The trial of Bankman-Fried, the former CEO and co-founder of collapsed crypto trade FTX, is coming into its subsequent chapter as proceedings resume Thursday. As confirmed throughout a teleconference Wednesday, SBF will likely be taking the stand, together with a handful of different witnesses as the onus shifts towards the protection after the prosecution introduced its case to its conclusion.
As former federal prosecutor Josh Naftalis advised Ztoog, SBF taking to the stand in his personal trial is a “Hail Mary” ahead of a verdict and potential sentencing for seven counts tied to fraud and cash laundering.
“Once it goes to cross[-examination], he doesn’t get to say, ‘I’m done,’” Naftalis mentioned. “He can’t just walk out if he doesn’t like how it’s going.”
Naftalis spoke at size about what comes subsequent in the trial, and addressed frequent misconceptions about the prosecution and protection in the newest episode of Ztoog’s Chain Reaction podcast, which you’ll be able to hear to beneath, or on Apple Podcasts or Spotify.
The SBF trial is one of the greatest circumstances of its form inside the crypto area. Our resident crypto knowledgeable Jacquelyn Melinek has been on the floor at the trial because it began, and continues to cowl the ins and outs of the proceedings. But the trial has been on pause from October 20 to at present, so there’s lots to make amends for for those who want a refresher ahead of it coming into its remaining few phases.
For these in want of a complete refresher on the case, her breakdown of how FTX went from the third-largest crypto trade valued at a peak of $32 billion to chapter will get you up to pace.
You may also comply with alongside together with her and the Ztoog group’s protection in the Chain Reaction publication, which drops Thursdays at 12 p.m. PT, and the Chain Reaction podcast, which can hit your feed each Thursday.
How to comply with the SBF trial
The trial kicked off with jury choice October 3. From there, entry to the proceedings is restricted, as no gadgets are allowed; reviews are being bodily put collectively inside the courtroom (or despatched to overflow rooms).
Beyond our each day protection, extra experience and commentary will stay on Ztoog+. There, you’ll find tales like this in-depth breakdown of what to count on from either side of the SBF case, the place the prosecution and protection may acquire floor or fall quick of their arguments and what the takeaways have been from the opening arguments.
SBF trial: What we realized in week three
The third week of the trial featured a pair of noteworthy moments for the prosecution, together with FTX’s former normal counsel Can Sun. He, like many of SBF’s former colleagues, opted to cooperate with authorities and testified that SBF requested him to create a theoretical “legal justification” for the use of billions in client funds simply days earlier than FTX filed for chapter.
Robert Boroujerdi, managing director of the hedge fund Third Point, testified about his expertise working with SBF and FTX, in a partnership that finally resulted in a $60 million funding and a scarcity of consciousness about the particular relationship between Alameda Research and FTX. Had he identified of such a relationship, he testified that Third Point wouldn’t have invested in FTX in the first place.
And earlier in the week, a University of Notre Dame professor who helped the authorities prosecution of Enron and WorldCom, Peter Easton, testified about what he uncovered after tracing the circulate of billions of {dollars} between Alameda Research and FTX. Much of mentioned funding got here from prospects, and Easton testified that he discovered that person deposits have been utilized by each FTX and Alameda to buy actual property, make investments or direct funding towards political causes and charities.
SBF trial: What we realized in week two
The second week of the trial’s standout testimony got here from Alameda Research’s former CEO Caroline Ellison, who claimed she took $14 billion from prospects to repay money owed to lenders, utilizing them as a line of credit score below the instruction of SBF. Ellison additionally went into element about how a $2 billion enterprise fund, FTX Ventures, was funded by cash that had beforehand been allotted to Alameda from third-party lenders.
And although there aren’t any prices of bribery in the case, Ellison additionally testified to paying Chinese officers $150 million to restore entry to $1 billion in frozen buying and selling accounts.
SBF trial: What we realized in the week one
As anticipated, the opening statements in the SBF trial have been spicy. The prosecution painted an image of an empire “built on lies” and made a degree to present precise photos of SBF alongside wealthy and highly effective figures to illustrate the peak of his energy and affect prior to FTX’s implosion.
“This man stole billions of dollars from thousands of people,” prosecutor Thane Rehn advised the court docket. “He defrauded sophisticated investors and lenders, and he emptied the accounts of ordinary customers, too. He bought himself wealth, power and influence.”
The protection, on the different hand, depicted SBF and his colleagues as in over their heads, with out ill-will as FTX collapsed round them.
“Sam and his colleagues were building the plane as they were flying it,” protection lawyer Mark Cohen mentioned. “They had to figure out how to navigate a world where they were running FTX, building out its systems, dealing with hacking threats, managing the credit risk of their customers, managing hundreds of employees, all while building up their actual exchange.”
Read a recap of the prosecution and protection’s full arguments right here.
FTX’s co-founder and CTO Gary Wang testified Thursday on the extent to which Alameda Research was used for no matter functions he and SBF noticed match. The crypto buying and selling agency, in accordance to Wang, pulled funding immediately from FTX prospects, whose transactions could be funneled towards Alameda after which directed elsewhere.
Check right here for our rundown of Wang’s testimony to this point, ensuing from a responsible plea in December 2022.
Thursday additionally introduced in testimony from Matt Huang, co-founder and managing accomplice at crypto funding agency Paradigm. That agency invested $278 million in FTX throughout 2021 and 2022, and is an element of a class-action lawsuit accusing it and others of defrauding prospects by selling FTX.
His testimony centered round being left uninformed about FTX’s utilization of buyer cash to maintain the Alameda Research afloat, a observe that Huang says would have halted his involvement. The full breakdown of his testimony on his relationship with FTX, stretching again to 2019, may be discovered proper right here.
We additionally bought a have a look at the composition of the SBF trial’s jury, which ranges from a practice conductor to a retired funding banker who attended Stanford University. You can hear to a particular joint episode of our podcasts Equity and Chain Reaction to get a greater sense of the vibe between the jurors and the relaxation of the court docket.
For a full rundown of our protection of the SBF trial, test beneath: