On October 3, the first hearing will take place in the case of the collapsed FTX exchange and its former CEO Sam Bankman-Fried (SBF). Before the hearings, ForkLog collected current news from the defense and prosecution.
Federal prosecutors plan to call former FTX clients, investors and employees in the upcoming trial, the U.S. Justice Department said.
Investors can communicate their expectations regarding how FTX should hold their funds. Former employees of the crypto exchange will testify about “interactions with the defendant and their understanding of his goals, certain statements and actions.”
The DOJ intends to attract retail clients who have “transferred tens of thousands of dollars in assets” to FTX, and institutional clients with “tens of millions of dollars.”
Among the former employees assisting the investigation are FTX technical director Gary Wang, technical department head Nishad Singh and Alameda Research CEO Caroline Ellison.
One of the witnesses, identified by the DOJ as “Client FTX-1,” lives in Ukraine. He will try to get permission from the government to travel to testify directly in a US court.
Bankman-Fried’s lawyers noted that some of the Justice Department’s proposed questions for jurors could either lead to bias or lead them to decide whether the client is guilty before the trial begins.
In their opinion, the absence of the word “allegedly” when describing SBF’s crimes “improperly suggests that fraud on the part of the accused is an established fact.”
Other proposed questions are too limited or provide “instructions” for action, lawyers emphasized.
The jury selection process will begin on October 3 and will last no more than 24 hours.
Bankman-Fried will not be able to blame FTX’s lawyers for the company’s collapse in his opening statement, the federal judge in the case, Lewis Kaplan, ruled.
SBF could still use the “attorney referral” strategy, where it would shift all liability to a third party. However, this argument without specifics risks confusing the jury, the judge emphasized.
Bankman-Fried will likely try to prove that FTX’s in-house attorneys and Fenwick & West lawyers were involved in many management decisions.
“Whether and to what extent the accused should be allowed to argue or adduce evidence regarding the presence or participation of lawyers will depend on the circumstances. The best that can be done at this time is to provide sufficient notice to the court to take appropriate action on a case-by-case basis,” Kaplan concluded.
Interference in politics
According to the author of the book about the collapse of FTX Michael LewisSBF once planned to pay former US President Donald Trump $5 billion so that he would refuse to participate in the elections.
“This will only shock you if you don’t know Sam,” the writer noted.
Lewis added that Bankman-Fried studied the legality of the deal and negotiated with Trump even after the stock exchange crash. However, he emphasized that this did not happen only because SBF did not have such an amount.
The founder of FTX considered the former president a threat to democracy and included him on his list of “existential risks” for the United States.
On October 30, the wallet associated with the FTX hack became active and began moving funds. Over the weekend, the alleged hacker transferred 15,000 ETH worth about $25.8 million.
Some of the assets were routed through the THORChain Router cross-chain protocol, the Railgun privacy tool, and intermediate wallets.
On November 15, 2022, a couple of hours after FTX declared bankruptcy, an unknown person emptied the exchange’s vaults and withdrew approximately $340 million worth of digital assets. These were mainly Bitcoin (25.4%) and Ethereum (68%).
Earlier, lawyers shared their opinions regarding the upcoming hearings in the SBF case. They recalled the charges and calculated the possible sentence for the accused.
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