Sam Bankman-Fried FTX trial — five things you need to know
Sam Bankman-Fried will face his first day in court over a litany of charges less than a year after the calamitous collapse of cryptocurrency exchange FTX.
The former CEO of the bankrupt exchange is set to face 21 days in court during his criminal trial scheduled from Oct. 4 to Nov. 9. Bankman-Fried has been in pre-trial detention at the Metropolitan Detention Center since Aug. 11 and has filed several unsuccessful motions seeking his release to prepare for his trial.
United States District Judge Lewis Kaplan denied the former FTX CEO’s latest motion for release, citing concerns that Bankman-Fried was a flight risk given the severity of charges being faced and the potential length of time he could spend behind bars if convicted. The former FTX CEO has been granted permission to meet with his legal team at 7 am on active court days.
Proceedings will begin with jury selection on Oct. 3 before the trial itself gets underway on Wednesday, Oct. 4. Cointelegraph has highlighted five major talking points ahead of one of the biggest cryptocurrency-related trials in history.
What happened to FTX?
Once hailed as the darling of the cryptocurrency industry, FTX was co-founded in 2019 by Bankman-Fried and Gary Wang and went on to become a household name in the United States due to its high-profile sponsorships and campaigns.
Over the next three years, the company carried out a series of fundraising rounds that included a preliminary $900 million raise in July 2021 and another $420 million raise in October 2021. 2022 promised to be fruitful for the exchange as it kicked off the year with a further $400 million fundraising round headed up by the likes of SoftBank and Temasek, valuing the company at an estimated $32 billion.
FTX signed several major sponsorship deals during those two years. These included Mercedes’ Formula 1 team, as well as a reported $135 million deal for the naming rights of the Miami Heat’s NBA arena.
The company appeared to be in sound standing as the wider cryptocurrency ecosystem wavered after the implosion of the Terra/LUNA stablecoin. Several high-profile cryptocurrency lending firms were caught in the fallout, which led to FTX making a $240 million offer to acquire BlockFi as well as a failed bid to bailout Voyager Digital.
Things began to unravel in November 2022, with rumblings of trouble at FTX related to its relationship with Bankman-Fried’s quantitative trading firm Alameda Research and the latter’s dependence on FTX’s native exchange token FTT.
1) Hi all:
Today, I filed FTX, FTX US, and Alameda for voluntary Chapter 11 proceedings in the US.
— SBF (@SBF_FTX) November 11, 2022
The house of cards came crumbling down as Binance CEO Changpeng ‘CZ’ Zhao announced that the exchange would sell its FTT token holdings, which played a role as a catalyst for the liquidity crisis at FTX as the value of FTT plummeted.
Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won’t pretend to make love after divorce. We are not against anyone. But we won’t support people who lobby against other industry players behind their backs. Onwards.
— CZ Binance (@cz_binance) November 6, 2022
On Nov. 11 2022, FTX, FTX US and Alameda Research began bankruptcy proceedings, with Bankman-Fried resigning as CEO. John Ray III, the man who handled the infamous Enron bankruptcy, was appointed as acting CEO to review and monetize remaining assets of the FTX group.
Seven counts
Bankman-Fried stands accused of seven counts of conspiracy and fraud relating to the collapse of the exchange.
The U.S. Justice Department had originally announced an eight-count Indictment with fraud, money laundering, and campaign finance offenses in December 2022. This included two counts of wire fraud conspiracy, two counts of wire fraud, and one count of conspiracy to commit money laundering.
Bankman-Fried was also charged with conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to defraud the United States and commit campaign finance violations.
The latter campaign contributions charge was subsequently dropped by the Justice Department in July 2023, due to an extradition agreement with The Bahamas from whence Bankman-Fried had been deported.
Who will testify?
The Justice Department informed presiding Judge Kaplan that it would call up several witnesses for the trial, including former FTX clients, investors and staff.
The U.S attorneys noted that they expected FTX customers who had deposited funds on the defunct exchange to testify regarding their expectations and understanding of the exchange’s deposit policy and the ability to withdraw funds at any time.
Investors that purchased shares in FTX are expected to testify about their expectations of the company being a custodian of user funds as well as the full scope of custodianship in regard to cryptocurrency exchanges.
Lastly, the Justice Department expects cooperating witnesses, who pled guilty to participating in a conspiracy to commit fraud alongside Bankman-Fried, to testify about their interactions with the former CEO, as well as about statements and actions he carried out in the months leading up to the bankruptcy.
Among the cooperating witnesses expected to appear are Wang, FTX engineering director Nishad Singh and Bankman-Friend’s ex-girlfriend and former Alameda Research CEO, Caroline Ellison.
How long could SBF be in jail?
According to the Justice Department, Bankman-Fried’s alleged crimes carry significant prison time.
The counts of wire fraud conspiracy, wire fraud, and money laundering all carry a maximum sentence of 20 years. Meanwhile, charges of conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to defraud the United States carry five-year maximum sentences.
According to CNN, the 30-year-old could face over 100 years in prison if he is found guilty of a multitude of charges brought against him by the U.S. government.
Biggest fraud case in U.S. history?
Legal experts have already suggested that Bankman-Fried’s trial could signify one of the most significant fraud cases in U.S. history. $8.9 billion of customer deposits and investor funds went missing in the wake of FTX’s collapse, while an estimated $7.3 billion of liquid assets have since been recovered through bankruptcy proceedings.
Bernie Madoff arguably remains the most enigmatic fraud case in America, as the recent rendition of his $19 billion Ponzi scheme in a Netflix documentary highlights the grand scale of his influence and shadowy scheme.
While Bankman-Fried may not have caused as significant a level of financial harm as Madoff, his own image and that of FTX’s brand as a visibly active cryptocurrency proponent has thrust the story into the spotlight as a modern-day parallel of the late Madoff’s 17-year fraud.
Bankman-Fried also became involved in the U.S. political landscape, donating over $40 million to democratic committees and candidates in 2022. The former FTX CEO reportedly even considered paying Donald Trump $5 billion to not run for president in the United States, according to author Michael Lewis’s upcoming biography.
Bankman-Fried maintains his innocence, having pleaded not guilty to all charges brought against him in Aug. 2023.
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Politics
‘The time is now to stop Reform’ – Plaid Cymru calls on Labour voters to unite behind Welsh nationalists
One party has held court over Welsh politics for more than a century.
Welsh Labour MPs have been the largest group sent to Westminster in every general election since 1922 – and the party has been in government in the country for more than a quarter of a century.
But if the polls are accurate, Labour’s long-standing grip on politics in Wales is fading.
Plaid Cymru and Reform UK are running almost neck and neck, while Labour trails significantly. A recent YouGov poll put Plaid Cymru on 30%, Reform UK on 29% and Labour at 14%.
Plaid Cymru, heading into its conference this weekend, can sense the mood for change in Wales – and intends to show it is ready for government.
Polling last month put Plaid Cymru and Reform UK almost neck and neck in Wales, with just one point between them – while Labour trails
The party hopes to capitalise on disillusioned Labour voters feeling let down by their party under Sir Keir Starmer, and use this to tackle the rise of Reform – which is key to getting it into power.
In his leader’s speech, Rhun ap Iorwerth is expected to position Plaid Cymru as Wales’s progressive force, and the only party capable of taking on Reform.
He will say: “We’re not here to act as Labour’s conscience. We are not here to repair Labour. We are here to replace them.
“If you’ve never voted for Plaid Cymru before, the time is now.
“The time is now to stop Reform and elect a government more radical, more ambitious, more impatient to bring about positive change than any which has gone before it. A government of progress and of progressive values.”
One in five Labour voters in Wales intend to back Plaid Cymru at the Senedd elections in 2026, according to YouGov. But almost a quarter of Labour voters remain undecided on who to endorse.
The topic of independence will no doubt be a contentious issue for voters who are angry about decisions made by Labour in Wales and Westminster, but do not want an independent Wales.
Plaid Cymru supporters outside the Senedd on 8 October
Mr ap Iorwerth has ruled out an independence referendum if Plaid Cymru wins next year’s elections, signalling that he doesn’t want the campaign to centre on independence.
Throughout the conference, Plaid Cymru will position itself as ready to govern. But voters will expect clear plans for the NHS, education, and the economy. The question for the party, both during this conference and over the coming months, will be whether its proposals can win over Labour voters in its quest to beat Reform.
But Plaid Cymru’s challenge to Nigel Farage’s party faces a critical test sooner than May. Instead, its next battle will be in the Caerphilly Senedd by-election on 23 October.
Historically a Labour stronghold at both Senedd and Westminster levels, Caerphilly has consistently returned Labour representatives, with Plaid Cymru as the main opposition at Senedd elections.
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Farage’s coal pledge in Wales explained
However, this election introduces a new dynamic, as Reform has emerged as a credible challenger, poised to disrupt the traditional two-party contest.
Coming second at this election won’t be a total loss for Plaid Cymru.
If it can come second at the by-election, it will prove the point Mr ap Iorwerth will be making at the conference in Swansea: that his party is the only credible anti-Reform vote.
The full list of candidates standing at the Caerphilly by-election:
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Labour – Richard Tunnicliffe
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Plaid Cymru – Lindsay Whittle
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Reform UK – Llŷr Powell
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Conservative – Gareth Potter
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Green Party – Gareth Hughes
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Gwlad – Anthony Cook
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UKIP – Roger Quilliam
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Liberal Democrats – Steve Aicheler
Politics
Starmer’s found new enthusiasm for his digital ID project – but will he be able to sell it?
One metric for the rise and fall of this government might end up being the progress of the rollout of digital ID.
The lack of a clear plan – despite the high profile announcement by the PM – means the destination still remains slightly opaque, and some cabinet ministers are sceptical.
However, the PM’s India trip suggests that there might just be a path to success, if things fall in Keir Starmer’s favour.
During his visit, Starmer met the boss of Infosys, Nandan Nilekani, who is behind the rollout of digital ID to more than 1.4 billion Indian citizens.
Afterwards, when I asked about it at the closing press conference of the India trip, he was infused by a fresh enthusiasm for the plan, not evident at the Labour gathering in Liverpool in the days after he first unveiled it.
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Digital ID cards for everyone?
Below is what he said to me, transcribed in full.
But as you read it, notice how the PM’s explanation and justification for this scheme – which will be one of the biggest projects this government undertakes if it does happen – centres around convenience for citizens and makes no mention of the case originally used for it – to combat illegal migration.
Starmer told me: “We did discuss [digital ID] yesterday. And in particular, the benefits that it has brought in India.
“We’ve obviously also looked at other countries – Estonia, for example. The speed with which it allows citizens here to access services, particularly financial services, is something that was recognised in our discussions yesterday and actually at the fintech discussion that we had today, as well.
“So, we’re looking at those examples of how digital ID helps individuals, with the processes that sometimes take too long and are too cumbersome, and makes it easier for them.”
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Who opposes BritCard?
The answer is clear: the prime minister now puts personal convenience as the top justification.
While Starmer was locked in the Fintech summit, we visited Mumbai University to gauge opinion on digital ID, which has rolled out across India over the past 10 to 15 years.
We asked students as they could traditionally have been thought to be one of the more cautious groups in society towards a project which involves state intrusion into the lives of individuals.
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Sky’s Sam Coates reports from India
Among all the people that we talked to – and you can watch our video at the top of this page – there was a recognition of privacy concerns, worries about data leaks, and uncertainty about how some of the information might be used.
But every single person we stopped and talked to about it was nevertheless enthusiastically in favour – and said it had made their lives simpler and more efficient.
The net benefits of this scheme had landed with the Indian citizens we spoke to.
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Is this the end of digital privacy for UK citizens, or a tech solution to illegal immigration?
The engagement from Infosys is also significant after the boss of Palantir, a rival tech company, gave the idea of a UK digital ID scheme a comprehensive shellacking last week.
For a moment, it looked like the corporate world might be pulling back from the scheme – so the engagement of a massive multinational corporation has come at just the right moment.
None of which is to downplay the obstacles.
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Who is going to implement Labour’s new policy on digital ID cards?
In a bizarre move, the Home Office appears to have been allowed to swerve responsibility for the project, which has gone instead to Liz Kendall’s Department of Science, Innovation and Technology (DSIT), which does not yet have any track record of major delivery.
One DSIT aide said that the young average age of staff at the newly formed department is an advantage, a claim which seems somewhat doubtful.
So, Whitehall may tie itself up in knots over this project. Or, it might turn out that India’s cultural norms simply make it an easier place to roll out a scheme like this.
But on the basis of our enquiries, there is the potential case for a scheme that can be sold to a willing public.
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