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Latest update — Former FTX CEO Sam Bankman-Fried trial [Day 2]
Cointelegraph reporters are on the ground in New York for the trial of former FTX CEO Sam “SBF” Bankman-Fried. As the saga unfolds, check below for the latest updates.
Oct. 4: DOJ and Bankman-Fried’s defense state their arguments
The first hours of Sam Bankman-Fried trial have offered a glimpse of the arguments the Department of Justice (DOJ) and his defense will bring to court in the coming weeks.
After a jury selection in the morning, both parties gave opening statements to the 12-person jury present in the court.
The DOJ 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 DOJ, Bankman-Fried lied to FTX customers and investors, using Alameda as a key partner to “steal customers’ funds,” a phrase that was frequently used during the opening statements.
As per the trial preview, the DOJ will focus its arguments on allegations that Bankman-Fried misled customers, investors, and lenders regarding the safety of their funds while using Alameda to steal their money and influence politicians in Washington.
The defense, meanwhile, brought arguments about Bankman-Fried being a young entrepreneur 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. According to the previous arguments presented, all transactions were legitimate or made in good faith by Bankman-Fried during the crypto market downturn and the subsequent collapse of FTX in November 2022.
The defense also highlighted the role of Binance in the bank run that led to FTX’s collapse. Testimonies will continue throughout the day.
According to the defense, Bankman-Fried assumed FTX was allowed to loan funds to Alameda as part of a business relationship with the market maker, and there was no secret door for transactions between the companies.
Prosecutors also noted that Caroline Ellison, Gary Wang, and Nishad Singh will offer the jury insider details about Bankman-Fried’s role in FTX’s operations and alleged crimes. However, the defense pointed out that as part of the cooperation agreement with the government, they were supposed to give testimony against Bankman-Fried, raising doubts about their credibility.
The defense also downplayed the accusations against the nature of the relationship between FTX and Alameda, arguing that FTX margin traders were aware of the risks associated with transactions.
“There was no theft,” the defense claimed. “It’s not a crime to be the CEO of a company that files for bankruptcy.”
Oct. 3: SBF trial begins
The trial of Sam Bankman-Fried began on 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 ones involving detainees at Guantanamo Bay, the Gambino crime family, Prince Andrew and Donald Trump.
Bankman-Fried was ordered to be jailed on Aug. 11 after Kaplan found that his sharing of former Alameda Research CEO Caroline Ellison’s personal papers amounted to witness intimidation. Alameda Research was a trading house also founded by Bankman-Fried. Previously, he had been under house arrest in his parents’ home in Stanford, California on a $250-million bond.
December: SBF arrested
Bankman-Fried was arrested in the United States on his arrival from the Bahamas on Dec. 21, 2022. He had been arrested in the Bahamas on Dec. 12 after the U.S. government formally notified the country of charges the U.S. was filing against him. He declared his intention to fight extradition from the Caribbean nation but changed his mind after a week in Bahaman jail 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 burgeoning case.
November: FTX collapses
Bankman-Fried’s troubles began when reports emerged on Nov. 2 that Alameda Research had a large holding of FTX Token (FTT), FTX’s utility token. That revelation led to questions about the relationship between the two entities. On Nov. 6, Changpeng Zhao, CEO of rival exchange Binance, announced that his exchange would liquidate its FTT holdings, which were estimated to be worth $2.1 billion. Zhao turned down an offer tweeted by Ellison to buy Binance’s FTT.
A run began on FTX. Bankman-Fried gave reassurances on Twitter (now X) that the exchange’s “assets are fine” and accused “a competitor” of spreading rumors. By Nov. 8, the price of FTT had fallen from $22 to $15.40.
It’s only been one week since SBF’s notorious “FTX is fine. Assets are fine.” pic.twitter.com/zKoILqquHF
— Robert Smith (@BondHack) November 14, 2022
Also on Nov. 8, Bankman-Fried announced on Twitter that he had come to an agreement with Zhao “on a strategic transaction.” He wrote, “Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1.”
On Nov. 9, Zhao announced that Binance would not pursue the acquisition of FTX after due diligence and more reports of mishandled funds. The price of Bitcoin (BTC) plummeted to $15,600. The FTX and Alameda Research websites went dark for a few hours. When the FTX website came back, it bore a warning against making deposits and was unable to process withdrawals.
On Nov. 10, Bankman-Fried posted a 22-part Twitter thread that began with “I’m sorry.” It was the first of a long string of public statements he made about the exchange’s fall. The following day, the entire staff of Alameda Research quit, and FTX, FTX US and Alameda Research filed for bankruptcy in the United States. Bankman-Fried resigned as FTX CEO and was replaced by John J. Ray III, who was best known for his role in the Enron bankruptcy.
SBF and FTX before the fall
At the beginning of 2022, FTX had a $32-billion valuation and was thought to be in enviable financial condition. 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 spoke at congressional hearings.
Maxine Waters is chairing the investigation into FTX https://t.co/oFMctH4rRh pic.twitter.com/Ox6O5w4nOl
— Jordan Schachtel @ dossier.today (@JordanSchachtel) November 17, 2022
He had gained a reputation as a philanthropist, pursuing a philosophy popular among academics known as “effective altruism.” Part of his implementation of that philosophy was political activism in the form of financial support for candidates.
As the crypto winter set in, Bankman-Fried spoke of FTX and Alameda Research’s “responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion.” The companies made a bid for Voyager Digital that was rebuffed.
FTX made a deal with Visa to introduce its own debit card in 40 countries.
Bankman-Fried, Ellison and other alumni of Jane Street Capital founded Alameda Research in 2017. Bankman-Fried went on to found FTX with Wang in 2019. Zhao was an early investor in the exchange.
This is a developing story, and further information will be added as it becomes available.
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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