No matter what you think about cryptocurrencies, whether they have great potential or are just a fad or a scam, Sam Bankman Freed, also known as SBF The most common misconception about the upcoming trial is that it is a case that: Cryptocurrency.
Twenty years ago, I led an investigation. As a result, special agents from the Drug Enforcement Administration and the Internal Revenue Service, along with prosecutors from the U.S. Attorney’s Office for the Southern District of Florida, obtained an indictment against the maritime organization. It exported cocaine and heroin to the United States, some of it financed by real estate in Miami. But this case wasn’t about real estate. It was about drug trafficking and structuring financial transactions to avoid reporting requirements.
And so is Bankman Fried, founder of cryptocurrency trading firm Alameda Research and CEO of the more widely known cryptocurrency exchange FTX. Cryptocurrency is not the case here, as the lawsuit against Bankman Freed is not about cryptocurrencies. It’s about fraud.
indictment
In a seven-count indictment, Bankman Fried is charged with wire fraud against FTX customers. Conspiracy to commit wire fraud against FTX customers. Wire fraud against lenders to Alameda Research. Conspiracy to commit wire fraud against lenders to Alameda Research. Conspiracy to commit securities fraud against FTX investors. Conspiracy to commit commodity fraud against FTX customers in connection with the buying and selling of cryptocurrencies and swaps. and conspiracy to commit money laundering.
In essence, Mr. Bankman Freed misappropriated and misappropriated FTX customer deposits to line his own pockets, support FTX’s operations, fund speculative venture investments, and pay Alameda’s operating expenses. He is accused of using billions of dollars in stolen funds. He is also accused of providing false information to FTX investors and Alameda’s lenders.
Bankman-Fried has pleaded not guilty and the trial is scheduled to begin on October 3.
How prosecutors might proceed to prove their case against Bankman Fried
Prosecutors have indicated they intend to have at least three of Bankman Fried’s alleged co-conspirators testify at trial. They also indicated that they intended to call other former employees of Alameda and FTX, FTX customers, FTX investors, and lenders to Alameda. They also indicated that they intend to call expert witnesses who will provide a financial analysis of the nature and extent of Bankman Freed’s alleged fraud.
In presenting their case against SBF, prosecutors will likely want jurors to understand the history of Alameda and FTX. Prosecutors may start by calling witnesses who can testify about the founding of Alameda in 2017 and FTX in 2019.
Prosecutors will also want to reassure jurors of testimony and evidence that frequently references cryptocurrencies. So prosecutors may ask one of their early witnesses to explain to the jury how a trading company like Alameda works, or is supposed to work. Also, how exchanges like FTX work or are supposed to work.
Similarly, prosecutors want to know how customers of cryptocurrency exchanges use fiat currency, such as dollars, to buy cryptocurrencies, how transactions are recorded on the blockchain, and how customers You might want one of your early witnesses to explain to the jury how it can be held, traded, or converted. Cryptocurrency returns to fiat currency.
With this background and understanding, prosecutors will be able to begin developing their case against Bankman Fried.
Insider testimony against SBF
Based on court documents filed in the Bankman-Fried case, prosecutors are likely to call at least three of Bankman-Fried’s alleged co-conspirators as witnesses. Namely, Gary Wang, who co-founded FTX with Bankman Freed and was FTX’s chief technology officer. Nishad Singh was FTX’s Head of Engineering. Caroline Ellison, an employee of Alameda Research who later became CEO of Alameda Research, both agreed to cooperate with the government.
Mr. Wang, Mr. Singh, and Mr. Ellison will all be able to provide valuable inside testimony regarding Mr. Bankman Freed’s conduct. It could also provide equally valuable evidence relevant to establishing what Bankman-Fried knew and intended when he committed these acts. The reason this evidence is so important is that to convict Bankman Fried, for each crime charged, prosecutors would not only need to prove that he committed the illegal act. That’s because there isn’t. activitybut also he had the necessary conditions psychological statewhich means that he acted with the knowledge or intent required by law.
The evidence relevant to proving that Mr. Bankman-Freed knew or intended to do so was the evidence that Mr. Bankman-Freed may have made or given at the time he was engaged in the illegal activity. may result from instructions you may have received or other actions you may have taken.
Prosecutors say they intend to present evidence showing that Bankman Freed misrepresented customers, investors and lenders. They also learned that Mr. Bankman Freed directed Mr. Wang and Mr. Singh to implement features into FTX’s code, and that Mr. Bankman Freed exploited those features to allow Alameda to collect billions of dollars in FTX customer assets. He also indicated that he intended to introduce evidence that he had made it possible to divert the information.
Additionally, prosecutors have indicated that they intend to present evidence that Bankman Freed caused banks to make false statements in order to open accounts that would receive deposits from FTX customers. and Bankman Freed’s use of FTX customer funds for political contributions and straw donations to conceal the origin of those contributions in order to gain influence over political and regulatory decisions that would affect them. indicated that he intended to provide evidence that he had used someone else. Alameda’s and more importantly FTX’s business.
Also, last but not least, expect Wang, Shin, and Ellison to explain the control Bankman Freed had over both companies.
FTX employees
Prosecutors are expected to introduce books and records from Alameda and FTX, as well as emails, text messages or messaging app communications. Some of that evidence could be introduced through Wang, Shin, or Ellison. However, some will almost certainly be introduced through Alameda and her other FTX employees.
Some of these employees may be asked to expand the control Bankman Freed had over both companies.
humanize the incident
Especially in the digital field, when we hear about millions and billions of dollars being moved around, it’s easy to feel a bit alienated. But there were also real people who were hurt by what happened at Alameda and FTX. If what happened was a crime and Mr. Bankman Fried was criminally responsible, prosecutors would want the jury to know that. By doing so, you can humanize the incident.
Prosecutors have indicated they plan to call FTX customers, investors in FTX, and lenders to Alameda to testify as witnesses at trial.
FTX prosecutors have released portions of FTX’s commercials that feature celebrities such as Tom Brady, Gisele Bündchen, and Larry David and endorse FTX as “the safest and easiest way to buy and sell cryptocurrencies.” Don’t be surprised if you bring it up as evidence through your customer.
Don’t be surprised if prosecutors play these commercials to jurors.
Then, after playing those commercials for the jury, prosecutors asked witnesses whether those commercials influenced their decision to become or remain FTX customers. Don’t be surprised either.
give one’s opinion to the jury
The SBF investigation is being led by the Federal Bureau of Investigation, and prosecutors will call in FBI special agents to explain how Bankman-Fried conspired with others to launder the money. It is highly likely that That testimony should be interesting.
Last, but not least, prosecutors will call expert witnesses to explain the nature and scope of Bankman Freed’s fraud. This number can be staggering, and since the lawsuit against Bankman Freed is not about cryptocurrencies, it ultimately comes in terms of real dollars, not Bitcoin, Ether, or other cryptocurrencies. It will be explained. It’s about fraud. Fraud finds a way.
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