Inside the Trial: The Fall of FTX and Role of Former CEO Sam Bankman-Fried
Summary:
This news update chronicles the ongoing trial of Sam Bankman-Fried, former CEO of FTX. Bankman-Fried is facing charges for conspiracy and fraud linked to the collapse of FTX. Testimonies from colleagues including Caroline Ellison and Gary Wang have revealed insights into the financial strategies and struggles leading up to the crisis. Alameda Research, co-founded by Bankman-Fried, is shown to have a substantial liability to FTX, creating further complications. The trial is ongoing, and the article provides a detailed account of proceedings up to Oct. 11.
New York is currently witnessing the proceedings of former FTX CEO, Sam “SBF” Bankman-Fried's trial. Our reporters keep providing real-time updates as the trial unfolds.
Oct. 11 highlights include the testimony of Caroline Ellison, detailing the stressful last months of FTX. She talked about how SBF contemplated selling company shares to the Saudi Arabian Crown Prince. In the period leading up to FTX's upcoming fiasco in November 2022, lenders demanded repayment from Alameda Research after the market slump in May, as per Ellison's testimony. She shared her personal stress during this period.
Genesis Capital, one of the lenders, asked for a return of $500 million in loans, as exhibited by Telegram screenshots between Ellison, Bankman-Fried, and Genesis employees. At the happening, Alameda had a staggering debt of over $13 billion on its credit line with FTX, while its loans stood at over $1.3 billion. Upon Bankman-Fried's instructions, Ellison explored "alternative way" to inform Genesis about Alameda's financial situation.
Ellison expressed concerns that Genesis could revoke all loans to Alameda and tarnish its reputation if it were to discover the true financial status. She testified that Bankman-Fried's survival strategies included bringing in capital from Mohammed bin Salman, Saudi Arabia's crown prince. She also made veiled references to an alleged bribe of $150 million FTX purportedly paid to a Chinese official in 2021 to unfreeze their tied-up funds.
The relationship between FTX and Alameda Research was detailed further by Gary Wang in his testimony, which lasted more than four hours. Wang, co-founder of Alameda Research and FTX, presented a comprehensive look into how the crypto empire ended up $8 billion short in.client assets.
Wang's testimony will resume on Oct. 10, the day Ellison's testimony is also due.
Oct. 5 saw Adam Yedidia face prosecutors' cross-examination. A close friend of Sam Bankman-Fried, Yedidia was critical of the whopping $8 billion liability Alameda owed to FTX. Yedidia voiced his concerns to Bankman-Fried, only to be reassured that the debt will be resolved between the companies over a period of six months to three years.
Witness testimonies and Yedidia’s cross-examination will continue in the following days.
The trial of Sam Bankman-Fried started on Oct. 3, with the jury selection process. Facing seven counts of conspiracy and fraud related to FTX's collapse, Bankman-Fried has pleaded not guilty to all charges. The trial is now in progress under the watchful eyes of Judge Lewis Kaplan.
Bankman-Fried was arrested in the United States on December 21, 2022. He consented to his extradition after spending a week in a Bahamian jail. In the meantime, Gary Wang, FTX's co-founder, and Alameda Research's CEO, Caroline Ellison, agreed to plead guilty in the case.
All started when reports appeared on Nov. 2, exposing a colossal holding of FTX Token (FTT) by Alameda Research. Then started inquiries into the relationship between the two bodies. On Nov. 6, Changpeng Zhao, CEO of rival exchange Binance, agreed to liquidate its FTT holdings, summing up to $2.1 billion.
Because of FTX's fall, Bankman-Fried started losing his foothold. During the initial phase of 2022, FTX had shown a favorable financial condition evaluated at $32 billion. But the crypto winter seemed to have blown away the good luck wind.
This is an ongoing news story, and more updates will come our way as the proceedings continue.
Published At
10/11/2023 5:39:01 PM
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