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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The World Transformed, a left-wing political festival, has historically ran alongside the Labour Party Conference as an unofficial fringe event.
But a lot has changed since it began in 2016, organised then by the Corbyn-backed group Momentum. And like the former Labour leader himself, TWT has gone independent.
From Thursday to Sunday, a programme of politics, arts and cultural events will be held in Manchester, a week after Labour’s annual party gathering ended.
“It no longer made any sense to be a fringe festival of the Labour conference,” Hope Worsdale, an organiser since 2018, tells Sky News. “We need a space for the independent left to come together.”
This decision was made before the formation of Your Party in July and the surge of support behind the Greens and its new leader Zack Polanski, but both these factors have given TWT some extra momentum. Organisers say it is not just a festival, but a “statement of intent from the British left” – and a left that looks different from how it used to.
Previous headline speakers were Labour MPs in the left-wing Socialist Campaign Group, and in 2021, the showstopper was American democrat Bernie Sanders calling in live for an event alongside John McDonnell.
The World Transformed, previously headlined left-wing Labour MPs
Bernie Sanders and John McDonnell in conversation at TWT in 2021
This year, Mr Polanski, Jeremy Corbyn and Zarah Sultana are the only British politicians due to speak at events – though Brian Leishman, who lost the Labour whip in the summer, is also scheduled on a panel.
TWT was put on pause last year for organisers to reflect upon its role going forward, after Sir Keir Starmer’s election victory.
In 2021, 2022 and 2023, while he was leader of the opposition, the festival was able to “co-exist” with Labour as a space for activists on the left to discuss ideas.
But the prime minister’s “shift to the right” has alienated so many of those grassroots members that it was felt TWT’s core audience would no longer be at Labour Party conferences, says Hope, who joined Labour in the Corbyn years and has since left.
TWT in 2016. Pic: TWT
Event at TWT in 2023
“Our official position isn’t that Labour is dead and no one should engage with it,” she says.
“But they have shifted the values of Labour so radically since the last election, broken promise after promise, attacked civil liberties… there’s been such a suite of terrible decisions that mean people who are generally progressive and generally left wing feel like they have to take their organising elsewhere.”
So what’s on the cards?
There will be 120 events held in Hulme, Manchester, from Thursday to Sunday evening.
At the heart of the programme is daily assemblies, which organisers say are “designed to hold genuinely constructive debates about what we should do and how we should do it”.
But there’s just as much partying as there is politics – Dele Sosimi and his Afrobeat Orchestra are headlining the Saturday night slot while a “mystery guest” will host what TWT calls its “infamous” pub quiz on Friday night.
Back in 2018 that was Ed Miliband’s job, when 10,000 activists were expected to attend TWT. This year, organisers anticipate around 3,000 people will gather, but those involved insist this is a real chance for the left to strategise and co-ordinate, given the involvement of over 75 grassroots groups, trade unions, and activist networks.
Collaboration ‘vital’
A key question the left will need to address is how it can avoid splitting the vote given the rise of the Greens, socialist independents and the formation of Your Party,
One activist from the We Deserve Better organisation, which is campaigning for a left-wing electoral alliance and will be at TWT this weekend, acknowledged collaboration is “vital” if the left is to make gains under Britain’s first-past-the-post system.
Jeremy Corbyn at TWT. Pic: Reuters
But it remains to be seen whether Your Party co-leaders Mr Corbyn and Ms Sultana can even work together following their public spat last month, let alone with other parties. The pair put on a united front at a rally in Liverpool on the eve of TWT, when Sultana said she was “truly sorry” and promised “no more of that”. But will the truce last?
“It’s not ideal”, says the activist. “Hopefully they are back on track…a lot of collaboration is happening at the grassroots and we need to make sure it’s formalised so we can beat Labour and the right, we need to put on united front.”
They point to seats like Ilford North, where Health Secretary Wes Streeting clung on by a margin of just 528 votes in the general election, after a challenge from British-Palestinian candidate Leanne Mohamad, who ran in protest against Labour’s stance on Gaza.
Meanwhile, in Hackney, the Greens are hoping to gain their first directly elected mayor next May, with the Hackney Independent Socialist Group of councillors throwing their weight behind the party’s candidate, Zoe Garbett.
The We Deserve Better activist says Labour’s “hostile war on the left” has made these areas ripe for the taking, and what is more important than party affiliation is galvanising momentum behind one candidate who shares socialist values on issues like public ownership and immigration – be they the Greens, independents, or Your Party.
“The World Transformed reflects a general reorientation of the left outside of Labour. If they are taking these places for granted, we are going to win. If we unite as the left then we can win even bigger. Bring it on.”
Is Labour in danger?
There is some cause for Labour to be worried. It is haemorrhaging votes to both the right and the left after a tumultuous first year in office (13% to Reform UK, 10% to the Greens and 10% to the Lib Dems, according to an Ipsos poll in September).
Many Labour MPs feel the prime minister has spent too much energy trying to “out Reform Reform” with a focus on immigration, and he needs to do more to win back moderate and progressive voters that will be gathering at TWT this weekend.
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One fed-up MP told Sky News it was a shame TWT had decided to branch away from Labour, but not a surprise.
“This was something that was on the cards for a while, a parting of the ways, it’s another thing to show what’s happening with the direction of the party.”
He said in previous years the festival “was full of people for the first time in their life who were excited about politics and had a leadership looking at how it could challenge the biggest issues in our country”.
“Debates could be heated but it was always a place for intellectual discussion and that inside the Labour Party is now dead.”
But he said the party ultimately had bigger things to worry about than TWT, with a budget round the corner and potentially catastrophic local elections in May.
“I don’t think it will keep Keir Starmer or Morgan McSweeney up at night.”
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