In a Manhattan courtroom, the trial of former crypto titan Sam Bankman-Fried (SBF) has begun, sparking conversations on multiple fronts around the collapse of FTX, one of the world’s largest exchanges. From SBF's surprising transformation to jury selection and shocking disclosures about FTX's covert ties to sister firm Alameda Research. Here's a glimpse into the trial's first week.
Before we get into it all, take a read and get familiar with the FTX story.
SBF's New Look Raises Eyebrows
SBF, known for his laid-back attire, donned a pressed gray suit and styled haircut, leaving observers curious about his strategy for dealing with the legal proceedings. Appearances do matter, it seems. Who’d have thought it?
A Most Conventional Jury
Judge Lewis Kaplan introduced a 12-person jury and six alternates, mainly composed of individuals with minimal crypto knowledge. The group includes a librarian, a nurse, a train conductor, and an investment banker, reflecting a diverse array of backgrounds. All well and good in principle, but here’s hoping they’ll be able to get to the bottom of the financial back and forths.
A Con Man or Well-Intentioned Entrepreneur?
At the trial's core is the question of whether SBF's actions leading to the fall of FTX constitute fraud. The prosecution portrays him as a manipulative figure who deceived customers and misused funds, while the defense depicts him as an entrepreneur who made unfortunate choices during a tumultuous period in the crypto world.
Testimonies Point to Investor Fraud and FTX-Alameda Connections
The jury heard testimony from cocoa bean trader Marc-Antoine Julliard, Paradigm's Co-Founder Matt Huang, former FTX developer Adam Yedidia, and FTX's and Alameda's Co-Founder Gary Wang.
Julliard lost $100,000 when FTX collapsed, despite obtaining assurances from SBF that customer deposits were safe. Huang, one of FTX’s largest investors, claimed that SBF dismissed his concerns about ties between FTX and doomed Alameda. It’s also worth noting that Paradigm has marked the firm's $278 million investment in FTX as worthless.
Yedidia and Wang’s testimonies both suggested that there was hardly ever a line between FTX customer deposits and Alameda funds from the outset. Indeed, Yedidia went as far as to claim that an account at Alameda held about $8 billion of FTX fiat customer deposits, which it used to pay off its loans during the bear market.
On the third and fourth days, Wang claimed that not long after FTX took off, SBF provided a number of perks to Alameda. These included a get out of liquidation free card where Alameda could withdraw a whopping $65 billion line of credit, and trades that moved a lot faster than the norm.
Finally, and shockingly, Wang claimed that FTX's backstop fund was more 'make-believe' than reality. Apparently, the exchange randomly generated the number.
What's Next in the SBF Trial?
The second week of the trial, commencing today, promises more revelations. Wang and Alameda's former CEO Caroline Ellison are expected to testify, providing further insights into the shared operations of FTX and Alameda.
We’ll have more updates as the trial unfolds.
