Home News Sam Bankman-Fried FTX Trial: SBF Prosecution Date, Details in Full

Sam Bankman-Fried FTX Trial: SBF Prosecution Date, Details in Full

Teuta Franjkovic
Last Updated September 29, 2023 9:13 AM
Giuseppe Ciccomascolo
Verified by Giuseppe Ciccomascolo
Key Takeaways
  • FTX former CEO, Sam Bankman-Fried, is facing a significant criminal prosecution, which is set to last for at least 21 days.
  • The trial is scheduled to take place from October 4 to November 9, with jury selection starting on October 3.
  • Bankman-Fried is charged with seven counts of fraud and conspiracy.
  • Bankman-Fried has been in custody at the Metropolitan Detention Centre since August 11.
  • Despite multiple attempts for interim release, his requests have been denied, with concerns that he might flee.

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.