Cointelegraph reporters are on the bottom in New York for the trial of former FTX CEO Sam “SBF” Bankman-Fried. Because the saga unfolds, test under for the most recent updates.

Oct. 4: DOJ and Bankman-Fried’s protection state their arguments

The primary hours of Sam Bankman-Fried trial have supplied a glimpse of the arguments the Division of Justice (DOJ) and his protection will deliver to court docket within the coming weeks.

After a jury choice within the morning, each events gave opening statements to the 12-person jury current within the court docket.

The DOJ took a tricky stance towards Bankman-Fried in its first assertion, portraying the FTX founder as somebody who intentionally lied to traders to complement himself and increase his crypto empire.

In line with the DOJ, Bankman-Fried lied to FTX prospects and traders, utilizing Alameda as a key companion to “steal prospects’ funds,” a phrase that was continuously used in the course of the opening statements.

As per the trial preview, the DOJ will focus its arguments on allegations that Bankman-Fried misled prospects, traders, and lenders relating to the protection of their funds whereas utilizing Alameda to steal their cash and affect politicians in Washington.

The protection, in the meantime, introduced arguments about Bankman-Fried being a younger entrepreneur who made enterprise selections that “didn’t work out.” The protection denied the existence of secret transactions between Alameda and FTX, or a backdoor used to steal buyer funds. In line with the earlier arguments introduced, all transactions have been authentic or made in good religion by Bankman-Fried in the course of the crypto market downturn and the next collapse of FTX in November 2022.

The protection additionally highlighted the position of Binance within the financial institution run that led to FTX’s collapse. Testimonies will proceed all through the day.

In line with the protection, Bankman-Fried assumed FTX was allowed to mortgage funds to Alameda as a part of a enterprise relationship with the market maker, and there was no secret door for transactions between the businesses.

Prosecutors additionally famous that Caroline Ellison, Gary Wang, and Nishad Singh will provide the jury insider particulars about Bankman-Fried’s position in FTX’s operations and alleged crimes. Nonetheless, the protection identified that as a part of the cooperation settlement with the federal government, they have been supposed to present testimony towards Bankman-Fried, elevating doubts about their credibility.

The protection additionally downplayed the accusations towards the character of the connection between FTX and Alameda, arguing that FTX margin merchants have been conscious of the dangers related to transactions.

“There was no theft,” the protection claimed. “It isn’t a criminal offense to be the CEO of an organization that information for chapter.”

Within the second half of the primary day of the trial, the jury heard from two witnesses: Mark Julliard, a French dealer and former shopper of FTX, and Adam Yedidia, a pal of Sam Bankman-Fried and former worker at Alameda Analysis and FTX.

In his testimony, Julliard mentioned he had 4 Bitcoin held at FTX on the time of the trade’s collapse, price almost $100,000. He admitted that FTX and Bankman-Fried’s advertising and marketing efforts, together with notable enterprise capital firms backing FTX, gave him the arrogance to make use of the trade for crypto buying and selling. He assumed that VC companies had run due diligence on FTX and its management.

Through the questioning, prosecutors emphasised that the dealer used FTX solely for spot buying and selling and that he was not conscious that the trade was utilizing shopper funds for crypto buying and selling with Alameda Analysis.

Questions for Yedidia have been targeted on his instructional background at MIT, the place he first met Bankman-Fried, and his two skilled experiences with the FTX founder. Yedidia labored at Alameda for a quick interval in 2017 as a dealer after which got here again to work for FTX in 2021 as a developer. He was certainly one of ten individuals residing within the Bahamas on FTX’s $30 million actual property.

In Yedidia’s testimony, prosecutors used former FTX adverts as proof that the corporate was at all times positioning itself as a secure, trusted, and straightforward option to spend money on cryptocurrency, together with advertising and marketing campaigns with NFL participant Tom Brady and comic Larry David. The trial will resume Oct. 5.

Oct. 3: SBF trial begins

The trial of Sam Bankman-Fried started on Oct. 3 with jury choice. Bankman-Fried is charged with seven counts of conspiracy and fraud in reference to the collapse of FTX, the cryptocurrency trade he co-founded. He has pleaded not responsible to all prices. The case is being heard by Decide Lewis Kaplan, who has presided over an extended listing of different high-profile instances, together with ones involving detainees at Guantanamo Bay, the Gambino crime household, Prince Andrew and Donald Trump.

Bankman-Fried was ordered to be jailed on Aug. 11 after Kaplan discovered that his sharing of former Alameda Analysis CEO Caroline Ellison’s private papers amounted to witness intimidation. Alameda Analysis was a buying and selling home additionally based by Bankman-Fried. Beforehand, he had been beneath home arrest in his dad and mom’ house in Stanford, California on a $250-million bond.

December: SBF arrested

Bankman-Fried was arrested in the US on his arrival from the Bahamas on Dec. 21, 2022. He had been arrested within the Bahamas on Dec. 12 after the U.S. authorities formally notified the nation of prices the U.S. was submitting towards him. He declared his intention to struggle extradition from the Caribbean nation however modified his thoughts after every week in Bahaman jail and consented to extradition.

In the meantime, FTX co-founder Gary Wang and Alameda Analysis CEO (and reportedly someday SBF girlfriend) Ellison agreed to plead responsible within the burgeoning case.

November: FTX collapses

Bankman-Fried’s troubles started when studies emerged on Nov. 2 that Alameda Analysis had a big holding of FTX Token (FTT), FTX’s utility token. That revelation led to questions concerning the relationship between the 2 entities. On Nov. 6, Changpeng Zhao, CEO of rival trade Binance, introduced that his trade would liquidate its FTT holdings, which have been estimated to be price $2.1 billion. Zhao turned down a suggestion tweeted by Ellison to purchase Binance’s FTT.

A run started on FTX. Bankman-Fried gave reassurances on Twitter (now X) that the trade’s “belongings are effective” and accused “a competitor” of spreading rumors. By Nov. 8, the worth of FTT had fallen from $22 to $15.40.

It’s solely been one week since SBF’s infamous “FTX is okay. Belongings are effective.” pic.twitter.com/zKoILqquHF

— Robert Smith (@BondHack) November 14, 2022

Additionally on Nov. 8, Bankman-Fried introduced on Twitter that he had come to an settlement with Zhao “on a strategic transaction.” He wrote, “Our groups are engaged on clearing out the withdrawal backlog as is. This can filter liquidity crunches; all belongings will probably be coated 1:1.”

On Nov. 9, Zhao introduced that Binance wouldn’t pursue the acquisition of FTX after due diligence and extra studies of mishandled funds. The worth of Bitcoin (BTC) plummeted to $15,600. The FTX and Alameda Analysis web sites went darkish for just a few hours. When the FTX web site got here again, it bore a warning towards making deposits and was unable to course of withdrawals.

On Nov. 10, Bankman-Fried posted a 22-part Twitter thread that started with “I’m sorry.” It was the primary of an extended string of public statements he made concerning the trade’s fall. The next day, your entire workers of Alameda Analysis stop, and FTX, FTX US and Alameda Analysis filed for chapter in the US. Bankman-Fried resigned as FTX CEO and was changed by John J. Ray III, who was finest recognized for his position within the Enron chapter.

SBF and FTX earlier than the autumn

Firstly of 2022, FTX had a $32-billion valuation and was considered in enviable monetary situation. Bankman-Fried was seen as a revered enterprise chief by a lot of the crypto group and the world at giant. He was photographed with political leaders and spoke at congressional hearings. 

Maxine Waters is chairing the investigation into FTX https://t.co/oFMctH4rRh pic.twitter.com/Ox6O5w4nOl

— Jordan Schachtel @ file.in the present day (@JordanSchachtel) November 17, 2022

He had gained a fame as a philanthropist, pursuing a philosophy fashionable amongst lecturers generally known as “efficient altruism.” A part of his implementation of that philosophy was political activism within the type of monetary assist for candidates.

Because the crypto winter set in, Bankman-Fried spoke of FTX and Alameda Analysis’s “accountability to noticeably contemplate stepping in, even whether it is at a loss to ourselves, to stem contagion.” The businesses made a bid for Voyager Digital that was rebuffed.

FTX made a take care of Visa to introduce its personal debit card in 40 international locations.

Bankman-Fried, Ellison and different alumni of Jane Avenue Capital based Alameda Analysis in 2017. Bankman-Fried went on to discovered FTX with Wang in 2019. Zhao was an early investor within the trade.

This can be a creating story, and additional info will probably be added because it turns into out there.