Cointelegraph reporters are in New York to attend the trial of former FTX CEO Sam “SBF” Bankman-Fried. As the saga develops, check out the latest updates below.
October 4: The Justice Department and Bankman-Fried's defense present their arguments
The first hours of Sam Bankman-Fried's trial have offered a glimpse of the arguments that the Department of Justice (DOJ) and its defense will present in court in the coming weeks.
Following morning jury selection, both sides gave opening statements to the 12-person jury present in court.
The Justice Department took a tough stance against Bankman-Fried in its first statement, portraying the FTX founder as someone who deliberately lied to investors to enrich himself and expand his crypto empire.
According to the Department of Justice, Bankman-Fried lied to FTX clients and investors, using Alameda as a key partner to "steal client funds," a phrase that was frequently used during opening statements.
According to the trial preview, the Justice Department will focus its arguments on allegations that Bankman-Fried deceived clients, investors and lenders regarding the security of their funds while using Alameda to steal their money and influence politicians in Washington.
Meanwhile, the defense presented arguments that Bankman-Fried was a young businessman who made business decisions that "didn't work out." The defense denied the existence of secret transactions between Alameda and FTX, or a backdoor used to steal customer funds. Based on the above arguments presented, all transactions were legitimate or carried out in good faith by Bankman-Fried during the cryptocurrency market crash and the subsequent collapse of FTX in November 2022.
The defense also highlighted Binance's role in the bank run that led to the collapse of FTX. The testimonies will continue throughout the day.
According to the defense, Bankman-Fried assumed that FTX was allowed to lend funds to Alameda as part of a business relationship with the market maker, and that there was no backdoor for transactions between the companies.
Prosecutors also noted that Caroline Ellison, Gary Wang and Nishad Singh will provide jurors with inside details about Bankman-Fried's role in FTX's operations and the alleged crimes. However, the defense pointed out that, under the cooperation agreement with the government, they were required to testify against Bankman-Fried, which raised questions about their credibility.
The defense also downplayed allegations against the nature of the relationship between FTX and Alameda, arguing that FTX margin traders were aware of the risks associated with the transactions.
"There was no robbery," the defense stated. "It is not a crime to be the CEO of a company that goes bankrupt."
October 3: SBF trial begins
Sam Bankman-Fried's trial began Oct. 3 with jury selection. Bankman-Fried is charged with seven counts of conspiracy and fraud in connection with the collapse of FTX, the cryptocurrency exchange he co-founded. He has pleaded not guilty to all charges. The case is being heard by Judge Lewis Kaplan, who has presided over a long list of other high-profile cases, including those involving detainees at Guantanamo Bay, the Gambino crime family, Prince Andrew and Donald Trump.
fried banker his imprisonment was ordered on August 11 after Kaplan found that sharing former Alameda Research CEO Caroline Ellison's personal documents amounted to witness intimidation. Alameda Research was a trading house also founded by Bankman-Fried. Previously, there was been under house arrest at his parents' home in Stanford, California, on $250 million bail.
December: SBF arrested
Bankman-Fried was arrested in the United States upon arrival from the Bahamas on December 21, 2022. He had been arrested in the Bahamas on December 12 after the United States government formally notified the country of the charges the United States was bringing against him. He declared his intention to fight extradition from the Caribbean nation but changed his mind after a week in jail in the Bahamas and consented to extradition.
Meanwhile, FTX co-founder Gary Wang and Alameda Research CEO (and reportedly sometime SBF girlfriend) Ellison. agreed to plead guilty in the flourishing case.
November: FTX collapses
Bankman-Fried's troubles began when reports emerged on November 2 that Alameda Research had a large stake in FTX Token (FTT), FTX utility token. That revelation raised questions about the relationship between the two entities. On November 6, Changpeng Zhao, CEO of rival exchange Binance, announced that his exchange would liquidate his ITF shares, whose value was estimated at 2.1 billion dollars. Zhao rejected an offer tweeted by Ellison to buy Binance's FTT.
a race started at FTX. Bankman-Fried claimed on Twitter (now X) that the exchange's "assets are fine" and accused "a competitor" of spreading rumors. On November 8, the FTT price had down from $22 at $15.40.
It's only been a week since SBF's famous message: "FTX is fine." The assets are fine.” pic.twitter.com/zKoILqquHF
-Robert Smith (@BondHack) November 14, 2022
Also on November 8, Bankman-Fried announced on Twitter that he had reach an agreement with Zhao “in a strategic transaction.” He wrote: “Our teams are working to clear the withdrawal backlog as it is. This will solve liquidity crises; all assets will be covered 1:1.”
On November 9, Zhao announced that Binance would not pursue the acquisition of FTX after due diligence and further reports of mismanaged funds. The price of Bitcoin (btc) plummeted to $15,600. The FTX and Alameda investigation websites went dark for a few hours. When he returned to the FTX website, it displayed a warning against making deposits and could not process withdrawals.
Wednesday Nov. 10, fried banker posted a 22-part Twitter thread which began with "I'm sorry." It was the first in a long series of public statements he made about the exchange's downfall. The next day, the entire Alameda Research staff resigned and FTX, FTX US, and Alameda Research declared bankruptcy in the United States. Bankman-Fried resigned as CEO of FTX and was replaced by John J. Ray III, best known for his role in the Enron bankruptcy.
SBF and FTX before the fall
In early 2022, FTX It had a valuation of $32 billion. and was thought to be in an enviable financial situation. Bankman-Fried was seen as a respected business leader by much of the crypto community and the world at large. He was photographed with political leaders and speak in Congress audiences.
Maxine Waters chairs FTX investigation https://t.co/oFMctH4rRh pic.twitter.com/Ox6O5w4nOl
- Jordan Kasten @ dossier.today (@JordanSchachtel) November 17, 2022
He got earned a reputation as a philanthropist, following a philosophy popular among academics known as “effective altruism.” Part of his implementation of that philosophy It was political activism. in the form of financial support to candidates.
As crypto winter progressed, Bankman-Fried talked about FTX and Alameda Research "We have a responsibility to seriously consider intervening, even if we are at a loss, to stop the spread." Companies bid for Voyager Digital that was rejected.
ftx made a deal with Visa introduce your own debit card in 40 countries.
Bankman-Fried, Ellison and other Jane Street Capital alumni founded Alameda Research in 2017. Bankman-Fried founded FTX with Wang in 2019. Zhao was an early investor in the exchange.
This is a developing story and more information will be added as it becomes available.
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