Cointelegraph reporters are on the ground in New York for the trial of former FTX CEO Sam Bankman-Fried. As the story develops, check below for the latest updates.
October 3: SBF trial begins
Sam Bankman Freed’s trial began on October 3 with jury selection. Bankman-Fried has been charged with seven counts of conspiracy and fraud in connection with the collapse of FTX, the cryptocurrency exchange he co-founded. He pleaded not guilty to all charges. The case is being heard by Judge Lewis Kaplan, who has presided over a long list of other high-profile cases, including cases involving detainees at Guantanamo Bay, the Gambino crime family, Prince Andrew and Donald Trump.
Bankman-Fried was ordered jailed on August 11 after Kaplan found that his sharing of the personal papers of former Alameda Research CEO Carolyn Ellison amounted to intimidation. Alameda Research was a trading house also founded by Bankman-Fried. Previously, he was under house arrest at his parents’ home in Stanford, California, on $250 million bail.
December: SBF arrested
Bankman-Fried was arrested in the United States upon his arrival from the Bahamas on December 21, 2022. He was arrested in the Bahamas on December 12 after the US government formally notified that country of the charges the US was bringing against him. He announced his intention to fight extradition from the Caribbean country, but changed his mind after a week in a Bahamas prison and agreed to extradition.
Meanwhile, FTX co-founder and Alameda Research CEO Gary Wang (and SBF’s sometime girlfriend) Ellison has agreed to plead guilty in the burgeoning case.
November: FTX collapse
Bankman Fried’s troubles began when reports emerged on November 2 that Alameda Research owned a significant stake in FTT, the utility token FTX. This revelation led to questions about the relationship between the two entities. On November 6, Changpeng Zhao, CEO of rival exchange Binance, announced that his exchange would divest its FTT holdings, valued at about $2.1 billion. Zhao rejected an offer tweeted by Ellison to buy Binance’s FTT service.
The race has begun on FTX. Bankman Fried gave reassurances on Twitter (now X) that “stock exchange assets are fine” and accused a “rival” of spreading rumours. By November 8th, FTT had dropped from $22 to $15.40.
It’s only been a week since the infamous SBF said “FTX is fine. Assets are fine.” pic.twitter.com/zKoILqquHF
– Robert Smith (@BondHack) November 14, 2022
Also on November 8, Bankman Fried announced on Twitter that he had reached an agreement with Zhang “on a strategic deal.” “Our teams are working to clear the backlog of withdrawals as they stand,” he wrote. This would eliminate liquidity crises; All assets will be covered at a ratio of 1:1.”
On November 9, Zhang announced that Binance would not pursue an acquisition of FTX following due diligence and further reports of mishandling of funds. Bitcoin (BTC) price fell to $15,600. The FTX and Alameda Research websites remained down for a few hours. When the FTX website came back, it had a warning about making deposits and could not process withdrawals.
On November 10, Bankman-Fried posted a 22-part Twitter thread that began with “I’m sorry.” This was the first in a long series of public statements he made about the fall of the stock market. The next day, all Alameda Research employees resigned, and FTX, FTX US, and Alameda Research filed for bankruptcy in the United States. Bankman-Fried resigned as CEO of FTX and was replaced by John J. Ray III. Ray is best known for his role in the Enron bankruptcy.
SBF and FTX before fall
At the beginning of 2022, FTX was valued at $32 billion and was thought to be in an enviable financial position. Bankman-Fried was viewed as a respected business leader by much of the cryptocurrency community and the world at large. He was photographed with political leaders and Wire In Congress Hearings.
— Jordan Schachtel @ dossier.today (@JordanSchachtel) November 17, 2022
He gained a reputation as a philanthropist, following a philosophy popular among academics known as effective altruism. Part of his implementation of this philosophy was political activism in the form of financial support for candidates.
As the crypto winter arrives, Bankman-Fried spoke of “the responsibility of FTX and Alameda Research to seriously consider intervening, even at our own loss, to stop the contagion.” The companies made an offer to buy Voyager Digital which was rejected.
FTX has struck a deal with Visa to offer its debit card in 40 countries.
Bankman-Fried, Ellison and other Jane Street Capital alumni founded Alameda Research in 2017. Bankman-Fried went on to found FTX with Wang in 2019. Zhao was an early investor in the stock.
This is a developing story, and more information will be added as it becomes available.