Sam Bankman-Fried FTX test — 5 things you need to know
Sam Bankman-Fried will soon have his first day in court as he faces multiple charges less than a year after the devastating collapse of cryptocurrency exchange FTX.
The former chief executive of the bankruptcy exchange is set to appear in court for 21 days in a criminal trial scheduled from October 4 to November 9. Bankman-Fried has been in pretrial detention at the Metropolitan Detention Center in New York City since August. .
U.S. District Judge Louis Kaplan denied the former FTX CEO's latest request for release, citing concerns that Banman-Fried was a flight risk given the severity of the charges and the length of time he could spend in prison if convicted. The former FTX CEO was granted permission to meet with his legal team at 7 p.m. ET on active court dates.
The trial will begin on October 3 with jury selection before the trial begins on Wednesday, October 4. Cointelegraph has highlighted five major talking points from one of the most significant cryptocurrency-related experiments in history.
What happened to FTX?
Once the darling of the cryptocurrency industry, FTX was launched in 2015. Founded in 2019 by Bankman Fried and Gary Wang, it has become a household name due to its extensive sponsorships and campaigns in the US.
Over the next three years, the company held a series of fundraising rounds, including an initial $900 million in July 2021 and another $420 million in October 2021. A $400 million fundraising round led by the likes of SoftBank and Temasek valued the company at $32 billion.
FTX signed several major sponsorship deals during those two years. These included a reported $135 million for the Mercedes AMG Petronas Formula One team and the naming rights to the Miami Heat's National Basketball Association arena.
The company appears to be on sound footing as the broader cryptocurrency ecosystem wobbles after the Terra ecosystem implosion. Several high-profile cryptocurrency lenders have been caught up in the collapse, prompting FTX to make a $240 million offer to acquire BlockFi and rejecting a bid to divest Voyager Digital.
In the year In November 2022, things began to unravel in FTX when issues arose in FTX regarding its relationship with Bankman-Fried quantitative trading firm Alameda Research and the latter's reliance on FTX's native FTX Token (FTAT).
1) Hello everyone.
Today, FTX, FTX US, and Alameda filed for voluntary Chapter 11 proceedings in the US.
— SBF (@SBF_FTX) November 11, 2022
A house of cards collapsed when Binance CEO Changpeng “CZ” Zhao announced that the exchange would sell its FTT token holdings, citing a liquidity crisis in FTX due to the falling price of FTA.
Watering our FTT is only risk management after learning from LUNA. We've been supportive before, but we don't pretend to make love after a divorce. We are not against anyone. But we don't support people who go against other industry players behind their backs. in the future.
— CZ Binance (@cz_binance) November 6, 2022
In the year On November 11, 2022, FTX, FTX US and Alameda Research entered bankruptcy proceedings, with Bankman-Fried stepping down as CEO. John Ray III, the man who handled Enron's bankruptcy, was named acting CEO to review and monetize FTX Group's remaining assets.
Seven counts
Bankman-Fried was charged with seven counts of conspiracy and fraud related to the exchange's collapse.
The US Department of Justice (DOJ) first announced the indictment of eight defendants in December 2022 for fraud, money laundering and campaign finance crimes. .
Bankman-Fried has been charged with securities fraud, securities fraud and defrauding the United States of America and campaign finance violations.
The DOJ suspended his campaign contributions in July 2023 as part of a settlement with the Bahamas from which Bankman-Fried was fired.
Who will testify?
The DOJ has announced that Kaplan will call several witnesses at the trial, including former FTX clients, investors and employees.
US attorneys said they will testify about the expectations of FTX customers who deposited money on the defunct exchange and about the exchange's deposit policy and ability to withdraw funds at any time.
Investors who bought shares in FTX are expected to witness the company's expectations of being a custodian of user funds, as well as the full scope of custodianship of cryptocurrency exchanges.
Finally, the DOJ expects co-witnesses who have pleaded guilty to participating in the Bankman-Fried fraud to testify about their relationship with the former CEO and their statements and actions.
Among the co-witnesses expected to appear are Wang, Nishad Singh, a former FTX director of engineering, and Carolyn Ellison, the banker-friend's ex-girlfriend and former CEO of Alameda Research.
The court's October 1 ruling, handed down before the trial, was to blame FTX's attorneys for knowing most of the company's dealings, which are now part of the crimes Bankman-Fried is accused of.
“The government disputes this – at least in the way the defendant has described it. The defendant seeks to prevent such cases from “unduly focusing on the fact of lawyers' involvement” or from “lawyers blessing, for example, loans, bank documents or mail deletions.”
Kaplan granted the government's request to bar Banman-Fried from citing attorneys' involvement in future requests for evidence, arguments or testimony without notifying the court in the absence of the jury.
How long can SBF be held in custody?
According to the DOJ, the crimes for which Bankman-Fried is charged carry significant prison terms.
The wire fraud conspiracy, wire fraud and money laundering charges each carry up to 20 years in prison. Meanwhile, charges of securities fraud, securities fraud and conspiracy to defraud the United States carry maximum sentences of up to five years.
According to CNN, the 30-year-old could be sentenced to more than 100 years in prison if found guilty of multiple charges filed by the US government.
The biggest fraud case in American history?
Legal experts have suggested that the Banman-Fried trial may represent one of the most significant fraud cases in US history, with $8.9 billion in customer deposits and investor funds lost as a result of the FTX collapse. An estimated $7.3 billion in liquid assets was recovered in bankruptcy proceedings.
The Bernie Madoff trial remains the most significant fraud case in recent US history, with the recent release of a $19 billion Ponzi scheme on Netflix documenting his influence and shadowy scheme.
While Banman-Fried didn't make as much money as Madoff, his image and FTX brand as a visibly active cryptocurrency fan make his story a modern-day parallel to the late Madoff's 17-year fraud.
BANMAN-FRIED donated more than 40 million dollars to Democratic Party committees and candidates in 2022. BANMAN-FRIED began to participate in the political environment of the United States. It was reported that the former CEO of FTX planned to pay Donald Trump 5 billion dollars not to run for president in the United States. A forthcoming biography of Michael Lewis.
Bankman-Fried pleaded not guilty to all charges in August 2023.
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