that were codified in the code that drove FTX’s trading engine. The prosecution questioned Bankman-Fried’s veracity, claiming that the defendant was aware of Alameda’s activities and portraying the company as an independent business comparable to any FTX user.

The former CEO of FTX oversaw a variety of real estate, cryptocurrency mining division of Genesis, Michael Kives’ K5 Global, Modulo Capital, and Robinhood, to mention a few. Bankman-Fried did neither confirm or deny that he had bought an apartment for Mike McCaffrey, the former CEO of The Block, a cryptocurrency news website.

In reference to Alameda’s loan payback to lenders like as BlockFi and Genesis, Bankman-Fried stated that while he was aware that using customers’ assets on FTX may potentially undermine the exchange, he believed the likelihood of that occurring was low. 

After Bankman-Testimony Fried’s ends on October 31, there will probably be two government rebuttal witnesses and a direct from his defence team, headed by former federal prosecutor Mark Cohen. 

Day 14 – Suspense Unfolds: Responsibility and Legal Maneuvers

In a federal court in New York, FTX founder Sam Bankman-Fried testified before Judge Kaplan and a jury, stating that occasionally, his team took decisions that were outside of his authority and against his directions.

Judge Lewis A. Kaplan of the Southern District of New York decided to permit FTX’s data retention policy during cross-examination after a contentious mock trial for Bankman-Fried. 

According to InnerCityPress , Daniel Friedberg, the defendant’s general counsel, allegedly wrote the policy, which addresses the Signal auto-delete function that Bankman-Fried’s businesses employ for internal communications.

At the time, the founder of FTX presented an advice-of-counsel defence that centred on assigning guilt to his attorneys. It’s uncertain if this tactic will finally result in a not guilty finding for Bankman-Fried.

Ellison Under Suspicion For Alleged Failure To Hedge

FTX, the cryptocurrency exchange he co-founded with his childhood friend Gary Wang, and Alameda Research, a trading company that plays a significant role in FTX’s overall operations, both declared unequivocally that Bankman-Fried did not conduct fraud there. 

When the defendant launched Alameda in 2017 from a Berkley office, he claimed to have made $200,000 during a period when cryptocurrency was gaining global interest. 

In less than 18 months, Bankman-Fried established his futures exchange, FTX, and brought Caroline Ellison  on board at Alameda. However, he later acknowledged that he had concealed some of the trading firm’s shortcomings from his former colleague on Jane Street.

The former crypto tycoon claimed that FTX and Alameda grew naturally, moving to Hong Kong in 2021 and then, shortly after, to the Bahamas, where the regulatory environment was more lenient than in the United States.

Later on, the exchange would use more aggressive marketing strategies supported by Alameda loans, the most of which came from balances held by FTX customers.

With an enormous credit line, Alameda’s only role on the exchange was market maker. According to the defendant’s testimony, this credit line increased in size over time to billions, and the company got specialised services to lessen pricing actions that moved the market. 

We increased the number of servers, for the risk engine. But we learned that if there was an erroneous liquidation of Alameda or any other large account, it would be catastrophic for FTX. So I told Gary [Wang], we have to stop such liquidations of Alameda’s account. They told me they’d done it,” Bankman-Fried stated .

Blaming Unique Code ‘Allow Negative’ for FTX’s Woes

According to Bankman-Testimony Fried’s, Fried was not aware of the unique code called “Allow Negative,” which was created by Wang, a co-founder of FTX and used as a buffer or workaround for Alameda throughout its liquidation. The defendant contends that it was not his decisions that brought down FTX, but rather the activities of his staff and the lack of risk management procedures. 

According to Bankman-Fried, political donations are given to support humanitarian causes like Michael Sadowsky’s Guarding Against Pandemics and urge lawmakers on crypto legislation. 

These gifts, which were reportedly made possible by Alameda loans, would subsequently buy the defendant time in front of Congress. 

Alameda’s liquidity dropped from $40 billion to $10 billion by June 2022. According to Bankman-Fried’s report, former CEO of Alameda Caroline Ellison expressed concerns about the company’s liquidity, while former head developer Nishad Singh raised the alarm about a $8 billion bug. 

“Yes. Nishad expressed concerns about marketing, brand partnerships, and K5. I told him the marketing team was a mess. I said I didn’t greenlight certain new initiatives and told him other initiatives were succeeding, like the MLB umpire patch,” Bankman-Fried claimed .

The creator of FTX said that despite his alleged advise to create a $2 billion safety net, Alameda did not hedge its bets. In the autumn of 2022, Bankman-Fried informed Adam Yedidia that FTX was not “bulletproof” and contemplated closing Alameda.

As directed by Judge Kaplan, Bankman-Testament Fried’s will continue on October 30, during which the prosecution will prepare a thorough cross-examination and a rebuttal argument. The judge made a suggestion that a charge conference, during which attorneys deliberate on closing objections and jury instructions, might occur prior to November 3.

Day 13 – Where’s the Crucial Defense Document?

Sam Bankman-Fried (SBF) took the stand for what can only be called a “test run” in a courtroom scenario without the jury. The purpose of the hearing was to assist the judge in determining what evidence will be allowed at the trial.

Under the interrogation of Assistant U.S. Attorney Danielle Sassoon, SBF’s performance was subpar. He occasionally came out as evasive due to his verbose responses and many apologies, which contrasted strongly with Sassoon’s probing questioning.

First, SBF was questioned by his own solicitors and a defense attorney,  Mark Cohen asked him about whether he had ever scammed someone.

In response, Bankman-Fried said, “No, I did not.”

Most questions, however, were focused on an enigmatic document preservation policy. Mysterious because, even after spending nearly an hour debating its contents, the policy itself is nowhere to be located.

Cohen revealed that Fenwick and West, the legal firm that developed on the policy, had turned down their subpoena to deliver it over after Bankman-Fried’s fictitious testimony ended.

In essence, a document that is essential to the defense’s argument is missing from the evidence.

In response to a particular question from Sasoon on Bankman-specific Fried’s communications with solicitors on paper, SBF stated , “I think we have requested some of those but have not been given them.”

When Cohen questioned Bankman-Fried, he stated that Dan Friedberg founded North Dimension, which was a part of Alameda. Friedberg is the purported “fixer” for SBF, although Bankman-Fried is presenting a different image than the one produced by the FTX estate.

The forms for the North Dimension bank account were handled by Friedberg, who gave them to SBF to sign.

“I briefly reviewed them,” SBF commented.

Friedberg oversaw the contract for deposits made by FTX customers as well.

In general, Bankman-Fried apologised frequently to Sassoon during his interrogation if he didn’t “understand” or wasn’t answering the “correct” question. Inquiring about his comprehension of a paper or a conversation, he would also frequently qualify his response with the word “contemporaneously.”

A few times, Sassoon cut Bankman-Fried off, telling him to address her real query instead. She inquired about the intent of the North Dimension bank account and the person who made the decision for it to accept deposits from customers, for instance, on multiple occasions.

Bankman-Fried often referred back to an agreement he had signed as a payment agent between FTX and Alameda.

Sassoon also inquired about the auto-delete function that was covered in previous Thursday’s hearing regarding certain Signal communications.

Sassoon specifically inquired as to whether Bankman-Fried or former Alameda CEO Caroline Ellison had addressed the $13 billion deficit on Signal.

“Probably,” Bankman-Fried stated and added that he wasn’t completely sure.

Day 12 – FTX General Counsel Shocked At $7B Deficit Revelation

Can Sun, the former general counsel for defunct cryptocurrency exchange FTX, stated  unequivocally during his testimony on Thursday, October 20, 2023, at Sam Bankman-Fried’s trial that the former CEO had asked him to explain legally why the company lacked the $7 billion it needed to cover soaring customer withdrawals in early November 2022, just before it collapsed.

The night before FTX revealed its insolvency, Sun, one of three prominent witnesses from Bankman-Fried’s inner circle who had already testified, said former Head of Engineering Nishad Singh “looked like his soul had been plucked away from him.” Sun held the position for 14 months before the firm’s collapse.

“It has been my understanding throughout my time at FTX that FTX has safeguarded, segregated customer assets, that we do not misuse, we do not touch customer assets,” he testified, adding that this message was communicated in all public forums, including SBF’s tweets and Congressional testimony, as well as in private conversations with investors and regulators.

Sun admitted to being astonished when asked about the missing payments by prosecutors. “So when there is a $7 billion deficit and FTX relied on Alameda to return the money to be able to plug in that hole, I was shocked,” Sun said.

Bankman-Fried is accused of seven felonies, including wire fraud, conspiracy to launder money, and offences related to campaign funding. Authorities claim that Bankman-Fried intentionally misappropriated client monies to support Alameda.

Separated and protected

In August 2021, Sun joined FTX and started working on a revised Terms of Service that better reflected the size of the organisation that FTX had become.

This phrase, which has subsequently been essential to the government’s argument, was among the words Sun worked on. It reads, “Title to your Digital Assets shall at all times remain with you and shall not transfer to FTX Trading.”

Sun, however, asserted in his testimony that this was not a change for the exchange and that it was consistent with both how Bankman-Fried had portrayed user assets being separated from the company’s own assets and how FTX’s policy has been throughout. The updated Terms of Service were simply clarified for the benefit of users. The Terms of Service were completely rewritten and published online in May 2022 after the language was finalised in September 2021.

The Appearance Of Wrongdoing

Sun stated  in his testimony that he was shocked to learn of Alameda’s exemption from auto-liquidation between the months of August and September 2022. He claimed that a different worker had informed him that Bankman-Fried and Singh intended to keep Alameda’s exemption from liquidation.

Sun pushed for the adjustment to be made into a delayed-liquidation mechanism that would be accessible to all market makers and to make it clear to all regulators and users that this was already in place and had previously been misrepresented.

When users began widespread exodus of their assets from the site at the beginning of November 2022, the procedures for these modifications were still in progress.

Checking The Maths

According to Sun, he learned about FTX’s misappropriation of customer assets on November 7, 2022, the day before it was made public that FTX was insolvent, while he was attempting to assist FTX in raising money from investment management company Apollo Capital.

Sun studied a spreadsheet outlining the financials of FTX and Alameda while sitting in an apartment in Albany with Bankman-Fried, Singh, FTX’s head of product Ramnik Arora, and SBF’s father, Joseph Bankman. A further panel indicated how much cash Alameda had available to satisfy any prospective withdrawals from concerned clients. It showed that FTX was short the $7 billion needed to fund those withdrawals. Sun was surprised since he had believed that FTX and Alameda were independent organisations.

In his testimony, he claimed that when he questioned the mathematics used in the computations, he frequently got no answer. On other occasions, he only sometimes got responses, and they were “vague.” He claimed that Bankman-Fried was using his computer to type and occasionally stepping away to answer calls.

Nishad was there, he continued, “sitting there.” His face was grey and pallid throughout. It appeared as though his soul had been taken from him.

No Reasons In The Law

After a few hours had passed, and shortly before SBF was to meet with the asset management company, he requested from Sun “a legal justification as to why the funds were missing and…at Alameda.” The defendant’s inquiry validated Sun’s suspicions that Alameda had stolen FTX client deposits and that FTX didn’t have enough money to satisfy customer withdrawals.

Just before the meeting at 7 o’clock, the two went for a stroll in Bankman-Fried’s gated enclave in Albany. Sun provided SBF with three theoretical justifications for the deficiency, but he also provided justifications for why each justification was either insufficient or false.

The dormancy fee that FTX assessed to consumers who were inactive but still had funds on the exchange was the first hypothetical legal defence. That reasoning, however, would not hold water given the tiny sums associated with these accounts. Sun’s explanation was acknowledged by Bankman-Fried with a “yup, yup.”

The second argument was based on the idea that a user could default on a loan when they freely lend their cryptocurrency to another user. Sun, however, said that Singh and Arora had retrieved data indicating that the facts did not support this plausible reason. Again, SBF said, “Yup, yup.”

Whether FTX had ever made it apparent what the legal connection is between a user and his or her assets would have determined the outcome of the final debate. This rationale, according to Sun, would be invalid, however, because FTX’s “terms of service make it clear that when a user deposits assets onto the exchange, those assets continue to belong to the user.”

“I was actually expecting a bigger response, but it was very muted,” Sun said of Bankman-Fried’s response to the information that there was no legal justification. Sam essentially said, “Got it,” or something similar. He was not at that surprised.

The prosecution next showed a brief excerpt from an episode of Good Morning America during which George Stephanopoulos spoke with Bankman-Fried. The anchor emphasised that FTX was not permitted to use client assets by the Terms of Service. In the video, SBF begins by outlining how loan and borrowing can be incorporated into the scheme. The clause from the Terms of Service stating that the money cannot be lent out is read out by Stephanopoulos. Bankman-Fried pauses for a second and whispers Stephanopoulos’ remarks back to himself before looking up, pausing once again, and saying, “There existed a borrow/lend facility,” to which Stephanopoulos responds that participants had to choose to participate. Hearing SBF’s defence in the courtroom during the days immediately following the collapse provided a preview of what a cross-examination may be like for him if he were to testify.

Cross-Examining Sun

Sun was successfully cross-examined, earning some points. The terms of service for fiat cash, which were more ambiguous regarding who owns title than those for digital assets, were retrieved by the defence attorney Mark Cohen. However, the lawyer just politely inquired about this. The defence attorney’s next question about the Terms of Service, which specified that English law would govern them, was met with a warning from Judge Kaplan. Sun was asked to simply repeat Cohen’s request that “The terms and any dispute shall be governed by, and construed in accordance with, English law.”

Robert Boroujerdi, managing director of asset manager Third Point, concluded the day’s testimony by outlining how Bankman-Fried omitted crucial information about FTX’s activities that would have affected Third Point’s choice to invest $60 million in the business. The value of that investment, which was marked down to zero and is now worthless, is comparable to one made by the venture capital firm Paradigm, whose managing partner Matt Huang testified earlier in the trial. A week from today, on Thursday, October 27, the trial will resume.

The prosecution anticipates taking a break that morning, and Bankman-Fried’s solicitors have asked to start their defence after lunch. Whether or not SBF will take the stand is the key question that will remain unanswered for the next week.

Day 11 – “This is a joke!” – Judge Shames Defense

Cory Gaddis, the Google records custodian, was called to the witness stand to discuss the information in a Google Sheets file linked to SBF’s Google account.

The testimony, however, didn’t go as expected. Gaddis acknowledged to defense lawyer Christian Everdell during the cross-examination that he was not an expert in metadata.

The court reprimanded the prosecution and the defense for wasting the jury’s time as soon as Gaddis was dismissed.

Calling this witness to the stand, Kaplan continued, was “a joke.” The judge then stated, referring to the 12 jurors and the six alternates, “We have 18 people devoted” to this case.

When it was discovered that Gaddis had been transported from Texas to New York to testify on a subject in which he was not even an expert, Judge Kaplan became even more incensed.

Judge Kaplan  : “Lawyers are supposed to do better than this, and I’m talking to both sides.”

Additionally, three pieces of evidence were up for discussion later on in the trial between the prosecution and Bankman-Fried’s attorneys. Following the demise of FTX, Bankman-Fried and other people exchanged messages, some of which contained “swear words.”

Even though Everdell was hesitant to speak them, the judge’s patience eventually ran out.

Kaplan said, “I’ve heard it before,” as Everdell spelt out a particular bad term.

Everdell rushed off his list of objections to the planned government evidence against Bankman-Fried much too quickly for the judge, further complicating the situation.

“I play 33-rpm records. The judge informed Everdell, “Not 45. Younger members of the group, Kaplan was talking about the speed at which albums are played.

Everdell slowed down after recognising the message. Afterward, it was Paige Owens, an accountant with the FBI who examined thousands of pages of Alameda and FTX bank statements, and she was the final government witness to testify on Wednesday.

The cause? to discover the origin of Bankman-Fried, Singh, and Salame’s numerous political contributions.

Alameda’s Prime Trust account sent seven wire transfers totaling $47 million to his personal Prime Trust account in relation to SBF.

These transactions all took place between January and April of 2022. According to the authorities, a large portion of the money was funnelled into the accounts of Building a Stronger Future, which is also handled by SBF’s brother, and two Democratic PACs, including the House Majority PAC and Guardians Against Pandemics, which is led by Gabriel Bankman-Fried.

ICYMI, Peter Easton, an accounting professor, testified that SBF’s parents, Joe Bankman and Barbara Fried, bought a $16.4 million home in the Bahamas. The kink in this story is that, according to Easton’s testimony, the property was probably bought using money from FTX customers.

From August 2022 until early October 2022, more wire transactions totaling $16 million were sent from Alameda’s Silvergate account to Bankman-Fried. According to the prosecution, some of the money was used to pay another Democratic PAC.

During his testimony, Nishad Singh’s political contributions took the stage. Additionally, the Alameda and FTX Digital Markets bank accounts paid out over $3 million to the former head of engineering at FTX. Numerous PACs and campaign funds, including the LGBTQ Victory Fund, the Senate Majority PAC, and the Iowa Democratic Party, received a portion of the multi-million dollar amount.

Singh entered a guilty plea to seven federal counts, including one for violating campaign financing laws, in February.

Additionally, the FBI verified that Ryan Salame, the CEO of FTX Digital Markets, had money transmitted to him for political contributions. Salame admitted to breaking the law regarding campaign fundraising.

While the FBI can examine the bank transfers, the defence stated that the witness was unable to provide proof of how the money reached the Alameda bank accounts. That was outside the purview of her inquiry.

Given all the talk today about how FTX customer money was spent, Everdell suggested that it might have come from Alameda trading revenue as opposed to what the government may have been hinting with Owens’ testimony.

Thursday is expected to be the last day in court this week. According to Judge Kaplan, there might only be two witnesses, which could lead to a shortened trial day. If the defence decides to present a case, they will be prepared to begin as early as next Thursday, according to the defence.

Day 10 – FBI Agent Reveals SBF Phone Records

On the tenth day of the SBF Trial, the defense aimed to undermine the credibility of ex-FTX head engineer Nishad Singh, who testified against former FTX CEO, Sam Bankman-Fried. Meanwhile, FBI Agent Richard Busick exposed Bankman-Fried’s connections to high-profile politicians.

Busick seemed relatively matter-of-fact during his evidence while the prosecution reviewed Sam Bankman-Fried’s cell phone data. The jury, however, continued to focus on the agent as he spoke exclusively to them in the jury box.

The Bahamas Prime Minister’s son had requested a conversation with SBF over an NFT project, and the US government was able to determine SBF’s phone number via an email exchange with the PM. The complete phone number is listed in the court transcript, although phoning it right now is probably pointless.

In New York City, the AT&T cell phone data that Busick examined from Bankman-Fried’s number covered the years 2021 to 2022. The prosecution effectively built maps of SBF’s phone’s location in Manhattan at various times to match the dates and timings of emails sent to Bankman-Fried and other FTX workers.

Here’s a sneak glimpse at the people Bankman-Fried met up with. The emails for Bankman-Fried frequently featured dinner invitations. Bankman-Fried had dinner with New York Mayor Eric Adams at Osteria La Baia on March 3, 2022, and his phone was close by.

The government was able to prove that Bankman-Fried received an invitation to a meeting with New York Governor Kathy Hochul at the Capital Grille in the middle of September 2022.

Four days later, according to another email, Bankman-Fried was leaving for a meeting with “President Clinton”—presumably Bill Clinton—at the New York Hilton Midtown.

Anthony Scaramucci of Skybridge was also mentioned; he contacted SBF to extend an invitation to a Pittsburgh Steelers game on November 20, 2022. SBF might have been a little busy by that point.

FTX representatives discussed a potential meeting between Bankman-Fried and the Saudi Minister of Investment at the Pierre hotel in Manhattan in communication that the government revealed a day later. SBF attorney Christian Everdell responded to all of this during the cross-examination of Busick with a rather simple and basic defence.

Busick’s cell site analysis is unable to identify the user of the cell phone at the dates, times, and locations when it pings surrounding cell towers, even if the number belongs to Bankman-Fried. Additionally, it only provides a rough approximation of the phone’s location.

Busick nodded in agreement, and Everdell swiftly finished wrapping his cross.

Professor Peter Easton, an accounting specialist, is the following probable government witness. Easton would be the second expert witness for the prosecution if summoned to testify.

According to David Lesperance, Crypto Legal Expert from Lesperance & Associates, there will be more to see.

He told CCN:

“Although we have not seen the defence yet, from the testimony and “receipts” presented to date, SBF looks highly unlikely to post a reasonable doubt counterargument. The increasing common wisdom is that his only chance is to take the stand himself. However, unlike his pre-arrest interviews, he will not be able to control the question and answers. If he thought CoffeeZilla was tough, wait till he faces a cross examination by the prosecution!”

After Nishad Singh’s Evidence, SBF’s Mother Left.

Tuesday afternoon, Singh Cohen finished his cross-examination of Nishad Singh and finished the prosecution’s key witnesses.

In relation to a $3.7 million home he purchased on Orcas Island off the coast of the state of Washington, Singh was frequently called to account. which, well, was bought after that talk with SBF in September 2022 on the balcony of the Orchid penthouse in the Bahamas. Hm.

Singh did, however, acknowledge during his cross-examination that he had considered leaving the company a few times, including once in 2018 and a few other times following upsetting conversations with Gary Wang, the co-founder of SBF and FTX.

However, he chose not to leave. In November 2022, he finally left his flat in the Bahamas.

This brings us back to the house, which, according to Cohen, was scheduled to close in the first week of November, only a few days before FTX would inevitably go under. Perfect timing.

Returning to the balcony meeting, Singh expressed concern at this time about the $13 billion that was missing from FTX’s balances. According to Singh, Bankman-Fried wasn’t really concerned about this as it was only depriving the former FTX CEO of “some 5-10%” of his productivity.

Cohen repeatedly questioned Singh about the rationale behind his home purchase. Singh ultimately decided that he was being “selfish” at the time because he understood he was “drawing on customer funds” to purchase the house he believed would be a wonderful place for his friends and family to unwind.

Cohen concluded his cross-examination by saying that he further described his decision to purchase the home as “egregious” and “unnecessary.”

Singh said that he was fine with putting himself in front of clients in September 2022 during the redirection from prosecutor Nicolas Roos.

Richard Busick, an FBI Special Agent, took the witness stand after Singh was expelled. Busick is an authority on analysing cellular site data.

More than 14,000 pages of AT&T cellular data that Busick pieced together into a comprehensive analysis have been provided by the government. Very interesting.

It’s not yet obvious how this precisely connects to Bankman-Fried. However, we’ll keep you informed.

A Juror Fell Asleep During An Engaging Cross-Examination

We’re back to talking about political money now. Specifically, Nishad Singh’s contribution to political causes as seen from his perspective.

At one point, Cohen questioned Singh about his opinion on the need for him to represent political donations.

Singh answered: “Not necessary.”

Prior to Singh’s cross-examination, the government’s version of events suggested that Singh had been effectively intimidated into serving as the conduit for enormous sums of cash going to Democratic politicians and causes by Gabriel Bankman-Fried and his friends.

Cohen also emphasised that loans made up the majority of the donations. Singh first resisted the categorization, but in the end he gave in and accepted it.

Cohen then enquired whether Singh believed he was responsible for the loans at least four times. Singh claimed there was no formal arrangement that he had to repay them, but he “wanted to pay them back.” It’s a great shame that folks who lend money typically expect the money returned.

Day 9 – FTX Chief Dev Reveals Huge Expense For SBF Public Image

Sam Bankman-Fried’s social capital and public image were built with the help of $1.3 billion in client funds, according to  Nishad Singh, a former chief developer for Alameda and FTX.

Following the testimony of significant witnesses including Caroline Ellison and Gary Wang, who were both a part of Sam Bankman-Fried’s inner circle, federal prosecutors proceeded to question the last few government witnesses in United States v. Sam Bankman-Fried.

Prior to day nine of the trial, the defence attorneys requested lunchtime Adderall. According to InnerCityPress, Bankman-Fried’s attorneys said that the creator of FTX needs further medication in order to support his case and maybe testify.

In week three of SBF’s trial, the prosecution put Tareq Morad to the stand to testify. Morad opened an FTX account in 2021 as a retail customer and funded it with wire transfers to Alameda accounts.

Morad was persuaded by Bankman-Fried’s media appearances and was comforted by the founder’s social media posts during FTX’s closing hours, similar to the first witness Marc-Antoine Julliard.

Morad used appearances in Forbes magazine and political lobbying in Washington as justification for Bankman-Fried’s fictitious legitimacy.

As part of his cooperation agreement with the government, Nishad Singh was required to take an oath to testify after pleading guilty to charges of fraud, money laundering, and campaign financing crimes. Singh could receive a sentence of 75 years in jail for the offences he admitted to, but a plea agreement could greatly reduce any potential sentence.

Singh, a former developer for Alameda and FTX, warned of the FTX founder’s “excessive spending” and mistrust for the founders’ operating philosophy.

Singh claimed that Bankman-Fried lavished a lot of money on endorsements and properties in addition to making substantial investments in organisations like Anthropic and a cryptocurrency mining operation in Kazakhstan.

By Bankman-Fried’s order, K5 Global, a consultant run by Michael Kives, received $1 billion in funds from Alameda Research and FTX, and Singh claims that executives were occasionally told of choices after they had been made. According to the witness, FTX spent $1.3 billion on celebrity promotions, including tens of millions given to Tom Brady, Larry David, Kevin O’Leary, Steph Curry, and others.

Singh recounted real estate deals and lavish flats given to people like Bankman-Fried’s father, Joseph Bankman, who witnesses said was included in business discussions using the encrypted messaging service Signal.

“I told him it was too flashy, I said. When questioned if he scrutinised SBF’s spending or usage of client funds, Singh replied, “He stated he’d spend $100 million to make the drama go away. Additionally, Bankman-Fried suggested allocating $120 million for the well-liked social network Telegram.

According to the witness, Bankman-Fried and Wang, who served as Bankman-Fried’s former chief technology officer, gave him instructions on how to code a “allow negative” feature for Alameda’s credit line on FTX. According to Singh, the tool was not created to steal customer cryptocurrency from the exchange but rather to allow access to locked FTT tokens.

The former FTX developer referred to Alameda and FTX’s handling of funds entrusted to their safekeeping as “inappropriate.”

According to Singh, Ryan Salame, head of FTX Digital Markets, coordinated political donations with the FTX founder and his brother, Gabriel Bankman-Fried. The three came up with a scheme whereby executives would obtain loans, transfer the value to FTX.US, and then distribute the money to political campaigns.

Optics required loans to be made in this manner, according to Singh, who also noted that recipients were aware the funds came from somewhere else and that Sam Bankman-Fried meticulously tracked the recipients of all FTX donations.

“I made an effort to avoid getting involved. The scheme was ultimately sponsored by Alameda Research, according to Singh, who mentioned that there was a Signal chat room dubbed “Donations Processing.” Notably, Guarding Against Pandemic was run by the brother of the creator of FTX.

Singh’s evidence was consistent with Ellison’s allegations of what transpired within FTX’s executive ranks between November 6 of last year, the day after Alameda’s balance sheet was leaked, and November 12, the day bankruptcy was made known to the public. The witness also remembered considering liquidating SRM, one of Bankman-Fried’s favourite coins, and FTT, the exchange token for FTX.

Ryan Salame was speaking on the phone in Sam’s Gemini 1 flat. We had been discussing the term “solvent.” They discussed making the tweets powerful, which I took to mean deceptive. I believed it to be untrue.

The witness also mentioned interacting with FTX general counsel Daniel Friedberg.

Mark Cohen, the defence attorney, requested to postpone SBF’s trial until October 19, when more Adderall would be available. FTX’s former CEO’s case was not expedited, according to Judge Lewis A. Kaplan of the Southern District of New York, who decided to uphold the daily hearing schedule.

Day 8 – BlockFi CEO Blames FTX and Alameda for Company’s Downfall

On Friday, October 13, the eighth day of the SBF trial, Zac Prince, the CEO of the now-defunct crypto lending business BlockFi, gave testimony. He said that BlockFi’s failure was caused by FTX and Alameda, which led to a $1 billion loss for his company.

BlockFi requested the loans repayment due to losses on Terra and Alameda complied. However, Alameda received over $850 million in fresh loans from BlockFi between July and November 2022, using tokens like $FTT as collateral.

The several quarterly balance reports Alameda produced, according to Prince, showed it had a sizable amount of liquid assets and was solvent. There were still about $650 million in unpaid debts to BlockFi when the trading company failed.

BlockFi incurred additional losses attributed to SBF. The lender channeled $350 million of customer funds into its FTX account, on top of securing Alameda’s collateral. As a result, BlockFi found itself exposed to more than $1 billion in total when FTX declared bankruptcy.

In November 2022, promptly following FTX’s collapse, BlockFi initiated a Chapter 11 bankruptcy filing. This strategic move was pivotal for the cryptocurrency company, enabling them to begin the process of operational and business recovery while simultaneously safeguarding client assets and pursuing counterparty obligation recoveries.

Mark Renzi, Managing Director of the Berkeley Research Group, enlisted to investigate BlockFi’s bankruptcy, identified two primary factors behind the crypto lender’s downfall: the overall cryptocurrency market’s downward trend and the demise of FTX.

Day 7 – Terra Luna and UST Crashes Hit Alameda With $100M Loss

The FTX co-founder’s continuing trial is generating a lot of new information about the iconic exchange collapse. According to the proceedings, Bankman-Fried’s platform position in TerraUSD caused his Alameda research to lose $100 million.

The Terra Luna stablecoin, TerraUSD, imploded in May 2022 . After that, it sparked a series of issues that spread to several platforms. FTX was consequently one of the platforms hampered by the fall. But the trial has shown that the cryptocurrency hedge fund, Alameda, was also significantly impacted.

According to evidence from the former Alameda’s CEO Caroline Ellison, the crytpo hedge fund maintained the assets. According to the reports , she did state that she had come to the “bad idea” judgement that keeping the asset was not a good idea. She then asserted that the hedge fund ought to have sold the assets following the crash.

The next witness in the case was a former software engineer from Alameda named Christian Drappi who said that he sat around 40 feet away from Bankman-Fried for a few months while observing him work at the Hong Kong office.

According to Drappi, Bankman-Fried used Signal to keep in touch with Alameda staff members directly. He participated in significant trades and had access to the firm’s back-end data as well as “pointer,” Alameda’s internal interface.

Drappi mentioned a trade in which a senior trader said, “Sam wanted to do it,” alluding to a trade in which Japanese bonds were sold  and the currency was purchased. Drappi claimed to communicate daily with merchants in Alameda.

Drappi claimed to have been in the office the evening of November 8 with Ellison and two dealers, Tony Qian and David Nyeste. Around 11 p.m., Bankman-Fried tweeted that Binance has agreed to purchase FTX , effectively saving the exchange.

Drappi characterised the reaction as “shock.”

The Binance agreement had no legal effect. Competitor exchange withdrew from the agreement  on November 9, and Changpeng Zhao, CEO, saying FTX’s “issues are beyond our control or ability to help.” After two days, FTX filed for bankruptcy.

Day 6 – Caroline Strikes The Blow Revealing Saudi Prince Funding Plan

Caroline Ellison testified  for a second day on Wednesday, October 11, 2023, saying Sam Bankman Fried allegedly considered a scheme to obtain funding from Saudi Crown Prince Mohammed bin Salman.

Ellison cried on the witness stand and recalled how it was the saddest week of her life when people learned that Alameda had misappropriated FTX clients’ monies in November. “I felt a sense of relief that I didn’t have to lie anymore,” she said.

Ellison drew attention to the fact that SBF required Alameda to repay loans despite having insufficient funds when lenders sought to recover loans from the company last year. According to Ellison, she was aware that he was requesting the usage of money from FTX customers because “he knew that’s the only way it could be repaid.”

FTX customers deposited $13 billion by June 2022, but only $3 billion was accessible on the exchange. Alameda borrowed $10 billion, with half going to its leaders and associated businesses. When Genesis requested an updated balance sheet, SBF instructed Ellison to withhold crucial details. Ellison presented SBF with seven different balance sheets, and the one not showing the FTX debt was sent to Genesis.

SBF yelled that it was Ellison’s responsibility when it was brought up in the autumn of 2022 that Alameda had borrowed $10 billion from FTX, she recalled. Ellison claimed in court, adding that she was crying at the time, “But Sam made all these investments that put us in this situation.

Ellison’s testimony also includes SBF’s bribery of Chinese authorities. Alameda’s accounts on Huobi and OKX, holding $1 billion, were frozen in 2021 during a money laundering investigation involving one of Alameda’s counterparts. To unfreeze the accounts, SBF allegedly sent $150 million in cryptocurrency to addresses linked to Chinese officials, as directed by an employee named David Ma.

Alameda initially attempted to employ a lawyer in China to speak with the government in an effort to try and unfreeze them, but that effort was unsuccessful. The company subsequently began using other trading tactics, according to Ellison.

“On OKX we made several accounts using the IDs of different people who I believe were Thai prostitutes, and we tried to basically have our main account lose money and have those other accounts make money, so do very imbalanced trades between the two accounts so those other accounts would be able to make money and withdraw it,” she stated .

Ellison will return to court on Friday, October 13, 2023, to undergo cross-examination by solicitors for SBF.

Day 5 – Ellison Admits Fraud Amidst Defense’s Bid to Present Evidence of Anthropic Stake

The key witness Caroline Ellison testified against her former business partner and alleged love interest, Sam Bankman-Fried, on Tuesday, October 10.

She said that, prior to the demise of FTX founder and CEO, the two of them, along with other accomplices, engaged in fraud and money laundering.

It is Ellison’s first appearance in front of the public since she admitted to seven charges almost a year ago.

Ellison admitted under cross-examination by Assistant US Attorney Danielle Sassoon that she did not perpetrate the offences alone as CEO of Bankman-Fried’s crypto company Alameda Research.

“They were committed with Sam,” she claimed  and added that Bankman-Fried “set up the systems that allowed Alameda” to steal money from FTX customer accounts when questioned about his involvement in the unlawful activities.

Ellison gave examples of the unlawful behavior that she claims Bankman-Fried ordered her to commit while testifying on the witness stand on Tuesday.

She testified before the jury that, among other things, she emailed Alameda’s lenders balance sheets that misrepresented the fund’s actual balance sheet in order to make it appear “less risky.”

Ellison outlined how their love affair started in the autumn of 2018. He was “very ambitious,” according to her, and she intended to utilize his wealth to influence politics. Ellison testified that he had claimed there was a “5% chance” he would run for president.

She portrayed the two businesses as being closely related from the beginning, with FTX being initially developed as a means to increase revenue for Alameda. Ellison repeatedly stated that Bankman-Fried made all significant decisions, even when she was the CEO of Alameda.

Ellison entered a guilty plea in the hopes of receiving a reduced sentence in exchange for her assistance to the prosecution. She could receive a term of up to 100 years in jail for each of the seven crimes.

“I knew it wasn’t right,” she said on the stand.

At a hearing in December, Ellison, a mathematics graduate from Stanford, said before the court that Alameda had an almost limitless borrowing facility in FTX and that she had committed to keep the relationship between the two businesses a secret from consumers and investors.

Ellison added, “I am sincerely sorry for what I did. “I knew it was wrong,” she said.

Day 4 – Alameda’s Special Privileges Revealed

On Friday, October 6, Gary Wang, one of the co-founders of Alameda Research and FTX, who is potentially facing a maximum sentence of up to 50 years in jail, appeared in the FTX trial. Wang discussed how Alameda’s unique privileges were built into the FTX code as early as July 31, 2019, just a few months after the exchange launched.

In court, the prosecution produced evidence such as deleted messages, tweets, and Github code papers. These benefits were not made known to the general public, FTX customers, or investors — according to Wang — who is working with the government in the hopes of receiving “ideally, no prison time.”

Wang revealed that Alameda was permitted to transfer and receive money from FTX despite having a negative account balance. One permission allowed Alameda to have a negative balance on its FTX account. This allowed Alameda to transmit and withdraw more money than it had on hand, in effect “borrowing from the exchange.”

Wang and Nishad Singh, the head of engineering at FTX, are said to have been asked by Bankman-Fried to use Alameda’s funds and other bookkeeping accounts on FTX to pay for different FTX-related expenses in July 2019, particularly for costs associated with FTT, the company’s cryptocurrency. Then Alameda’s account had the “allow_negative” feature activated.

Alameda withdrew more money than it had on the site, and, according to Wang, those monies belonged to FTX clients. There was around $8 billion borrowed from the exchange at the time of FTX’s bankruptcy filing.

Wang stated that other FTX customer accounts that went into the red would be liquidated and closed in order to prevent FTX and customers from suffering financial loss. But the “allow_negative” code protected Alameda’s account from being closed. Wang claimed that SBF had instructed him to prevent the liquidation of Alameda’s account on FTX.

Wang claimed that he examined Alameda’s balance on FTX towards the end of 2019 or the beginning of 2020 and found that it was negative by over $200 million, which was more than FTX’s $150 million in trading revenue at the time.

Wang, who was perplexed by the circumstance, claimed that he spoke with Bankman-Fried, who advised him to update the values by taking into account all of the FTT stored in all of Alameda’s FTX accounts.

In his testimony on Friday, Wang identified what he saw as two issues with Bankman-Fried’s strategy. In place of FTT, Alameda was withdrawing US dollars and other cryptocurrencies. Second, the price of FTT would collapse so drastically if Alameda sold an equivalent quantity to offset its withdrawals that the selling “might not be enough to cover how much Alameda was withdrawing.

The $65 Billion Credit line For Alameda

Alameda, according to Wang, has a $65 billion line of credit, which is far more than any other customer on the exchange. The line of credit initially had a limit of a few million dollars, but it progressively grew because the trading company lacked sufficient collateral to issue the enormous orders required for its market-making responsibilities.

Wang indicated that at first it was only a few million dollars, then a few hundred million, and then this kept happening. SBF then urged him and the rest of the team to accept a high sum to stop this from happening again. Wang increased it to a billion dollars before the problem reappeared. He said  that he would raise it to $65 billion when Bankman-Fried subsequently requested him to do so.

Wang testified that Bankman-Fried requested a detailed picture of Alameda’s balances on the FTX exchange in June 2022.

Bankman-Fried called a meeting in the Bahamas office to discuss Alameda’s balance of negative $11 billion with Wang, Singh, and Caroline Ellison, the then-CEO of Alameda Research and Bankman-Fried’s ex-girlfriend. This was done after discovering and fixing a bug that caused the incorrect representation of Alameda’s balance on FTX .

During the meeting, Bankman-Fried allegedly gave Ellison the order to pay back the money owed by Alameda to its creditors, including cryptocurrency lender Genesis, who were demanding repayment of the loans. Alameda’s lenders would be paid back entirely from deposits made by FTX customers, according to Wang.

After reading a Bloomberg article  that emphasized the close relationship between FTX and Alameda in September 2022, Bankman-Fried allegedly sent a Google document to Wang and Singh rather than Ellison to discuss the possibility of closing down Alameda Research.

Contempt For the US Government

Wang claims that on November 11, the day after FTX declared bankruptcy, Bankman-Fried, and Bahamian government representatives ordered him to deliver FTX assets to the Bahamas regulators. Wang claimed that Bankman-Fried believed that giving them control of the FTX assets would be excellent because they “seemed friendly” and willing to allow Bankman-Fried to maintain power.

Wang said that after receiving similar instructions from U.S. authorities to transfer assets to them, he followed Bankman-Fried’s example by disobeying the U.S. bankruptcy team and sending money to Bahamas regulators.

On November 16, Wang left the country once more. The next day, he met with the government to discuss his desire to assist the FBI and federal prosecutors. Wang, who believed that being accused was likely, stated that he wanted to avoid going to jail and believed that cooperating with the US government would result in a reduced sentence.

By December, Wang had entered into a cooperation arrangement with American authorities and admitted guilt to four charges. According to the terms of the deal, Wang was required to appear before the government, honestly respond to their inquiries, abstain from committing any more crimes, and testify in court against his former flatmate and maths camp friend.

The trial will resume on Tuesday due to the US holiday on Monday. Caroline Ellison is scheduled to testify next.

Day 3 – Wang Throws SBF Even Further Into Muddy Waters

Gary Wang, co-founder of FTX and Alameda Research, and Matthew Huang , co-founder of Paradigm, both gave testimony during the second phase of the Sam Bankman-Fried trial on October 5.

Between 2021 and 2022, Paradigm invested a total of $278 million in FTX through two fundraising rounds. Huang claims that neither the venture capital firm nor the privileges enjoyed by Alameda with the cryptocurrency exchange were aware of the mixing of funds between FTX and Alameda.

Among these benefits was Alameda’s exclusion from the liquidation engine of FTX, a device that closes holdings that are at risk of liquidation. Alameda was able to leverage its position and keep a negative balance with FTX because to the exception.

The co-founder of Paradigm further admitted that the company relied on information from Bankman-Fried and did not perform further due diligence on FTX.

The absence of a board of directors at FTX was another issue for Paradigm. Huang claims that Bankman-Fried agreed to create a board of directors for FTX and choose qualified executives to sit on it despite being “very resistant” to the concept of having investors serve on it.

Wang admitted  throughout his brief testimony that he and Bankman-fried, Caroline Ellison, and others had engaged in wire fraud, securities fraud, and commodities fraud.

Wang’s evidence, along with that of two other close business acquaintances, is an essential part of the prosecution’s case against Bankman-Fried, 31, who authorities claim was the mastermind of a massive, multi-year operation to swindle investors and steal from clients.

Wang also mentioned that Alameda has special benefits from FTX, including a $65 billion line of credit  and the opportunity to withdraw an unlimited amount of money from the exchange. Wang used the contrast between Alameda’s credit line, which was in the billions, and the credit limit of any other market maker to demonstrate these rights.

Wang reportedly indicated a $200 million to $300 million loan from Alameda, supposedly as part of the acquisition of additional crypto companies. The loans, however, were never added to his account. On October 6, he will continue to testify.

On the other side, the topic of the cross-examination of Adam Yedidia  by the prosecution on October 5 was a $8 billion liability from Alameda to FTX. Sam Bankman-Fried’s close buddy Yedidia worked as a developer at FTX. Additionally, he was one of the ten residents at Bankman-Fried’s $35 million opulent Bahamas property.

Yedidia testified that beginning in early 2021, FTX deposited user funds into an Alameda account titled “North Dimension ” because it was having trouble obtaining its own bank account. Money would be viewed as Alameda’s obligation to FTX, which amounted to $8 billion in June 2022.

Even though Yedidia knew about the money sent to Alameda’s account, he didn’t think much of it when he initially learned about it in 2021. However, after being informed of the responsibility amount in 2022, he spoke with Bankman-Fried about his worries while playing tennis. Yedidia claims that Bankman-Fried stated that the companies should pay off their debt within six months to three years.

“I trusted Sam, Caroline, and others in Alameda to handle the situation,” he answered the question from prosecutor.

Yedidia resigned in November 2022 after discovering that Alameda was not only keeping the money but also using it to pay its debtors.

While the prosecution used the case to demonstrate how the corporations were mixing funds, Bankman-Fried’s defence attorney aimed to give the jury a more comprehensive understanding of FTX and Alameda’s connection.

The defence emphasised that FTX was expanding quickly and that Bankman-Fried, who at the time handled multiple divisions of the company, and other leadership members worked more than 10 hours each day during the bull market of 2021.

Yedidia had been the subject of multiple enquiries from prosecutors due to an immunity order, which meant that cooperating with prosecutors would shield him from being held accountable for his involvement at FTX. This was another argument made by the defence attorney.


Day 2 – Jurors Named, Debate Heats Up

The jury selection procedure continued on the second day of the Sam Bankman-Fried trial, although it was completed quickly, allowing the trial to begin in its entirety with both the prosecution and defense making opening statements.

The FTX founder was the target of serious accusations from the Department of Justice (DOJ). According to the indictment, SBF willfully misled investors and utilized his relationship with Alameda to “steal customers’ funds.”

Allegations that he misled FTX clients, investors, and lenders about the security of their assets were at the heart of the prosecution’s case. They also said that he used Alameda to steal money and win the favour of Washington, D.C., officials.

In stark contrast, the defence painted Bankman-Fried as a young, enterprising man who, despite his best efforts, made bad business decisions that ultimately backfired. The legal team for SBF vigorously refuted any claims of clandestine transactions between FTX and Alameda or any customer fraud schemes.

In addition, the defence claimed that every transaction was honest and lawful, even during the tumultuous period between the collapse of the cryptocurrency market and the eventual collapse of FTX in November 2022.

Notably, the defence also emphasised the part Binance played in the series of occurrences that led to FTX’s financial collapse. The solicitors said that SBF rejected any claims of covert interactions between the two companies and insisted that FTX’s loaning money to Alameda was a normal commercial transaction with the market maker.

The defence further asserted that FTX clients, particularly those who engaged in margin trading, were aware of the dangers. The attorneys emphasised that “there was no theft” and stressed that it is not illegal to drive a business into bankruptcy. On the first day of the trial, the jury heard testimony from two witnesses: Adam Yedidia, a former employee of SBF, and Mark Julliard, a former client of FTX.

French trader Julliard testified about his choice to entrust FTX with his possessions, namely four Bitcoins worth approximately $100,000 as of publication. He credited his faith in FTX to its advertising efforts and the support of well-known venture capital firms.

He thought these VC firms had done their homework on FTX. Prosecutors stressed during cross-examination that Julliard only utilised FTX for spot trading and was unaware that the exchange was using customer cash for trading with Alameda Research.

Yedidia, who was connected to SBF both personally and professionally, gave details on his time spent at FTX and Alameda. Yedidia talked about his education at MIT, where he first met Bankman-Fried, when describing his background.

He spent a brief period of time at Alameda in 2017 before joining FTX in 2021. He even resided in the Bahamas on FTX’s $30 million property due to his connections to the company. During Yedidia’s evidence, the prosecution showed former FTX advertisements to demonstrate the platform’s emphasis on being a reliable crypto investment channel, displaying collaborations with famous people like Tom Brady and Larry David.

Day 1 – Trial Starts Without a Selected Jury

The Bankman-Fried (SBF) trial’s first day came to a close without a verdict being reached; the trial will go on for another day.

The procedure, which is anticipated to end on October 4, will select 12 jurors and six alternates for the U.S. District Court for the Southern District of New York.

On October 3, Judge Lewis Kaplan disqualified a number of prospective jurors because of conflicts of interest and other factors. Many prospective jurors said that they had lost money investing in cryptocurrencies, either personally or through family members.

Personal convictions and financial circumstances that can affect prospective jurors’ capacity to serve have both been highlighted during the ‘voir dire’ phase of the selection process. In order to demonstrate the broad scope of the inquiry, Assistant U.S. Attorney Danielle Sassoon mentioned a number of prospective witnesses and others associated with the case.

Despite having previously sworn to his innocence, it is still unknown if SBF will testify. The jury selection process is likely to be completed shortly after opening arguments, and the trial might continue up to six weeks.

Prosecutors stated on the first day of Sam Bankman-Fried’s criminal trial that they had never considered giving the former FTX CEO a plea deal.

This is a significant development, especially in light of the fact that some of his former collaborators have entered plea agreements and will likely testify during the trial.

Former SEC employee John Reed Stark believes that SBF, the former CEO of FTX, will be found guilty at the upcoming trial.

The confessions of former FTX and Alameda executives, John Ray III, the new CEO of FTX, who has offered incriminating testimony, and SBF’s public appearances, which may have unintentionally provided further evidence for the prosecution, are some of the main causes.

Before SBF’s criminal trial, his defence team raised various objections to and demanded explanations for some of the judge’s findings.

FTX’s assets from its bankruptcy proceedings, evidence related to U.S. regulatory oversight, and the inclusion of his charitable endeavours are a few of these.

The prosecution’s request to allow FTX consumers to testify about their expectations for how the cryptocurrency exchange would manage their assets has also been contested by the attorneys.

They also objected to the use of video testimony from an anonymous Ukrainian user, citing worries about the Sixth Amendment and the possibility that jurors would feel overly sympathetic given the geopolitical situation in Ukraine.

SBF Trial Starts This Week

SBF is charged with seven charges, including securities fraud and wire fraud.

Authorities claimed that SBF took billions of dollars from FTX customers’ assets for his own personal use and to help Alameda Research, a crypto hedge fund he also managed, make up for significant losses. Additionally, they claim that SBF cheated FTX investors by concealing the scheme.

Five more accusations that were filed after Bankman-Fried’s extradition from the Bahamas, where FTX was headquartered, were chosen by the prosecution to be dropped in June. On those counts, a second trial is set to start in March.

SBF has frequently discussed and written about his perspective on the situation since his arrest: He was an inexperienced businessman who got out over his skis, and he never intended to commit fraud.

In court records, his attorneys have made hints that they will use the “advice of counsel” defense. In other words, SBF was acting at the direction of FTX’s solicitors and was unaware that his acts were against the law.

The CEO of Alameda, Caroline Ellison , who is also Bankman-Fried’s ex-girlfriend, was held accountable for the company’s losses in Bankman-Fried’s private letters that were released by the New York Times.

In cooperation with prosecutors, Ellison and three other former high-level associates entered a guilty plea.

Due to Bankman-Fried’s disruptive pre-trial behavior, the judge and prosecutors in the case decided to imprison him in a Brooklyn jail while he awaits trial. If found guilty, he may spend up to 115 years in prison, albeit most likely only a decade or two.

What Became of FTX?

FTX promoted itself as a simple, secure gateway for cryptocurrency trading. Like a conventional brokerage, it made money by charging fees on customers’ trades.

In 2021, FTX’s profile soared along with the value of digital assets. The corporation attained a private valuation of over $30 billion at its height. Its name was painted all over a Miami basketball court, and Tom Brady and Larry David both endorsed it by appearing in FTX’s Super Bowl commercials.

However, market instability in the spring of 2022 decimated the cryptocurrency market, driving its worth from $3 trillion to $1 trillion.

By November, FTX’s foundation started to exhibit fractures, and it only took a little more than a week for everything to collapse.

An article by the cryptocurrency news website Coindesk that revealed severe concerns about the financial connections between FTX and Alameda, two purportedly independent companies formed by Bankman-Fried, caused fear among investors and clients. According to a document received by Coindesk, a significant portion of Alameda’s assets appeared to be made up of FTT, a digital coin produced by FTX that was rapidly losing value and placing Alameda on precarious financial ground.

Customers poured their money out of FTX quickly, revealing a $8 billion gap.

On November 11, FTX declared bankruptcy and Bankman-Fried left his CEO position.

He was detained in the Bahamas in December on suspicion of fraud and conspiracy and was then extradited to the US in January.

What Will Defense Look Like?

SBF has frequently discussed and written about his perspective on the situation since his arrest: he was an inexperienced businessman who got out over his skis, and he never intended to commit fraud.

In court records, his attorneys have made hints that they will use the “advice of counsel” defence. In other words, SBF was acting at the direction of FTX’s solicitors and was unaware that his acts were against the law.

The CEO of Alameda, Caroline Ellison, who is also Bankman-Fried’s ex-girlfriend, was held accountable for the company’s losses in Bankman-Fried’s private letters that were released by the New York Times.

In cooperation with prosecutors, Ellison and three other former high-level associates entered a guilty plea.

“SBF’s biggest challenge is going to be that his former colleagues are going to testify against him,” said  Howard Fischer, a partner with Moses Singer and a former senior trial attorney at the Securities and Exchange Commission. Additionally, Bankman-Fried has been the target of open hostility from FTX’s new management, which is managed by a restructuring specialist who oversaw the liquidation of Enron.

This kind of cooperation, according to Fischer, is a blessing for the prosecution.

Another problem, according to Fischer, is that SBF “has consistently failed to demonstrate an awareness of how serious his situation is” in his protracted blog entries, tweet conversations, TV media appearances, and purported document releases.

Juries dislike arrogant jerks who show no regard for the rules of engagement. It is prudent for a defendant in a case like this to avoid testifying, but it’s likely that SBF’s apparent unchanging self-confidence will prompt him to do so.

Trial to Last Six Weeks

According to a recently disclosed trial calendar filed to the public court docket, former FTX CEO Sam “SBF” Bankman-Fried will spend at least 21 days in court as part of his criminal prosecution, which will start in earnest on October 4 and extend until Nov. 9.

The jury selection phase of the growing trial schedule, which was announced on September 28th, starts on October 3rd. On October 4, the Bankman-Fried trial’s first scheduled hearing, the seven fraud counts brought against him will be covered.

In order to prove Bankman-Fried’s guilt on two substantive charges, the prosecution must persuade the jury. The prosecution must persuade the jury on five more “conspiracy” charges that Bankman-Fried intended to commit the offenses.

In October, there are 15 full trial days, and there are six more in November. Between October 20 and October 25, as well as on weekends, the court will not be in session. Additionally, Oct. 9 and Nov. 10 are public holidays, and Nov. 3 does not have a trial scheduled.

SBF trial calendar
Credit: CourtListener

The Metropolitan Detention Centre has been housing the former CEO of FTX since August 11. He is currently awaiting trial. Bankman-Fried has submitted a number of applications for interim release through his solicitors in order to get ready for his future trial.

On September 28, United States District Judge Lewis Kaplan rejected his most recent attempt once more, expressing concern that Bankman-Fried would flee due to his youth and the possibility of receiving a “very long sentence” if found guilty.

“If things begin to look bleak… maybe the time would come when he would seek to flee.”

However, Kaplan claimed to understand the defense’s worries and gave Bankman-Fried permission to show up at court on most trial days at 7 a.m. local time to meet with his attorneys before testimony starts.

Assistant U.S. Attorney Danielle Kudla stated during the hearing on September 28 that the Department of Justice predicted the case would go on for four to five weeks.

Following the demise of FTX, SBF entered a not-guilty plea to seven counts of fraud and conspiracy. He now faces a maximum sentence of 110 years in jail.

SBF’s Political Donations Admitted as Evidence

Sam Bankman-Fried’s political donations will be made public by federal prosecutors since the information is directly related to his fraud accusations, according  to U.S. District Judge Lewis Kaplan.

The choice was made as part of a series of decisions  Kaplan reported in a 16-page pretrial order on Sept. 26 that clarified what proof would be allowed in court during the fraud trial for the FTX founders, which is presently set to start on Oct. 3.

Initially, federal prosecutors accused Bankman-Fried of campaign finance rule violations and seven other fraud and conspiracy charges. However, these charges were later dropped as part of an extradition agreement with the Bahamas.

“Evidence that the defendant spent FTX customer funds on political contributions is direct evidence of the wire fraud scheme because it is relevant to establishing the defendant’s motive and allegedly fraudulent intent.”

Kaplan approved the prosecution’s request to present evidence about Bankman-Fried’s alleged involvement in creating the FTX Token, his purported instructions to Alameda Research and its former CEO, Caroline Ellison, to manipulate the token’s price, and his campaign contributions.

“The alleged manipulation of the cryptocurrency tokens, which resulted in an alleged manipulation of Alameda’s balance sheet, was an act ‘done in furtherance of the alleged conspiracy’ and therefore is considered ‘part of the very act charged,’”  Kaplan stated .

“Moreover, defendant’s alleged directive to Ms. Ellison to manipulate the price of FTT is direct evidence of their ‘relationship of mutual trust.’ The probative value of this evidence outweighs any risk of unfair prejudice. It is admissible,” Kaplan resumed .

Defense Requests Temporary Release Again

The defense team for FTX founder Sam Bankman-Fried has reportedly requested  his temporary release during the upcoming trial once more, claiming difficulty with doing so under the current constraints.

Bankman-Fried’s expertise and participation are essential for examining the thousands of pages of discovery materials and financial records in this complicated case, according to the letter  to Judge Kaplan. His lawyers contend that if he is kept in custody, they will have very little opportunity to speak with him outside of court sessions, which will make it difficult for them to adequately defend him.

The defense proposed limits on Bankman-Fried’s access to communication devices and private security for authorized site transportation to mitigate flight risk. They are willing to consider additional restrictions as deemed necessary by the Court, believing these measures sufficiently address security concerns while ensuring proper trial preparation.

This most recent request comes after the Second Circuit upheld Judge Kaplan’s decision to revoke Bankman-Fried’s $250 million bail last week. Judge Walker noted during the oral arguments the motivation to allow Bankman-Fried and his attorneys appropriate access in order to prevent potential appellate concerns.

Seven Key Witnesses for SBF Barred

In petitions to bar the evidence of seven witnesses for former FTX CEO, Sam Bankman-Fried, or SBF, the US Department of Justice won the day, according to a federal judge.

Judge Lewis Kaplan allowed  in limine motions from prosecutors to exclude specific witnesses from testifying in SBF’s criminal trial in a document filed with the U.S. District Court for the Southern District of New York on September 21.

Kaplan outlined various legal justifications for approving the DOJ’s petitions against specific witnesses, including the fact that the intended testimony would be “not at all clear,” extraneous to the case, or would otherwise appear to confuse the facts for the jury.

Several legal professionals, including Thomas Bishop, Brian Kim, Bradley Smith, Lawrence Akka, Joseph Pimbley, Peter Vinella, and Andrew Di Wu, were among the witnesses in question in the criminal prosecution. The legal team for SBF may have received up to $1,200 per hour for their testimony, according to court documents from August 28.

In response to testimony from witnesses for the US government, Kaplan left the door open for the defense team of SBF to call some of the people. He did, however, reject a petition from Bankman-Fried’s attorneys that would have excluded testimony from Peter Easton, an accountancy professor from the University of Notre Dame, who will speak about FTX customer fiat accounts.

FTX Debtors Sue SBF’s Parents to Reclaim Misappropriated Millions

Bankman-Fried is the subject of legal action by the FTX Debtors in an effort to reclaim money that was purportedly transferred and misappropriated improperly.

The document said :

“Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves.”

According to a court document  dated September 18, the FTX debtors have filed a lawsuit against SBF’s parents. The creditors want to recover substantial sums of money. SBF’s mother is referred to in the court filing as “Fried,” while Allan Joseph Bankman is referred to as “Bankman.”

The filing claims that Bankman and Fried deliberately took advantage of their access to the shuttered cryptocurrency exchange for their own gain. It claims that it was detrimental to the debtors who were involved in these Chapter 11 Cases.

Bankman is accused of using his significant experience as a tax law specialist and Stanford law professor to secure a key position at FTX.

According to the document, Bankman first worked for the organisation as a volunteer. Nevertheless, he eventually took on the duties of a “de facto” officer, providing strategic guidance and managing FTX operations.

“Bankman portrayed himself as the proverbial adult in the room—and was uniquely positioned to fulfill that role—as he worked alongside inexperienced fellow executive officers, directors, and managers responsible for safeguarding billions of dollars.”

Bankman allegedly earned considerable money from the debtors for his work at FTX. This payment allegedly included cash, property, a trip on a private jet, and opulent lodging.

250 Pages of Justification Ready for Trial

Sam Bankman-Fried directly appraised his situation at the conclusion of a 15,000-word Twitter thread  that he never published.

“I’m broke and wearing an ankle monitor and one of the most hated people in the world. There will probably never be anything I can do to make my lifetime impact net positive,” he wrote and added that he thought that what he was doing was right.

In the hundreds of pages he wrote to defend himself after being charged with fraud in connection with the demise of FTX and put in home detention in December, Bankman-Fried discussed everything from childhood experiences to mathematical computations.

He arranged a draft of his unsent messages as a series of tweets that spanned around 70 typed pages in which he attacked some of his closest associates, peppering his arguments with images from his high school years, stock shots of popcorn, and a garden maze.

Every few pages, a major scene in the story is highlighted with a link to an Alicia Keys, Katy Perry, or Rihanna music video.

Bankman-Fried, 31, formerly a frequent Twitter contributor, referred to the thread as “a draft of a draft of a draft of an idea” and offered links to 29 other files about FTX.

One document, labeled “Inception V2,” is a protracted criticism of the firm’s bankruptcy attorneys and includes a still from the 2010 Christopher Nolan film. A different link opens a spreadsheet with a list of Bankman-Fried’s Amazon purchases from the year 2021.

The notes also provide fresh information about his potential legal defense outside of what his attorneys have discussed in court, illuminating how he may defend his actions when his trial begins on October 3.

In several of Bankman-Fried’s materials, his attorneys expand on the points they have presented in court. Bankman-Fried asserted that the story that he stole user money was made up by Sullivan & Cromwell, the legal team in charge of FTX’s bankruptcy, in documents named “Inception V2,” “Inception V3,” and “Inception Evidence.”

He wrote, “They’ve played it incredibly well.” “I would tip my hat to them if it weren’t destructive to pretty much everything I care about in life.”

SBF Requests Release Due to Poor Internet Connection

Bankman-Fried lawyers have asked for a pre-trial release on the grounds that the federal prison’s internet access is inadequate. The legal team for SBF claimed that a slow internet connection interferes with their ability to prepare their defense and wastes time.

Following the Appellate judge’s denial of SBF’s plea for immediate release from jail on September 6, the court file  dated September 8 represented the second such request for pre-trial release within the previous week. The motion was then forwarded to the subsequent three-judge panel by the judge.

The legal team for SBF claimed that despite assurances from the government that their client would have access to a laptop on weekdays from 8 a.m. to 7 p.m., those pledges haven’t come to pass. The attorneys also noted a number of instances where SBF’s use of a laptop for Internet was restricted because of legal procedures.

The first time was on September 1, when Bankman-Fried lost four hours of preparation when he was summoned back to his cell at 2:30 p.m. for a headcount.

On September 6, SBF was released from his cell for a second time at 11:00 a.m. Bankman-Fried attempted to access the discovery database, but the shoddy internet connection only allowed for the perusal of one document from the database.

According to the legal team’s filing :

“Despite the Government’s efforts, there does not appear to be a way to solve the internet access problem in the cellblock. That means that Mr. Bankman-Fried has no way to review and search documents in the discovery database or the AWS database before the trial. The defendant cannot prepare for trial with these kinds of limitations.”

Salame Pleads Guilty, Leaving SBF as the Lone Defiant

Former FTX executive Ryan Salame pleaded guilty  to criminal charges stemming from the collapse of the cryptocurrency exchange.

Salame, who was the co-chief executive of FTX’s Bahamas subsidiary before the exchange imploded last November, appeared in Manhattan federal court on Thursday afternoon. Flanked by lawyers and wearing a blue suit and Bitcoin socks, Salame pleaded guilty to one campaign finance violation and one charge of operating an illegal money-transmitting business.

Salame’s plea agreement did not include a promise to testify against Sam Bankman-Fried, who goes on trial for fraud next month, but the deal will likely increase the pressure on the FTX co-founder.

Prosecutors claim Bankman-Fried orchestrated a yearslong scheme to misuse FTX customer funds for personal expenses, high-risk bets through affiliated hedge fund Alameda Research and political donations meant to influence US crypto regulation before the exchange’s collapse. Bankman-Fried has pleaded not guilty.

Each of the counts to which Salame, 30, pleaded guilty carries a maximum sentence of five years in prison. Though Salame agreed to a $1.55 billion forfeiture order — dwarfing even the $700 million prosecutors are seeking from Bankman-Fried — the government said it would pursue that amount only if Salame lied or failed to surrender a much smaller amount in assets, including $6 million in cash and a Porsche 911 Turbo.

After the hearing, Salame was freed on a $1 million bond. He’s scheduled to be sentenced on March 6.

Bankman-Fried Battles Prosecutor’s Evidence

On Friday, September 1, attorneys for Bankman-Fried opposed  various petitions by federal prosecutors to introduce particular evidence. Bankman-Fried is scheduled to stand trial on accusations of fraud and conspiracy on October 1.

Bankman-Fried’s attorneys argued against presenting evidence related to previously dismissed charges, such as suspected FPA violations, political campaign contributions, and bank fraud linked to FTX’s U.S. affiliate business.

The defense contended that admitting such material would be irrelevant, prejudicial, and confusing to the jury. They also argued against prosecutors selectively using clauses from FTX’s terms of service, insisting that the entire document is relevant.

The defense objected to the prosecution’s attempt to introduce unspecified hearsay evidence. Bankman-Fried’s lawyers argued that the prosecution should not exclude defense evidence related to industry standards, repayment intentions, legal counsel involvement, and other pertinent topics. They found many of the prosecution’s requests to be overly broad and premature.

SBF’s Defense Motion Thrown Out

One of Bankman-Fried’s pre-trial defense motions has been rejected by a federal district court. In accordance with the court document , U.S. District Judge Lewis A. Kaplan rejected SBF’s Motion in Limine No. 1 to prevent the introduction of evidence obtained by the defense after July 1 by the government.

In August, SBF’s defense team filed several motions in limine, aiming to exclude evidence tied to FTX’s bankruptcy, SBF’s retirement, specific FTX.US remarks, and the already-denied Motion No. 1.

A contentious procedural debate preceded the recent denial of the first motion. The legal team for SBF was appalled by the U.S. government’s revelation of 7.7 million pages worth of discovery papers . They argued that the belated release of 3.7 million pages violated the agreed discovery timeline and requested the court to halt further significant document disclosures due to the upcoming trial.

SBF’s defense faces added complexity following the court’s recent decision. However, his legal team emphasizes his need to participate actively in his defense. He is currently detained at the Metropolitan Detention Center, where he lacks access to the delivered hard drive, hindering his ability to review evidence.

SBF maintains his not-guilty plea with the trial just six weeks to go and plans to make the case that his actions were reasonable and supported by legal counsel.

New Motion Seeks Temporary Release for Preparation of Defense

Bankman-Fried’s legal team has submitted a new motion , citing his right to assist in the preparation of his defense, to obtain his “temporary release” or at the very least to have him meet with his defense team five days per week.

According to a motion , Bankman-Fried’s right to work on his own case is being violated by his detention because the materials he needs to analyze are only available online.

In a statement  released on Friday, SBF lawyer Christian Everdell stated the defense does “not believe that anything short of temporary release will properly address these problems and safeguard Mr. Bankman-Fried’s right to participate in his own defense.”

He then asked  the Court to reevaluate its earlier ruling and direct the Marshals to bring Bankman-Fried to the proffer rooms at 500 Pearl Street five days a week. This would allow defense attorneys to provide him with internet-enabled computer access for reviewing, editing, and sharing documents.

According to Everdell, the laptop would, be returned to the defense attorney at the conclusion of the session, who will remain with Bankman-Fried the entire time.

SBF can use a laptop for six hours per day, two days per week, while he is at the federal courthouse in Manhattan. This is a significant decrease from the “80-100 hours per week” ordered before being jailed.

SBF Granted 7-Hours of Freedom

Bankman-Fried (SBF) has been granted  7 hours of freedom to briefly step away from his confinement to speak to his lawyers, as decided by a federal judge overseeing his ongoing criminal case.

Judge Lewis Kaplan from the US District Court for the Southern District of New York has sanctioned a window  for SBF to convene with his legal team to facilitate discussions between SBF and his attorneys in preparation for his upcoming court proceedings.

However, the meeting is confined to the confines of the cell block attorney room at the courthouse.

According to Kaplan’s order, the meeting is scheduled to occur between approximately 8:30 AM EST and 3:00 PM on Tuesday, August 22. During this period, SBF will have access to “one Internet-enabled laptop and one WiFi device.”

SBF’s legal representatives had previously approached the court  with a request for their client’s release for five days each week throughout the trial phase. They argued that this extended period of release would enable SBF to adequately prepare for the legal proceedings.

Major VC Firms  Sued for “Aiding and Abetting” FTX Fraud

A class action lawsuit has been filed  in the United States District Court for the Northern District of California against 18 venture capital (VC) investment companies, including Temasek, Sequoia Capital, Sino Global, and Softbank, for their connections to the now-defunct cryptocurrency exchange FTX.

The investment firms were accused of “aiding and abetting” the FTX fraud in the case, which was filed on August 7. In the lawsuit, the defendants are accused of using their “power, influence, and deep pockets to launch FTX’s house of cards to its multibillion-dollar scale.”

class-action lawsuit filed
Credit: CourtListener

The lawsuit alleges that while the defendant VCs provided a hazy picture of the exchange and claimed they had done their due diligence, the FTX bitcoin exchange broke various securities laws and stole money from clients.

According to the lawsuit, these VC companies “performed, conspired to perpetrate, and/or aided and abetted the multi-billion-dollar frauds of the FTX Group for their own financial and professional gain.”

The plaintiffs used Temasek’s declaration regarding FTX’s financial situation as an illustration when talking about VC companies’ part in encouraging and stifling the FTX fraud.

Temasek asserts that after an eight-month thorough investigation of FTX’s financials, audits, and regulatory inspections, it found no warning signs.

The lawsuit also claimed  that these VC companies touted the exchange’s professed efforts to become legally regulated while endorsing the stability and safety of FTX.

Ex-FTX Executive Salame Pursues Plea Agreement

Following the collapse of the cryptocurrency exchange, Ryan Salame, the former co-chief executive of FTX Digital Markets, is reportedly  in talks with federal prosecutors to admit guilt to criminal charges.

According to people who requested anonymity because the negotiations are private, Salame may plead guilty to crimes, including breaking campaign finance laws, as soon as next month.

It is unknown if he will sign a cooperation agreement with the prosecution and give a witness statement against Sam Bankman-Fried, a co-founder of FTX.

Gary Wang, Caroline Ellison, and Nishad Singh, three of Salame’s former coworkers, have already entered guilty pleas to their claimed roles in the billions dollar scam at the now-bankrupt crypto empire and will be crucial witnesses in the government’s case against Bankman-Fried.

Salame has not yet been charged in relation to FTX, and the specifics of a potential plea agreement are still being worked out.

Salame, a Bankman-Fried aide who assisted in FTX’s political fundraising machine, could enter a guilty plea to increase pressure on the founder before his imminent trial in October.

Discrediting Ex-Lover and Co-Worker

Sam Bankman-Fried has consented to a gag order that forbids him from speaking to anybody about anything that would affect his trial, but he contends that other prospective witnesses, such as current FTX CEO John Ray, should also be kept silent.

The U.S. government accused Bankman-Fried of trying to obstruct a fair trial by publicly criticizing former coworker and witness Caroline Ellison in an interview with the New York Times on July 20, prompting the request for the gag order against him.

A few days ago, Bankman-Fried was charged by the US Department of Justice (DoJ) with disclosing Ellison’s personal documents. Caroline Ellison was a former business partner and love interest of SBF’s.

The DoJ charged Bankman-Fried with trying to thwart a fair trial by publicly smearing Ellison, who turned out to be a government witness in SBF’s case in late 2022, in a new complaint submitted on July 20.

SBF shared a government witness’ private writings with a reporter in an effort to have those writings appear in a piece that was published by The New York Times on July 20, according to the complaint filed by U.S. Attorney Damian Williams.

Ellison wrote in her diary about being overburdened with her work at Alameda Research, as well as other things like the hurt from her breakup with SBF and her professional insecurities.

SBF Not Allowed To Publicly Criticize Witnesses

Bankman-Fried’s legal team at Cohen & Gresser LLP refuted the allegations in a letter  dated July 22 to United States District Court Judge Lewis A. Kaplan of New York, but they agreed to accept a gag order as asked .

An official court order known as a “gag order” prevents information or comments from being made public or disclosed to any uninvited third parties. Bankman-Fried will no longer be permitted to publicly criticize a government witness in this case by disclosing private information that can taint the jury pool.

However, in exchange for the respite, Bankman-Fried’s attorneys also demand that the same gag order be imposed on any parties or witnesses who might be called as evidence in his criminal case.

“We respectfully request that any such relief, however, should apply not just to Mr. Bankman-Fried, but equally to all ‘parties and witnesses’ — namely, the Government and all potential witnesses in this case.”

According to the lawyers, this would include the US government, former FTX workers, FTX Debtor businesses, Alameda Research, and any prospective witnesses interested in the lawsuit.

Gag Order for the New CEO?

The request was explained by the attorneys, who noted that one of the main offenders in the “toxic media environment” that has surrounded their client since the collapse of the exchange was FTX CEO John Ray.

“Mr. Ray’s repeated ad hominem attacks on Mr. Bankman-Fried seem more focused on publicly demonizing Mr. Bankman-Fried than on his involvement in recovering assets for FTX creditors. Mr. Bankman-Fried has no choice but to respond as a result of this, the attorneys continued.

The law firm claimed that by promoting various publications meant to damage SBF’s reputation, the U.S. government was using a double standard. They used this as the justification for asking for SBF to receive the same gag order.

American attorney John J. Ray III is well-known for his expertise in recovering money from bankrupt firms. For example, he oversaw the efforts to recoup the assets of creditors after Enron’s demise in 2004.

Following the collapse of the exchange in November 2022, Ray III was named CEO of FTX. He is presently conducting an investigation into the failed exchange to see whether it can be revived.

It was observed that he put in a few additional hours in April on a few tasks that might have something to do with a future FTX relaunch.

On May 22, references were made about “2.0 next steps,” “2.0 reboot,” “2.0 communications,” “2.0 bidder list,” and “FTX restart” in the monthly personnel report and compensation report.

March Deadline

Sam Bankman-Fried recently asserted that prosecutors failed to meet deadlines for submitting important pieces of evidence necessary for the defense of several fraud allegations.

The government had until the end of March to turn over the contents of five electronic devices, according to a letter from Bankman-Fried’s attorneys  to United States District Judge Lewis A. Kaplan dated June 5. However, the government has not done so.

Among the items were a laptop owned by FTX co-founder Gary Wang, an iPhone, and a laptop owned by former Alameda Research CEO Caroline Ellison.

According to the letter, the defense worries that the tardy submission of such an extensive and crucial discovery would affect the defense’s preparation because the trial date is now less than four months away.

Sam Bankman-Fried’s Request For Dismissal of Criminal Charges Denied By Judge

On Tuesday, June 27, a federal court denied Sam Bankman-Fried’s request to overturn the majority of the U.S. government’s criminal case against him for allegedly organizing a multibillion-dollar fraud.

The 31-year-old former billionaire Bankman-Fried will be tried on October 2 as a result of the ruling by U.S. District Judge Lewis Kaplan in Manhattan.

Judge Lewis Kaplan gave his decision on motions that would have halted the discovery and disclosure of certain evidence relating to SBF’s criminal prosecution in a filed  memorandum opinion.

On May 8, Bankman-Fried’s legal team submitted papers in an effort to have the judge throw out 10 of the 13 criminal counts against him, leaving just the conspiracy to commit money laundering, securities fraud, and conspiracy allegations.

Ten allegations, including wire fraud, conspiracy to commit wire fraud, and violations of campaign funding rules were up for consideration by the judge. Using precedent from the U.S. Court of Appeals for the Second Circuit, he essentially rejected the arguments made in support of the motions.

“The Court has considered all of the arguments of the parties. To the extent not addressed herein, the arguments are either moot or without merit,” the judge concluded.

FTX Suing K5 Global In an Effort to Recoup Over $700 million

On June 22, FTX filed a lawsuit  in the United States Bankruptcy Court for the District of Delaware, against some of the investment companies it had connections to prior to its demise. The lawsuit has 16 counts and demands that the defendants pay nearly $700 million.

The incubator and investment firm K5 Global, Mount Olympus Capital, and SGN Albany Capital, as well as related companies and K5 Global co-owners Michael Kives and Bryan Baum, are named as defendants in the complaint filing. Kives was a former Hilary Clinton adviser and a former agent for the CAA entertainment agency.

Bankman-Fried attended a social gathering that Michael Kives threw in 2022, according to the legal complaint.

The lawsuit claims that an amazing roster of guests, including a past presidential contender, well-known celebrities and musicians, reality TV personalities, and numerous billionaires, attended this special dinner party. This fact implies that Kives had several contacts and sway inside powerful circles.

The lawsuit also claims that Alameda Research, a cryptocurrency trading company connected to FTX, handed K5 Global, Michael Kives, and Bryan Baum a staggering $700 million.

However, it has been claimed that the transactions were made to appear as though they came from SGN Albany and Mount Olympus Capital, two shell corporations.

According to FTX’s lawsuit , these transfers were made “without receiving equivalent value” and were deemed avoidable under American bankruptcy law. A transfer that is avoidable under the Bankruptcy Code or other applicable legislation is referred to as an unnecessary transaction.

The money that was transferred from Alameda Research and ultimately wound up in SGN Albany Capital, as well as the money that was transferred from Kives, Baum, and SGN Albany Capital to Mount Olympus Capital, are the targets of FTX’s recovery efforts.

The lawsuit claims that after FTX’s demise, Kives and Baum worked covertly with Bankman-Fried to devise a plan to find a possible savior for the troubled FTX Group while defending their own interests.

When Should SBF Appear in Court?

On October 2, Bankman-Fried is scheduled to appear in court on a plethora of fraud allegations, alleged unlawful political donations, and bribes to the Chinese government. However, per the letter, he does not want the trial date postponed, and more moves could be made “if the newly produced discovery provides grounds for new motions.”

The letter continued by claiming that, during the trial, the government had also neglected to provide data regarding FTX debtors.

It stated that “the five productions thus far are voluminous, totaling over 3.6 million documents and over 10 million pages,” and that “these late productions have a cumulative effect on the defense’s ability to properly prepare for trial.”

The defense got the final production on May 25, and it contained just under 2.5 million papers, “which more than triples the documents in the existing discovery.” The first four productions totaled roughly 1.1 million documents.

In the meantime, during the trial it has been revealed that FTX bankers charged with saving the troubled company are considering selling their stakes in a business associated with the hotly debated artificial intelligence industry.

On June 6, Semafor wrote  that Perella Weinberg, the investment banking company hired by the insolvent exchange, had been “teasing the sale of hundreds of millions of dollars’ worth of shares” in AI startup Anthropic to potential investors. This could be a worthy information, since Semafor was one of SBF’s biggest investments.

The company possessed $500 million worth of Anthropic shares, according to FTX balance statements at the time of its bankruptcy in November 2022, which is projected to be worth much more now that the AI boom is in full swing.

On May 23, Anthropic raised $450 million  in its most recent Series C fundraising round, valued at $4.6 billion.

SBF Pleads Not Guilty, Wants His Case Dismissed

Just a month earlier, in May this year, SBF’s lawyers filed motions to have the US government’s fraud allegations against him dismissed.

Attorneys of Bankman-Fried alleged that the government misrepresented the transgressions that the former CEO of the insolvent cryptocurrency exchange committed. They requested the judge to dismiss the majority of the allegations, which include fraud and corruption.

As for now, Bankman-Fried is being held under house arrest  after posting a $250 million bond. The former FTX boss is awaiting trial at his parents’ Palo Alto home.

Bankman-Fried has admitted running his firm improperly, but denied defrauding anyone.

Gary Wang, Caroline Ellison, and Nishad Singh, three of Bankman-Fried’s former business associates, have admitted guilt to multiple offenses and are helping the police with their inquiries.

However, in March this year, a U.S. judge expressed his continued dissatisfaction  with a request to place rigorous limits on how Sam Bankman-Fried, the founder of the indicted FTX cryptocurrency exchange, communicates with the outside world while out on bond.

Testing the Limits of $250 Million Bail Package

Prosecutors claimed that Bankman-Fried attempted to contact the new FTX Chief Executive, John Ray, and an internal counsel in an apparent effort to influence witnesses, which raised concerns about his conduct while out on bail. Bankman-Fried was trying to assist, not meddle, according to the defense attorneys.

During the trial, attorneys for the prosecution and the defense suggested allowing ex FTX head to possess a flip phone without internet access and a basic laptop with constrained functionality, but forbidding him from utilizing any other electronic communication tools.

However, according to Judge Lewis Kaplan during the hearing in March, Bankman-Fried was “inventive,” and could figure out a way to get around the limitations and covertly connect with people online.

Bankman-Fried’s attorney, Christian Everdell, promised to collaborate with the prosecution on a fresh plan to allay the judge’s worries.

Old-Fashioned Fraud

Authorities said that Bankman-Fried organized “one of the biggest financial frauds in American history,” robbing billions of dollars from FTX clients to make up for losses at its sibling hedge fund, Alameda Research.

After investors rushed to withdraw their savings from the exchange, causing a liquidity crisis and spreading instability throughout the cryptocurrency market, FTX and Alameda both declared bankruptcy in December.

John Ray III, the new CEO of FTX, claimed at a congressional hearing that client monies deposited on the FTX website were mixed with funds at Alameda, which placed a series of speculative, high-risk bets. Ray made his name managing the liquidation of Enron in the early 2000s.

The two businesses were the victims of “old-fashioned embezzlement” by a tiny group of “grossly inexperienced and unsophisticated people,” according to Ray.

How Was it Possible for a Successful Company to Bankrupt?

 Back in 2013, when Bankman-Fried was just 21 years old, he began working on Wall Street. He acquired his wealth by engaging in cryptocurrency arbitrage, which involves buying coins at a discount on one exchange, then swiftly selling them at a premium on another.

His trading company, Alameda Research, was established after he persuaded a handful of his effective altruist pals to participate in this arbitrage concept. By 2019, it was profitable enough for Bankman-Fried to start his own cryptocurrency exchange, FTX.

Investors were drawn to FTX in part because it permitted riskier transactions than other exchanges; users could place highly leveraged bets up until 2021, when it scaled back the leverage it provided them.

Fast became known as a bright disruptor in the crypto space was Bankman-Fried. At the age of 29, he had a $22.5 billion net worth that year.

He was already making waves in politics at the age of 30. He was one of Joe Biden’s largest individual funders in 2020, and has established a legitimate political machine and hired employees to assist him on a variety of topics, including crypto regulation.

When worries about FTX began to surface, Bankman-Fried might not have been open. Prior to the severity of FTX’s financial disorder being clear on November 7, Bankman-Fried tweeted that “everything was great. Assets are good”, the man wrote.

“The holdings of all clients are covered by FTX,” he was ensuring the public.

In another letter, he stated, “We don’t invest customer assets (even in treasuries)”. However, it seems that wasn’t the case after all. Since then, he has removed the tweets.

What Now?

The stability of the larger cryptocurrency market has been impacted by FTX’s decline, and the value of Bitcoin, the most valuable digital currency in the world, has plummeted.

The FTX Future Fund has stated that it is unlikely to be able to fulfill all of its promises to grantees, and Bankman-Fried’s financial collapse may send shockwaves across the philanthropic community as well.

A few months ago, the possibility of an FTX revival under the new moniker FTX 2.0 and the new CEO John Ray III surfaced, garnering a lot of interest from the cryptocurrency world.

The company is now seriously considering relaunching because it was profitable on its own.