The trial of Sam Bankman-Fried, the disgraced founder of FTX and former crypto billionaire, has begun.
Federal prosecutors accuse him of masterminding one of the most significant financial frauds in U.S. history. Bankman-Fried, once celebrated as a crypto billionaire, is alleged to have orchestrated a multibillion-dollar fraud. He faces charges related to defrauding customers on his digital currency exchange, FTX. The accusations include wire fraud, securities fraud, and money laundering.
The case has been described by Damian Williams, U.S. Attorney for the Southern District of New York, as “one of the biggest financial frauds in American history.” Bankman-Fried’s trial could potentially last up to six weeks.
This post will be regularly updated throughout the trial.
Friday, October 6
Next up: More from Gary Wang, then BlockFi CEO (9:41 a.m. ET)
The jury has been seated. Starting the day with more testimony from FTX and Alameda Research co-founder Gary Wang, who began his testimony yesterday by declaring that he, Bankman-Fried, and their inner circle committed fraud by allowing Alameda to “withdraw unlimited funds.” Meanwhile, we’ve also gotten more looks at what life was like in the condo that FTX execs shared in the Bahamas.
Prosecutors said yesterday that after Wang’s testimony concludes, they plan to put former BlockFi CEO Zac Prince on the stand. Prince accepted a bailout line of credit from Alameda Research after the crypto lender was hit hard by the collapse of hedge fund Three Arrows Capital and Celsius Network. Since BlockFi filed for bankruptcy, it’s been revealed in court documents that Prince told management to “get comfortable” with how shaky Alameda’s balance sheet was.
Family dinner 🍽️ (9:39 a.m. ET)
Thursday, October 5
Gary Wang testifies 🗣️ SBF knowingly committed crimes (3:50 p.m. ET)
FTX and Alameda Research co-founder Gary Wang testified today that fellow co-founder and childhood friend Sam Bankman-Fried allowed the crypto trading desk to “withdraw unlimited funds” from FTX. Alameda is at the center of the FTX controversy. Prosecutors allege that Alameda had access to FTX customer deposits and bilked the exchange’s clients for billions.
Wang has pleaded guilty to wire fraud and three conspiracy charges—wire, securities, and commodities fraud—and agreed to cooperate with federal investigators.
The $8 billion bug 🐛 (11:40 a.m. ET)
A bug in FTX’s code led to an $8 billion overstatement of the money that Alameda Research owed FTX customers, Adam Yedidia told the court on Thursday.
According to Yedida’s testimony, in June 2022 he had just been tasked with fixing a bug responsible for saying Alameda owed $16 billion. But after it was fixed, it then accurately showed that Alameda still owed $8 billion. The DOJ pressed him for details about a conversation he had with SBF about it.
After telling Bankman-Fried he was concerned, Yedida said the FTX founder looked nervous as he said that it would take anywhere from six months to three years before the company was “bullet proof” again.
AUSA: And were where you?
Yedidia: In that little hut between the two courts.
[The “hut” has not walls]
Yedidia: I asked, How long until we’re bullet proof again?
AUSA: What did he say?
Yedidia: Six months to three years. He looked nervous.
— Inner City Press (@innercitypress) October 5, 2023
DOJ exhibit: SBF’s Bahamas wet bar 🍹 (10 a.m. ET)
As the trial kicks off on Day 3, the prosecution resumes testimony from Adam Yedidia, a close friend of SBF’s. The two met while in undergrad at MIT. He later did a brief stint as a trader at Alameda Research and then worked at FTX in 2021 as a software developer. But it didn’t last.
“I was concerned that as a developer at FTX I may have unwittingly written code that contributed to the commission of a crime,” Yedidia said on the witness stand yesterday. He resigned from the company in November 2022 and has been granted immunity by the DOJ in exchange for his testimony.
Today he’s helping prosecutors describe what life was like working at the company in the Bahamas and, for a while, being a roommate of Sam Bankman-Fried’s. One of their pieces of evidence is a photo showing off a wet bar in the $35 million Bahamas condo where SBF lived with eight friends and FTX employees.
The planes, the planes ✈️
A late court filing on Wednesday emerged Thursday morning indicating that the Department of Justice is seeking to seize two private jets used by Sam Bankman-Fried.
The two planes have been identified as the Bombadier Global 500, or the Bombadier Global Express, and an Embraer Legacy 600.
“The government has taken the position that both aircraft are subject to forfeiture as property purchased with the proceeds of fraud,” reads the filing.
Wednesday, October 4
Meanwhile, outside the courthouse (2:18 p.m. ET)
Fong was famously one of the first journalists to release a lengthy phone interview with SBF after FTX collapsed, reconnected with him while he was under house arrest, and eventually visited him in his parents’ Palo Alto home. The grumbling about her level of access while not being affiliated with a mainstream news publication lead the New York Post and Daily Mail to deduce that she must have been sleeping with SBF.
Her reaction: “Jesus fuckin christ.”
Meanwhile, Shkreli was half of the couple being examined in a 2020 Elle feature: The Journalist and the Pharma Bro.” That’s because in July 2018 Bloomberg News reporter Christie Smythe quit her job covering white collar crime, moved out of her apartment, divorced her husband, and began dating Shkreli—all while he was still serving his 7-year prison sentence. He was released early last year, but a key quote of Smythe’s from the profile stuck: “Maybe I was being charmed by a master manipulator.”
He’s rumored to have broken up with her through his lawyers after she went public about their relationship in the same profile where she mused that he may have manipulated her.
Now, it turns the SBF trial provided the perfect opportunity for Fong and Shkreli to thumb their noses at all of it.
DOJ says SBF stole billions; defense says transfers to Alameda were loans (1:30 p.m. ET)
In its opening statement to the court, the Department of Justice alleged that Sam Bankman-Fried knew he was stealing billions from customers, lied publicly to cover his tracks, and confided in his inner circle—many of whom are expected to testify—about doing so.
Meanwhile, SBF’s defense attorneys argued that the loans made to Alameda Research were not done secretively, he acted in good faith, and that Binance CEO Changpeng Zhao’s tweets about the FTT token were an attack that caused FTX to collapse.
The jury has been selected (11:30 a.m. ET)
After saying he hoped to wrap up jury selection this morning, Judge Lewis Kaplan made good on that by confirming the 12 jurors who will decide SBF’s fate.
Court sketch (10 a.m. ET)
SBF explained like you’re five
There’s 110 years of jail time facing 31-year-old Sam Bankman-Fried if he’s convicted. Here’s a super simple summary of how it all happened from when he founded Alameda Research in 2017 to the reasons he’s now on trial.
And for extra credit: An exchange token, like FTT, was pivotal in FTX’s meltdown. FTX isn’t the only crypto exchange that issued them. Here’s what you need to know about how and why they’re used.
DOJ says no regs isn’t an excuse (1 a.m. ET)
Early in the morning on Wednesday, the U.S. Department of Justice (DOJ) filed a formal letter to Judge Lewis Kaplan, to clarify that a lack of clear crypto regulations in the U.S. is not an acceptable defense for the charges against FTX founder Sam Bankman-Fried. SBF has argued that he adhered to regulations—however sparse or unclear—since FTX was not governed in the U.S.
The letter emphasizes that the absence of specific regulations doesn’t justify the alleged misappropriation of funds. “The funds were in fact misappropriated,” the DOJ writes.
The case continues to unfold as jury selection concludes and both parties present their opening arguments in the Southern District of New York in Manhattan.
Tuesday, October 3
Late night trial commentary—and book touring
During an interview on All In with Chris Hayes last night, author Michael Lewis took aim at the allegations against Bankman-Fried. No big surprise there.
Author Michael Lewis joins @chrislhayes to discuss “Going Infinite,” a new book about indicted crypto executive Sam Bankman-Fried.
“The alleged crime kind of makes no sense,” says Lewis. pic.twitter.com/h94vfv3VMb
— All In with Chris Hayes (@allinwithchris) October 4, 2023
The American author (“The Big Short,” “Moneyball,” and “Flash Boys”) spent 6 months embedded with SBF in preparation for his new book about the disgraded crypto mogul: “Going Infinite.” Last night’s comments track with what he’s already been getting panned for by the crypto community. Earlier this week, during an interview with CBS’ 60 Minutes, he said FTX was a “great real business.”
Potential jurors who lost money in crypto released
Several people were dismissed from the potential jury pool after voir dire questioning revealed that they had invested in cryptocurrency and ended up losing money. The pool also included people who worked for banks (including crypto-entangled Silvergate Bank), financial regulators, and investment firms. Judge Lewis Kaplan even quizzed some candidates on whether they watched Sunday’s episode of 60 Minutes on CBS, which featured a largely positive take on Sam Bankman-Fried.
One juror tried to say he didn’t understand cryptocurrency. Judge Kaplan told him, “You probably have a lot of company in this courtroom.”
Court adjourns, no jury selected
The court has adjourned for the day, and while the jury pool has been whittled down considerably, a final jury has yet to be selected. The selection process will continue tomorrow and likely conclude before the mid-day recess.
Amid questions for jurors to weigh their impartiality or potential biases, prosecutors today revealed names of previously unmentioned, yet important players in the FTX drama who may be called to testify or be mentioned at trial. Among them were former Alameda CEO Sam Trabucco, who hasn’t been heard from publicly since he stepped down from the company in August 2022.
SBF sues FTX’s insurance company
Yesterday, before his trial started, SBF’s lawyers filed a lawsuit against Continental Casualty Company (CNA), an excess insurer under a directors and officers insurance policy for Paper Bird Inc. and related companies—which includes FTX. The policy explicitly requires CNA to pay defense costs incurred by the insureds, including Bankman-Fried.
Bankman-Fried alleges in his lawsuit that CNA has refused to comply with its contractual mandate to pay his defense costs, despite multiple requests. The company is liable for up to $5 million worth of his legal fees now that $10 million worth of coverage has been exhausted.
The policy itself was signed and made effective in August 2022, a few months before the FTX founder stepped down and the company filed for bankruptcy.
Judge Lewis Kaplan addresses potential jurors
Just after 11 a.m. ET Judge Lewis Kaplan asked potential jurors if there was anything about the nature of Bankman-Fried’s case that would make it difficult for them to be fair. At least 10 people raised their hands and were excused, Decrypt‘s André Beganksi reports.
One juror stated he had heard of Bankman-Fried from the Joe Rogan podcast.
SBF is in the courtroom, no plea deal on the table
Jurors entered the room just after 9 a.m. ET. The prosecution stated that there have been no plea offers extended to Bankman-Fried, which the FTX founder’s attorney then confirmed.
Assistant US Attorney Nick Roos: We raised the issue early if there should be plea discussions. The answer was no, so there have been no plea offers
Judge Kaplan: Is that accurate, Mr. Cohen?
SBF’s lawyer Cohen: Yes, your Honor.
Judge Kaplan: My question are typed
— Inner City Press (@innercitypress) October 3, 2023
SBF doesn’t want FTX customers to testify
Although not yet discussed in court, an early-morning filing from SBF’s team seeks to stop the DOJ from calling FTX customers as witnesses during the ex-CEO of the now-defunct crypto exchange. Bankman-Fried’s lawyers argue that victims who lost money when the exchange filed for bankruptcy might critically misunderstand the relationship they had with the exchange and therefore bias the jury against SBF.
“The subjective perspective of the victim is not the appropriate yardstick for measuring materiality,” his legal team wrote, “particularly where the witness’s own view of the legal relationship with a commercial counterparty may be mistaken.”
On Tuesday morning, crowds had already gathered outside the New York courthouse where jury selection will begin for Bankman-Fried’s trial. Court officials told Decrypt reporter André Beganki that there would be no “perp walk” to publicly bring Bankman-Fried into the courthouse, because he’s already in custody.
A judge dismissed a motion from Bankman-Fried’s attorneys to allow him to be released from jail during the duration of his trial. By 9 a.m., court officials had admitted him into the courthouse.
Things to know and what to expect:
Editor’s note: This article was originally published on October 3 and last updated on October 6 at 11:02 a.m..