Sam Bankman-Fried faces federal charges following the collapse of FTX. He is now awaiting trial. Here’s what you should know.
FTX, once a major cryptocurrency exchange, collapsed in November 2022 following financial misconduct between the company and its sister firm, Alameda Research.
Sam Bankman-Fried, who was the founder and then-CEO of FTX, now faces federal charges related to the company’s failure and various wrongdoings. He has been awaiting trial in the U.S. for nearly a year. This is the latest on his situation.
According to an August 2023 indictment, Bankman-Fried currently faces seven charges:
- Wire Fraud on Customers of FTX
- Conspiracy to Commit Wire Fraud on Customers of FTX
- Wire Fraud on Lenders to Alameda Research
- Conspiracy to Commit Wire Fraud on Lenders to Alameda Research
- Conspiracy to Commit Securities Fraud on Investors in FTX
- Conspiracy to Commit Commodities Fraud on Customers of FTX in Connection with Purchases and Sales of Cryptocurrency and Swaps
- Conspiracy to Commit Money Laundering
Prosecutors broadly allege that Bankman-Fried misused investor funds in collaboration with Alameda Research. Those charges also claim that he spent those funds on real estate in the Bahamas and on political campaigns in the U.S. among other instances of improper spending. Because other executives helped Bankman-Fried commit the alleged crimes, he faces conspiracy charges in addition to basic charges.
Prosecutors have withdrawn several charges against Bankman-Fried, including but not limited to campaign financing charges. This decision is in part due to complications related to Bankman-Fried’s earlier extradition from the Bahamas. In August, prosecutors confirmed that Bankman-Fried will face those charges at a later date.
U.S. prosecutors could impose a maximum prison sentence of 115 years on Bankman-Fried. Prosecutors also intend to have him forfeit assets including U.S. currency in bank accounts, assets in crypto exchange accounts, and Robinhood shares. Reports from January 2023 suggest that Bankman-Fried could forfeit up to $700 million of assets.
Sam Bankman-Fried’s trial was originally expected to begin on Oct. 3, 2023. However, his lawyers have repeatedly complained that prosecutors and the court have not provided enough time to review large amounts of discovery material.
Reports from Reuters now suggest that the judge could delay Bankman-Fried’s trial for five months, putting a potential trial date as late as March 11, 2024. This would combine his trial with a separate trial that will concern the delayed charges described above.
Several individuals are expected to appear as witnesses, including FTX co-founder Gary Wang, ex-FTX engineering chief Nishad Singh, and ex-Alameda CEO Caroline Ellison. Each individual previously reached a plea deal with U.S. prosecutors.
Meanwhile, prosecutors have attempted to dismiss Bankman-Fried’s expert witnesses, including legal professionals, academics, and data and forensic experts.
Bankman-Fried’s lawyers have also attempted to exclude testimony from University of Notre Dame Professor Peter Easton, a witness for the prosecutors who will allegedly base his testimony on unfounded opinions. Prosecutors have opposed that request.
Between December 2022 and August 2023, Bankman-Fried was released on bail and was under house arrest at his parents’ Palo Alto, California property.
However, he was imprisoned once again in August 2023 after he shared documents related to his former associate, Caroline Ellison, with the press. Prosecutors became concerned that Bankman-Fried could tamper with witnesses, and they successfully asked the court to revoke Bankman-Fried’s bail. Bankman-Fried is currently being held in New York’s Metropolitan Detention Center, Brooklyn.
Courts are permitting Bankman-Fried to meet with his lawyers and review evidence with limited internet access. Bankman-Fried’s lawyers are also attempting to press for a temporary release or, alternatively, more frequent meeting dates. However, there is no indication that Bankman-Fried will be released on bail in the near future.
Though jurors will be chosen through the normal selection process, jurors could be excluded on certain grounds that might introduce bias.
A list of questions asks potential jurors whether they have lost money trading cryptocurrency, whether they are opposed to political action committees (PAC) donations, whether they are familiar with ADHD, whether they are familiar with a social movement called Effective Altruism, and whether they are familiar with the case at hand.
It is still unclear whether Bankman-Fried will be found guilty of the numerous charges that he currently faces. Even if he is found guilty, he may not serve a maximum sentence. Bankman-Fried has pleaded not guilty during other court appearances.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.
