The trial of Sam Bankman-Fried (known as SBF), founder of the collapsed crypto exchange FTX, starts in New York today with SBF facing multiple counts of alleged fraud and conspiracy charges.
FTX, then one of the world's largest cryptocurrency exchange, quickly collapsed and filed for Chapter 11 bankruptcy protection in November 2022. Following the collapse of other major crypto firms such as Three Arrows Capital and Celsius, FTX's implosion marked the ongoing "crypto winter".
SBF was arrested in December 2022 on eight criminal charges initiated by the US Department of Justice. SBF later agreed to be extradited from the Bahamas - where FTX was based, to the USA. The number of charges was subsequently increased, and now includes allegations of wire, securities and bank fraud, conspiracy to operate an unlicensed money transmitting business, money laundering, campaign finance violations and foreign bribery. Certain of those charges will be tried separately.
SBF was previously released on a USD$250 million bail, but was later detained after his bail was cancelled.
Since his arrest, SBF has repeatedly spoken and written about his views of the case. His narrative is one of a young founder facing a rapidly growing business and he denies knowingly committing fraud.
SBF's defense team has said the case against him was a "classic rush to judgment" and cited the lack of detailed factual particulars in the original charges. The defense team has also told the court that SBF intends to argue in-house FTX attorneys and external lawyers "were involved" in certain decisions that the company made - a so-called "advise-of-counsel" defense.
On Sunday, the US federal judge overseeing the case upheld a Government motion, finding that SBF's Counsel team cannot blame his lawyers for the collapse or operations of FTX in opening statements to the jury, because:
the risk of confusion and unfair prejudice to the government were defendant to focus on the pretense or involvement of lawyers at or for FTX and Alameda, without any degree of specificity...is palpable.
The judge held SBF could still try and make this argument at trial on a case by case basis.
The US Department of Justice (DOJ) has said they want to call former FTX customers, investors and employees. The ex-employees are expected to include former FTX Chief Technology Officer Gary Wang, former FTX Head of Engineering Nishad Singh and former Alameda Research CEO Caroline Ellison as cooperating witnesses, each of whom has pled guilty to charges tied to the exchange.
According to the DOJ's brief, customers and investors who owned FTX shares can speak to their expectations of how FTX would hold customer funds, while the cooperating witnesses can speak to
their interactions with the defendant and their understanding of the purpose of certain statements and actions of the defendant.
The trial commences today US time with jury selection and is expected to last for six weeks.
By Jake Huang and Steven Pettigrove