A federal judge is allowing former FTX CEO Sam Bankman-Fried, or SBF, access to his legal team outside of jail provided he gives sufficient notice.
In an Aug. 23 order filed in United States District Court for the Southern District of New York, Judge Lewis Kaplan said SBF would be allowed access to discovery materials in his criminal case in a courthouse cell block with 48 hours’ notice to prosecutors and the U.S. Marshals Service. The order came prior to Kaplan reaching a decision on motions from the Justice Department and SBF’s legal team regarding how much time the former FTX CEO would be allowed outside of the Metropolitan Detention Center in Brooklyn in order to assist in the preparation of his case.
Kaplan said the order was in line with the accommodations the U.S. government proposed for SBF on Aug. 18. However, the details of the government’s offer in the filing were largely redacted, other than claiming the U.S. Marshals Service “offered these extraordinary accommodations in light of the unique nature of this case”. SBF’s legal team requested he be allowed outside of jail five days a week to assist with his own defense.
SPECIAL SAM: Looks like Bankman-Fried will be allowed to meet daily with his lawyers and laptop in the SDNY courthouse. This just-filed order refers to paragraphs from DOJ’s Aug 18 letter where are fully redacted. #SecretSamhttps://t.co/uUXBcLMej9pic.twitter.com/nbm2BVlQqM
The judge ruled on Aug. 21 that SBF be allowed roughly 7 hours in the New York courthouse cell block attorney room on Aug. 22. Based on an Aug. 23 filing from his legal team, the former FTX CEO and his lawyers may have discussed the defense strategy of relying on advice of previous counsel, causing him to act “in good faith” in regards to his alleged actions at FTX and Alameda Research.
SBF had been free on a $250-million bail following his extradition from the Bahamas and arraignment in the United States in December 2022. On Aug. 11, following allegations of witness intimidation, Kaplan revoked his bail, causing him to be sent to jail where he will likely remain through the trials.
The former FTX CEO faces 12 criminal counts which will be spread across two trials starting in October 2023 and March 2024. Bankman-Fried has pleaded not guilty to all charges.
The New York State Attorney General’s (NAYG) recent legal action against Galaxy Digital over its promotional ties to the now-collapsed cryptocurrency Terra (LUNA) was unfair and an abuse of the legal system, says SkyBridge Capital and founder Anthony Scaramucci.
“It’s LAWFARE, pure and simple due to an obscure but dangerously powerful New York law known as the Martin Act,” Scaramucci said in a March 28 X post.
Martin Law can “open the door for abuse”
“The law has no need to prove intent, creating a low standard of proof that can open the door for abuse like this. It shouldn’t exist,” he said.
New York’s Martin Act is one of the US’s strictest anti-fraud and securities laws, allowing prosecutors the power to pursue financial fraud cases without needing to prove intent. The NAYG alleged that Galaxy Digital violated the Martin Act over its alleged promotion of Terra, with Galaxy Digital agreeing to a $200 million settlement.
According to NAYG documents filed on March 24, Galaxy Digital acquired 18.5 million LUNA tokens at a 30% discount in October 2020, then promoted them before selling them without abiding by disclosure rules.
Scaramucci reiterated that Galaxy CEO Michael Novogratz was under the impression everything he was saying about Luna was true, as he had been deceived by Terraform Labs and its former CEO, Do Kwon.
The filing alleged that Galaxy helped a “little-known” token, referring to LUNA, increase its market price from $0.31 in October 2020 to $119.18 in April 2022 while “profiting in the hundreds of millions of dollars.”
Asset manager and investor Anthony Pompliano said he isn’t familiar with the details of the lawsuit but vouched for Novogratz, calling him a “good man” who has devoted a lot of time and money to helping others.
The Terra collapse is one of the crypto industry’s most infamous failures. In March 2024, SEC attorney Devon Staren said in the US District Court for the Southern District of New York that Terra was a “house of cards” that collapsed for investors in 2022.
Billionaire investor Elon Musk has sold his social media platform X to his AI startup xAI, sparking controversy as it coincides with a US judge rejecting his bid to dismiss a lawsuit tied to the social media platform.
The transfer of ownership of X to xAI on March 28 means that the class-action lawsuit against Musk — accusing him of defrauding former Twitter shareholders by delaying the disclosure of his initial investment in the social media platform — has become “a whole lot spicer,” Cinneamhain Ventures partner Adam Cochran said in a March 28 X post.
Acquisition may open up xAI to more ‘exposure’
On the same day that Musk said “xAI has acquired X in an all-stock transaction,” a US judge reportedly rejected Musk’s attempt to dismiss the lawsuit. Cochran said it has “opened up his AI entity to exposure here too, and it’s a much bigger pie.”
Musk said the deal values xAI at $80 billion and X at $33 billion, factoring in $12 billion in debt from the $45 billion valuation. He originally bought X, formerly Twitter, for around $44 billion in April 2022.
“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said.
“This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” he said, adding:
“This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”
However, Cochran claimed that “Musk used his pumped up xAI stock to pay multiple times over value for X, but still take an $11B loss on the transaction.” He said that Musk is “screwing over xAI investors, and X investors” and was executed to sell user data to xAI.
xAI is best known for its AI chatbot “Grok” which is built into the X platform. When Musk released it in November 2023, he claimed it could outperform OpenAI’s first iteration of ChatGPT in several academic tests.
Musk explained at the time that the motivation behind building Grok is to create AI tools equipped to assist humanity by empowering research and innovation.
While Cochran said that Grok being valued at $80 billion is an “insanely dumb valuation,” crypto developer “Keef” disagrees. Keef said, “This is shady all around, but given the day, Grok is genuinely probably the top model for various tasks.”
Five Democratic lawmakers in the US Senate have called on leadership at regulatory agencies to consider the potential conflicts of interest from a stablecoin launched by World Liberty Financial (WLFI), the crypto firm backed by US President Donald Trump’s family.
In a March 28 letter from the US Senate Banking Committee, Massachusetts Senator Elizabeth Warren and four other Democrats asked the Federal Reserve’s committee chair on supervision and regulation, Michelle Bowman, and acting comptroller of the currency, Rodney Hood, how they intended to regulate WLFI and its stablecoin, USD1.
The letter came as members of Congress are considering legislation to regulate stablecoins through the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act. The bill, if signed into law, would essentially allow the Office of the Comptroller of the Currency (OCC) and Federal Reserve to oversee stablecoin regulation, including for issuers like WLFI and its USD1 coin.
Trump also signed an executive order in February attempting to have all federal agencies — purportedly including the OCC — “regularly consult with and coordinate policies and priorities” with White House officials, giving the US president unprecedented control.
“President Trump’s involvement in this venture, as he strips financial regulators of their independence and Congress simultaneously considers stablecoin legislation, presents an extraordinary conflict of interest that could create unprecedented risks to our financial system and to the integrity of decisions made by the [Fed and OCC],” said the letter, adding:
“The launch of a stablecoin directly tied to a sitting President who stands to benefit financially from the stablecoin’s success presents unprecedented risks to our financial system.”
Since World Liberty launched in September 2024 — months before the US election and Trump’s inauguration — many of the firm’s goals have been shrouded in secrecy. The project’s website notes that Trump and some of his family members control 60% of the company’s equity interests.
As of March 14, World Liberty had completed two public token sales, netting the company a combined $550 million. On March 24, the project confirmed launching its first stablecoin on the BNB Chain and Ethereum. The president’s son, Donald Trump Jr., also pitched USD1 from the DC Blockchain Summit on March 26 with three of WLFI’s co-founders.