Less than a year ago, Sam Bankman-Fried was riding high. The then 30-year-old founded the cryptocurrency exchange FTX (at one point valued at $32 billion), which made him one of the richest men in the world and graced advertising billboards and magazine covers.
His downfall unfolds like a Shakespearean tragedy, with friends and lovers turning against each other and a once-mighty empire reduced to ashes. Bankman-Fried’s first criminal trial is set to begin on Tuesday, with federal prosecutors charging him with seven counts related to FTX’s collapse and alleged misappropriation of billions of dollars’ worth of client funds.
Here’s what you need to know about the ten-year trial.
What are the charges?
In November, an article published by a cryptocurrency industry publication Coin platform It was revealed that FTX’s trading arm, Alameda Research, had a balance sheet filled with FTX’s own cryptocurrency, setting off a chain of events that would sink the empire. Although FTX promised to support all customer deposits one-on-one, it was soon discovered that FTX had been using these funds for its own purposes, and prosecutors alleged that Bankman-Fried allowed Alameda to use user funds for its own transactions. FTX also spent money unscrupulously, spending billions on luxury real estate, political donations, and venture capital. As a result, when customers began trying to withdraw funds from FTX, the exchange was unable to cash out their deposits and fell into bankruptcy.
While prosecutors brought charges against Bankman-Fried ranging from campaign finance violations to bribing Chinese officials, they agreed to split the charges into two separate trials.The first one starts on Tuesday and will be addressed seven chargesranging from money laundering to wire fraud.
As the judge hearing the case explain “The issues in this case are very simple,” he told a recent hearing. Bankman Fried was either guilty of fraud or he was not.
What’s the stakes?
The original seven charges totaled more than 100 years in prison, although prosecutors and wealth Said the actual sentence was unlikely to be that long. Still, because Bankman-Fried decided not to plead guilty, any possible sentence would be longer than if he cooperated with prosecutors.
The scope of the crime involves billions of dollars in misappropriation of client funds, and the prison terms may also be extended. Bernie Madoff was sentenced to 125 years in prison for swindling tens of billions of dollars from pyramid schemes.
Bankman-Fried will also face a second trial next year to resolve his remaining charges, including alleged bribery of a Chinese official.
Why doesn’t SBF accept the transaction?
With Bankman-Fried’s inner circle turning against him and overwhelming evidence of his guilt, Bankman-Fried’s insistence on innocence remains a billion-dollar question. While a last-minute plea deal was possible, a trial seemed all but certain.
Lawyers I spoke to wealth Said he might have hoped for a sympathetic juror, arguing the prosecutor’s team failed to meet its burden of proof.
Perhaps the simplest explanation is that Bankman-Fried thought he messed up but committed no crime.exist Interview Since FTX collapsed, Bankman-Fried has blamed the failure on accounting errors. In a series of unpublished tweets, he also appeared to place blame on other senior executives.
Who is the judge?
Judge Lewis Kaplan will oversee the case. Kaplan is a graduate of Harvard Law School and a SUNY veteran who has presided over a number of high-profile cases, including author E. Jean Carroll’s recent case against former President Donald Trump Donald Trump’s civil lawsuit.
He is known for his no-nonsense approach – a trait that has surfaced in his growing exasperation with Bankman-Fried’s apparent attempts to tamper with witnesses. In August, Kaplan ultimately revoked Bankman-Fried’s bail agreement and remanded him to the Metropolitan Detention Center in Brooklyn, where he will likely remain throughout the trial.
What is SBF’s defense?
Lawyers for the FTX founders said in court documents that they may attempt an “advice of counsel” defense, meaning they would argue that their client’s actions were the result of poor prior counsel.Kaplan rule The defense will not be able to use this argument in opening statements, and it will likely come up during the trial.
According to former Justice Department prosecutor Renato Mariotti, such a defense is rarely successful and would likely allow Bankman-Fried’s former lawyers to waive attorney-client privilege and Share documents that further prove his guilt.
In a recent ruling, Kaplan also said he may exclude evidence presented by the defense team that showed Bankman-Fried acted consistent with other cryptocurrency companies. He wrote that the prosecution’s position was supported by the law that “the failure of police officers to stop every car traveling at the same speed does not justify a speeding ticket.”
One benefit for Bankman-Fried is that prosecutors must prove his guilt beyond a reasonable doubt — a difficult task even with a mountain of evidence.
Who can testify?
Prosecutors succeeded in replacing several members of Bankman-Fried’s inner circle, including his ex-girlfriend and former Alameda Research CEO Caroline Ellison, as well as FTX’s Two senior deputies, Gary Wang and Nishad Singh. All have pleaded guilty and are expected to testify. A fourth – former co-CEO of FTX’s Bahamas subsidiary Ryan Salame – pleaded guilty in September to campaign finance violations but said he would invoke his Fifth Amendment right against self-incrimination.
Whether Bankman-Fried will testify remains an open question. While it is unusual for a defendant in his position to be questioned in public by prosecutors, Bankman-Fried had an atypical pretrial process that included a lengthy media tour while under house arrest — — a decision that landed him in prison. MDC in Brooklyn.
Bankman-Fried’s attorneys tried to include testimony from expert witnesses, although prosecutors successfully challenged their qualifications. The defense team may still seek to subpoena them to testify.
More details about potential DOJ witnesses, including FTX victims, were released Saturday.
Where will the trial take place and how long will it take?
The trial will be held in the Southern District of New York, one of the most prestigious federal district courts in the United States. The court is notorious for its restricted access, with the vast majority of reporters and attendees unable to bring any electronic devices into the proceedings, except for a handful of reporters and attendees who regularly cover court proceedings.
Prosecutors said in court documents they expected the trial to last about six weeks. Jury selection will take place on the first day, with prosecutors and defense attorneys going through what is known as ” see say.Although the initial timetable has been determined freedit has not yet included details on when specific witnesses will testify.
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