- The long-awaited trial of Sam Bankman-Fried is underway.
- The first week of the case has generated several talking points and details about the blurred lines between FTX and Alameda.
- Week two is expected to be no different, with the prosecution’s star witness, Caroline Ellison, set to testify.
In a Manhattan federal court, the long-anticipated trial of former crypto kingpin Sam Bankman-Fried (SBF) kicked off on Tuesday, October 3. After a week of proceedings, the case has provided an extended range of talking points, from Bankman-Fried’s new look to the jury selection and jarring revelations about FTX’s clandestine ties to sister trading firm Alameda Research.
This article intends to get you up to speed on all that transpired in the first week of the case as we look ahead to what we can expect this week.
SBF Gets Tongues Wagging With New Look
One of the most well-known things about Bankman-Fried is his trademark appearance. Known for typically donning a T-shirt and cargo shorts topped off by a curly mop of hair, the FTX founder surprised onlookers by sporting a neatly styled haircut and a pressed gray suit at the trial.
The jury is still out on whether the disgraced crypto founder can charm his way out of criminal charges with his new look.
Meet The Jury
On Wednesday, October 4, Judge Lewis Kaplan announced a 12-person jury and six alternates to decide Bankman-Fried’s fate, composed mainly of everyday people who may have minimal knowledge of the crypto space. The group includes a librarian, a nurse, and a train conductor, all aged 30 to 70 years.
The prosecution and defense agreed on this group after a two-day selection process that saw them choose from a random pool of 50 eligible citizens. These potential jurors faced questioning about their age, education, job, and living arrangements as lawyers sought to judge their level of neutrality.
Among those screened was a 55-year-old man whose wife works at a law firm representing FTX and Alameda and a woman who disclosed that she had already reached a verdict on the case.
Following the jury selection, the case switched into high gear with opening statements from the prosecution and the defense.
A Plain Old Fraud or a Well-Intentioned Business Man?
At the heart of the case against Sam Bankman-Fried is whether his actions leading up to his crypto empire’s collapse constitute fraud. In opening remarks on Wednesday, October 4, the jury was given two contrasting images of the once-heralded crypto wunderkind.
During the proceeding, Assistant United States Attorney Thane Rehn wasted no time asserting that Bankman-Fried had built his crypto empire on lies. He reiterated allegations that the FTX founder had lied to customers that their deposits were safe while lavishing these funds on himself and political contributions.
On the other hand, Bankman-Fried’s defense, led by Cohen & Gresser Managing Partner Mark Cohen, suggested that the fallen crypto hero had never intended to defraud anyone but was a well-intentioned entrepreneur who made horrendous mistakes at the peak of a turbulent time for the broader crypto world.
However, witness testimony so far from insiders and investors leans more towards the prosecution.
Testimonies Point to Investor Fraud Amid Sordid Details About FTX-Alameda Ties
In the first week of the trial, the jury heard testimony from cocoa bean trader Marc-Antoine Julliard, Paradigm co-founder Matt Huang, former FTX developer Adam Yedidia, and FTX and Alameda co-founder Gary Wang.
Julliard lost $100k worth of crypto in the FTX collapse despite continuous assurances from Bankman-Fried that customer deposits were safe. According to Huang, in 2021, Bankman-Fried dismissed Paradigm’s concerns about potential ties between FTX and Alameda. The firm has now marked its $278 million investment in the exchange down to zero following its collapse.
Contrary to Bankman-Fried’s assurances, testimonies from Yedidia and Wang suggest that there was hardly ever a line between FTX customer deposits and Alameda funds from the beginning.
Yedidia disclosed that an Alameda bank account held about $8 billion of FTX fiat customer deposits, which it used to pay off its loans during the bear market.
Over the third and fourth days of the trial, Wang testified that aside from this misuse of customer fiat, just months after FTX’s launch, Bankman-Fried had ordered that the exchange grant several privileges to Alameda, including exemption from its liquidation engine, which gave it unlimited withdrawals, a $65 billion line of credit and faster trade execution. According to Wang, the value of FTX’s backstop fund was much lower than published. The exchange allegedly randomly generated the published figure.
What To Expect This Week in the SBF Trial
Week two of the criminal case against the disgraced FTX founder is set to kick off on Tuesday, October 10, with continued testimony from co-founder Gary Wang. Former Alameda CEO and Bankman-Fried flame Caroline Ellison is also expected to take the stand on the same day.
Widely regarded as the star witness in the trial, Ellison’s testimony is expected to provide more insight into the happenings at the shared headquarters of FTX and Alameda in the Bahamas.
On the Flipside
- The case is slated to run for six weeks. As such, it is still in its early stages.
- Wang and Ellison both entered plea deals in December 2022.
- Bankman-Fried maintains that he never intended to defraud customers and investors.
Why This Matters
FTX’s collapse led to an estimated loss of $8 billion in deposits from millions of customers. The Sam Bankman-Fried trial sheds light on the disgraced founder’s role in the events leading up to the exchange’s stunning collapse in November 2022, with the jury tasked with determining whether his actions constituted fraud at the end of what is projected to be a six-week ordeal.
Read this to learn more about the fallen crypto hero:
Sam Bankman-Fried: Crypto’s Fallen Hero?
y00ts’ Ethereum migration will begin this week. Learn more:
Source link: https://dailycoin.com/unpacking-the-sbf-trial-highlights-from-the-first-week/
