Trials and Tribulations: Unraveling the Case of Ex-FTX CEO Sam Bankman-Fried
Summary:
The ongoing trial of ex-FTX CEO, Sam Bankman-Fried, is being covered by correspondents in New York. Bankman-Fried stands accused of seven counts of conspiracy and fraud tied to the downfall of cryptocurrency exchange FTX. Amid charges, he faced arrest and detention. The case has also implicated other key figures, including FTX co-founder Gary Wang and ex-Alameda Research CEO Caroline Ellison. Notably, FTX and Alameda Research, both co-founded by Bankman-Fried, filed for bankruptcy. This live update reflects the proceedings of the high-profile case.
Our correspondents are stationed in New York to cover the ongoing trial of ex-FTX CEO, Sam Bankman-Fried. Find the latest updates below as the drama unfolds. Oct. 3: Trial KickstartsThe legal battle involving Sam Bankman-Fried commenced on Oct. 3 as jury selection got underway. Bankman-Fried, the co-founder of the cryptocurrency exchange FTX, faces seven accusations of conspiracy and fraud relating to the FTX's downfall. He maintains his innocence on all counts. The presiding judge, Lewis Kaplan, is no stranger to high-profile cases, having heard other prominent cases, including those relating to Guantanamo Bay prisoners, the Gambino crime family, Prince Andrew, and Donald Trump.
Following his indictment, Bankman-Fried was detained on Aug. 11 after Judge Kaplan ruled that his distribution of former Alameda Research CEO Caroline Ellison's private documents constituted witness tampering. Alameda Research, another startup birthed by Bankman-Fried was a commodity trading firm. Bankman-Fried had previously been under home arrest at his parent's house in Stanford, California, secured with a $250 million bond.
December: Bankman-Fried's ArrestUpon his return to the United States from the Bahamas on Dec. 21, 2022, Sam Bankman-Fried was apprehended. He initially got arrested on Dec. 12 in the Bahamas after the U.S. government formally informed the Bahamian government about the charges they were leveling against him. Despite declaring his intention to contest extradition from the Bahamas, Bankman-Fried surrendered to the extradition process after spending a week in a Bahamian prison. In the meantime, Gary Wang, FTX co-founder, and Caroline Ellison, Alameda Research CEO, and Bankman-Fried's alleged girlfriend both admitted guilt in the escalating case.
November: FTX's DownfallThe trouble at FTX began surfacing following reports on Nov. 2 that Alameda Research held a significant amount of FTT, FTX's utility token. This led to inquiries concerning the relationship between both firms. On Nov. 6, Binance's CEO Changpeng Zhao declared his exchange's decision to sell off its FTT holdings, valued at roughly $2.1 billion. He rejected a tweet from Ellison proposing to buy Binance's FTT.
The news catalyzed a run on FTX. Bankman-Fried, in response to the chaos, assured via Twitter, now (X), that the digital exchange's "Assets are fine," alleging that a rival was promoting negative rumors. By Nov. 8, FTT's price had plummeted from $22 to $15.40.
Also, on Nov. 8, Bankman-Fried announced a "strategic transaction" agreement with Zhang via Twitter, stating, "Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1." On Nov. 9, following due diligence and more reports of financial mismanagement, Zhang declared that Binance would abort the FTX acquisition. Bitcoin (BTC) price nosedived to $15,600. The FTX and Alameda Research websites went off-air for a few hours. When the FTX website resumed, it advised against making deposits and could not process withdrawals.
On Nov. 10, Bankman-Fried began a 22-part Twitter apology, the first of multiple public statements he made regarding the fallout of the exchange. Following these events, on the next day, the entire staff at Alameda Research left their positions, and FTX, FTX US, and Alameda Research commenced bankruptcy proceedings in the United States. Bankman-Fried stepped down, and John J. Ray III, best known for his involvement in the Enron bankruptcy case, took over as FTX CEO.
SBF and FTX Before Its DownfallAt the dawn of 2022, with a valuation of $32 billion, FTX seemed to enjoy fi
nancial stability, and Bankman-Fried was viewed as a reputable business leader within the global crypto community. Besides engaging in Congressional hearings, he was seen with political leaders and was commended for his philanthropic works in areas like effective altruism and political activism, supporting prospective candidates financially.
As the crypto winter unfolded, Bankman-Fried reiterated FTX's and Alameda Research's "responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion". Their bid for Voyager Digital was declined. FTX also initiated a deal with Visa to launch its own debit card in 40 countries.
Bankman-Fried, Ellison, and other Jane Street Capital alumni founded Alameda Research in 2017. Bankman-Fried then went on to establish FTX in 2019 with Wang. Early on, Zhao invested in the exchange.
More information will be made available as this case unfolds.
Published At
10/3/2023 9:51:34 PM
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