FTX’s Sam Bankman-Fried is on trial for fraud and conspiracy
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FTX’s Sam Bankman-Fried is on trial for fraud and conspiracy
By Elizabeth Lopatto, a reporter who writes about tech, money, and human behavior. She joined The Verge in 2014 as science editor. Previously, she was a reporter at Bloomberg.
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Sam Bankman-Fried, the founder of failed cryptocurrency exchange FTX, is on trial for seven counts of wire fraud and conspiracy.
Bankman-Fried founded FTX because he was frustrated with other exchanges used by his crypto trading firm Alameda Research, according to a profile from FTX investors Sequoia Capital. But FTX was a fraud “from the start,” the Securities and Exchange Commission alleges.
Bankman-Fried is accused of misappropriating and embezzling FTX customer deposits, according to the superseding indictment. He represented himself as the Good Boy of Crypto, “spending millions of dollars to promote FTX and its sister company FTX.US as safe places to invest in cryptocurrency,” the indictment says. Meanwhile, “FTX’s finances contained a multi-billion-dollar deficiency caused by his own misappropriation of customer funds from the exchange.”
The customer money was used by Bankman-Fried to, variously, make billions of dollars of investments, buy $200 million of real estate, and repay Alameda’s lenders, according to the indictment.
The entire scheme came to light after CoinDesk published a blockbuster article about Alameda’s balance sheet. It showed that FTX and Alameda were very closely linked and that a lot of the balance sheet consisted of the FTT token, which was issued by FTX. That article led to Binance CEO Changpeng “CZ” Zhao — a former investor in FTX — saying he would sell his holdings of FTT.
A series of events resulted, which ended in FTX’s bankruptcy and Bankman-Fried’s resignation from the company. Ellison was charged by the SEC with manipulating the price of FTT, which inflated Alameda’s balance sheet. That misled people about FTX’s risk exposure from Alameda.
Besides the financial shenanigans, there is also the salacious aspect of the case. Bankman-Fried’s ex-girlfriend and childhood friend are testifying against him. The court has ruled questions about recreational drug use and political donations are fair game.
You can follow along below for all the latest updates and regular updates from the trial.
26 minutes ago
Sam Bankman-Fried was a terrible boyfriend
She didn’t even get equity!Photo illustration by Cath Virginia / The Verge | Photos by Bloomberg, Getty ImagesI’ve got some shitty ex-boyfriends, but none of them made me the CEO of their sin-eater hedge fund while refusing to give me equity and bragging about how there was a 5 percent chance they’d become the President of the United States, you know? Absolutely counting my blessings after Caroline Ellison’s first day on the stand. I wonder how many of the nine women on the jury are doing the same.
Read Article >Ellison was the head of Alameda Research, the aforementioned hedge fund, during the implosion of it and FTX. She’s already pleaded guilty to criminal charges stemming from one of the worst romantic relationships I’ve ever heard of, and her testimony was widely anticipated before the trial. Today, that took the form of discussing a damning spreadsheet — one she prepared for her ex and boss Sam Bankman-Fried, now the defendant in a criminal fraud trial.
Oct 10
Maybe it’s the new haircut?Sam Bankman-Fried reportedly is sporting a jailhouse haircut during his fraud trial over FTX’s failure, and observers, including this NPR reporter and CNBC, note that his ex, Caroline Ellison, needed a little time to find him in the courtroom.
According to CNBC and the New York Times, once her testimony began, she wasted little time:
“Sam directed me to commit these crimes,” she said. He “directed us to take customer money to pay loans.”
Expect a full report from Liz Lopatto later today.
Oct 10
He’s over there...Former Alameda Research CEO and ex-girlfriend of Sam Bankman-Fried Caroline Ellison has begun testifying in the fraud trial against SBF.
Oct 10
True, yet misleading.On the stand today during Sam Bankman-Fried’s fraud trial, Gary Wang dove into his evolving explanation of the infamous (and now-deleted) SBF tweet saying that “FTX is fine. Assets are fine,” that he posted the day before Binance’s acquisition announcement, which is when things truly came apart.
Oct 10
The Sam Bankman-Fried fraud trial continues.The Verge reporter Liz Lopatto is back in a New York City courtroom today, as Sam Bankman-Fried’s friends turned cooperating witnesses continue to take the stand in the case against the fallen FTX boss.
We broke down FTX CTO Gary Wang's testimony / code review on Friday, and today the case restarted with him still on the stand, and former Alameda CEO and SBF ex Caroline Ellison is expected to make her appearance later today. Stay tuned here for all of the latest updates from the crypto exchange fraud trial.
- FTX liquidation could further hurt crypto startups.
Before they collapsed, FTX and Alameda Research “massed a roster of portfolio companies that included major names in the industry, such as stablecoin providers Circle and Paxos, blockchain developer Aptos Labs and crypto bank Anchorage Digital,” Bloomberg writes.
But venture funding for the crypto world has plunged; selling those stakes could further depress startup valuations.
- Michael Lewis would like Sam Bankman-Fried’s jury to read his book.
“If I were a juror, I would rather hear my story than either defense or prosecution,” Lewis tells Andrew Chow at Time. Also:
I want to ask about some details that appeared in variouschargingdocuments and complaints against Sam but are featured less prominently or not at all in your book. One is that Bankman-Fried allegedly bribed Chinese officials to release money from a frozen Alameda account.
I know too much about that, and it seemed like a distraction.
The FTX jury suffers through a code review
What did Gary Wang commit?Photo Illustration by Cath Virginia / The VergeAs a result of today’s testimony, I am both more and less confused. I am clearer on what probably happened at FTX. What I don’t understand is why Gary Wang did it.
Read Article >Wang was the co-founder and chief technology officer of FTX, as well as the co-founder of Alameda Research. He owned only 10 percent of Alameda and 17 percent of FTX. He got a $200,000 a year salary, with no performance bonuses. (Okay, sure, at times he was a billionaire on paper.) By contrast, Bankman-Fried owned 90 percent of Alameda and 65 percent of FTX.
- Former FTX CTO Gary Wang is on the stand.
The government’s prosecution of Sam Bankman-Fried continues where it left off Thursday, with another former college roommate and alleged co-conspirator testifying against the former FTX CEO about exactly how all that customer money ended up being used for SBF’s other interests.
You can read up on all of the details about the missing billions right here, ahead of another trial update later today from The Verge’s Liz Lopatto, who is in the courtroom right now.
Was Sam Bankman-Fried’s bean bag chair a lie too?
Choose your college roommates carefully...Photo illustration by Cath Virginia / The Verge | Photo by Drew Angerer, Getty ImagesThe difficult part of a fraud case is usually establishing a defendant knowingly lied — unless, apparently, the defendant is Sam Bankman-Fried.
Read Article >Today the government has made a brisk case for one count in the indictment and is close to making a case for a second one, as two of Bankman-Fried’s college roommates testified against him. We also heard about Bankman-Fried’s love life and bean bag chair.
- Full court press.
Liz Lopatto is on the ground, covering the Sam Bankman-Fried trial. But if you want even more curly-haired crypto baby in your life, our pals at New York will be reporting it out in their excellent newsletter Court Appearances.
Sign up for Court Appearances: USA v. SBF[New York Magazine]
- SBF Day 3: Bankman-Fried’s roommate’s testimony continues.
I expect to hear a lot more about that expensive Bahamas penthouse during today’s hearings in the case of the former FTX CEO, and possibly some fireworks on the cross, as Adam Yedidia is immunized from prosecution.
Is Sam Bankman-Fried’s defense even trying to win?
Even the defense’s opening statement was a bad look for Sam Bankman-FriedPhoto Illustration by Cath Virginia / The VergeI have never seen Sam Bankman-Fried so still as he was during the prosecution’s opening statement. The characteristic leg-jiggling was absent. He barely moved as the prosecutor listed the evidence against him: internal company files, what customers were told, the testimony of his co-conspirators and his own words.
Read Article >His hair was shorn, the result of a haircut from a fellow prisoner, the Wall Street Journal reported. He wore a suit bought at a discount at Macy’s, per the Journal; it hung on him. He appeared to have lost some weight.
- Dogecoin shows up in court.
Per Matthew Russell Lee of Inner City Press, a witness in the ongoing Sam Bankman-Fried trial had to spell out “D-O-G-E” in response to a question from a prosecutor. It doesn’t look like there were any follow-up questions about a cryptocurrency based on a meme. It’s probably for the best.
- Today on The Vergecast: Big Tech goes to court.
The government is in the middle of a trial with Google, heading toward one with Amazon, and in general trying to change the way we think about monopolies. Also: Sam Bankman-Fried’s trial has begun, and it has already been eventful. All that, and an ebook debate, on the flagship podcast of the Sherman Act.
- Day 2: We expect opening arguments in the Sam Bankman-Fried trial today.
We don’t have a jury yet for the trial of the former crypto CEO, but we will soon. After that, it’s opening arguments and, if I’m lucky, our first witness.
- Day 1: Sam Bankman-Fried got a haircut and other matters.
The first day of the trial is over, but we haven’t selected a jury yet.
Bankman-Fried, who appeared with a shorter haircut and sporting a suit, wasn’t offered a plea deal because when the government raised the question of plea discussions, the defense said no, said Nicholas Roos, one of the federal prosecutors. Two prospective jurors lost money in crypto, one along with his twin brother; another potential juror’s fiancé lost in crypto as well.
There were a couple Madoff mentions, as well. We should have a jury and opening statements tomorrow.
- Hello from the line!
The earlybirds are here for the Sam Bankman-Fried trial. Yes, I’m one of them.
The jet lag is real and it’s magnificent.Photo by Liz Lopatto / The Verge - The scariest thing about prison for Sam Bankman-Fried is the lack of internet.
Michael Lewis, interviewed on his time with Sam Bankman-Fried, says:
I do think that if he had the internet, he could survive jail forever. Without having a constant stream of information to react to— I think he may go mad. If you gave Sam Bankman-Fried a choice (this is quite serious) of living in a $39 million penthouse in the Bahamas without the internet, or the Metropolitan Detention Center in Brooklyn with the internet, there’s no question in my mind he’d take the jail.
Sep 28
The FTX trial is bigger than Sam Bankman-Fried
What evidence is he sitting on?Image: The VergeThe trial of Sam Bankman-Fried is likely to be more consequential than just whether the man himself is found guilty. Depending on what evidence is introduced during the trial, it could be rough for the entire crypto industry.
Read Article >“How much damage can this trial do to the already beaten-down reputation of the industry at this point?” asks Yesha Yadav, a law professor at Vanderbilt University. “This trial is going to be an excruciating moment for the industry because no one knows what kind of evidence might come out.”
Sep 19
The best stuff Sam Bankman-Fried’s parents bought using FTX money
An object lesson in filial piety!Illustration: The Verge; Image: Getty ImagesThe lawyers who represent what’s left of FTX filed suit against Sam Bankman-Fried’s parents, saying they “exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars.” The point of the suit is to get that money back so it can be paid out to the people FTX owes.
Read Article >Before all this, Barbara Fried and Joseph Bankman were already well-known and respected Stanford Law School professors. Last week, Bloomberg dropped a fascinating profile of the two of them.
Nov 15, 2022
Sam Bankman-Fried oversaw FTX’s meltdown, and the fallout is reaching DC
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Sam Bankman-Fried testifies on Capitol Hill, before his fall from gracePhoto by Jabin Botsford/The Washington Post via Getty ImagesCryptocurrency has a lot of heels. Sam “SBF” Bankman-Fried was a face — until last week.
Read Article >Before last week, Bankman-Fried ran FTX, crypto’s third-largest exchange by volume. The No. 1 largest exchange was (and is) Binance, run by Changpeng “CZ” Zhao. In recent months, Binance has lived with a cloud over its head — it’s being investigated by multiple federal agencies over its BNB token, insider trading, and money laundering.
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