On Nov. 2, Jury deliberation began in United States v Bankman-Fried over fraud allegations, conspiracy, and money laundering charges linked to FTX and Alameda’s collapse.
The criminal trial for Sam Bankman-Fried over the multi-billion dollar collapse of FTX reached its climax on Nov. 2 following closing statements from prosecutors and the defense.
Bankman-Fried’s defenders offered arguments presenting the FTX founder as merely human and therefore challenging the government’s case which alleges purposeful fraud and criminal intent.
Conversely, federal attorneys said the defendant arrived at several crossroads where he could have come clean and told the public the truth, but chose to risk it all following the two companies filing for bankruptcy.
Defense attorneys claimed witnesses Caroline Ellison, Gary Wang and Nishad Singh only testified to save themselves from severe prosecution. Former executives were never whistleblowers while FTX and Alameda operated because there was no law-breaking, according to Mark Cohen and the defense.
Prosecutors countered by painting FTX’s founder as a dictator who chose impressionable deputies and influenced all significant decisions. Federal lawyers asked the jury to consider Bankman-Fried’s demeanor on the stand against witnesses like Ellison, Wang and Singh, who allegedly yielded consistent answers throughout their testimonies.
AUSA Sassoon: Even if you believe everything that the defendant said on the stand, he is still guilty of fraud. He was the hub of this fraud. We don’t have to prove it was a fraud from Day 1. The evidence shows that. But even from Sept [2022] it’s fraud
Bankman-Fried’s legal team said the former FTX boss never checked the code bug or accessed the exchange’s AWS database. Government attorneys responded with Bankman-Fried’s MIT degree and his testimonies in front of Congress, stressing that the defendant was brilliant and calculated enough to convince investors and U.S. lawmakers alike.
The prosecution added that absent executives in critical departments like risk management and miscommunication with in-house legal consultants were strategies employed by Bankman-Fried showcasing conscious avoidance and conspiracy to commit fraud.
AUSA Sassoon: Consider the cooperators’ demeanor. I know it’s been a little while. But they were the same on direct and cross. The defendant? He was polished on direct, offering definition. Then his story changed. Caroline didn’t
Following rebuttals from both sides, Senior District Judge Lewis A. Kaplan charged the jury to deliberate and come up with an eventual verdict.
Two of the seven counts involve wire fraud on FTX customers and Alameda’s lenders, respectively. The charges also establish the venue for Bankman-Fried’s trial in the Southern District of New York.
Conspiracy charges make up the remaining five counts. For conspiracy charges in counts two and four, the Judge said arguments are sufficient if evidence proves that at least two persons agreed to break the law. FTX’s former boss is also charged with conspiracy to commit securities fraud.
Count one charged the defendant with conspiracy to launder wire fraud proceeds while count seven includes concealment of money laundering and the act itself. The jury would be required to choose either or both on the verdict form if Bankman-Fried is considered guilty.
Jurors were instructed to disregard why witnesses like Caroline Ellison signed cooperation agreements. Judge Kaplan also reaffirmed that Bankman-Fried is not charged with campaign finance violations or bribery of Chinese officials. The jury can, however, consider these matters in the context of alleged conspiracy.
Ellison testified that Alameda co-CEO Sam Trabucco and the defendants devised a plan to unfreeze $1 billion stuck in Chinese accounts by paying a $100 million bribe to Beijing officials. The blueprint for this transaction involved sending cryptocurrencies to wallets belonging to Thai escorts.
Alternate jurors were reminded not to read anything about the case and Judge Kaplan excused the jury to begin its deliberation. A verdict could be issued in a matter of hours or days. Here are the 12 jurors for Bankman-Fried’s trial.
Ten years ago, Pear VC, then a tiny new venture firm, operated out of a nondescript office in Palo Alto that was enlivened by bright, computer-themed art. Last week, the outfit – which closed its largest fund to date in May – quietly inked a deal to sublease 30,000 square feet of “Class A” office space in San Francisco’s Mission Bay neighborhood from the file-storage giant Dropbox.
It’s among a number of fast-growing outfits taking up more space in San Francisco as an earlier generation of companies shrinks its physical footprint.
As the San Francisco Chronicle first reported last week, ChatGPT creator OpenAI also just subleased two buildings totaling a collective 486,600 of square feet from Uber. The ride-share giant, which originally leased a grouping of four buildings down the street from Dropbox and will continue to occupy two of these, told the paper it is “right-sizing.”
Meanwhile, a rival to OpenAI – Anthropic – also just reportedly closed a sizable subleasing deal. Its plan: to take over the entire 250,000-square-foot building in downtown San Francisco that was previously Slack’s headquarters.
Salesforce, which acquired Slack in 2021, is an investor in Anthropic. Meanwhile, Pear VC co-founder Pejman Nozad wrote one of the first small checks to Dropbox when he was still relatively new to the U.S. from Iran and selling Persian rugs to Silicon Valley bigwigs. Such subleases don’t necessarily begin with hand-shake deals, however. Asked if Nozad zeroed in on Pear’s new space owing to his connection to Dropbox, he scoffs. The office — which has room for more than 200 desks, features more than 20 conference and call rooms, and has dedicated events space to host talks — “was a business deal for them,” says Nozad. “The founders were not involved. As you know, I sold rugs for 17 years, so I have some skills in negotiation,” he adds with a laugh.
Certainly, it’s a good time to strike a subleasing deal if you’re a well-funded company on the rise. According to Colin Yasukochi, an executive director at the commercial real estate services firm CBRE, subleases in prime areas like Mission Bay and the city’s Financial District currently range from $60 to $80 per square foot. The higher the floor and the more plentiful the amenities, the higher the price. For startups willing to sublease space with less than five years left on the lessee’s contract, the better the terms (as they’ll need to lease again somewhere else in the not-too-distant future). In comparison, office lease rates passed the $75 per square foot mark in September 2019 before the pandemic turned the city upside down.
There’s also no shortage of options right now. San Francisco’s commercial buildings are currently 35% vacant, and there are still more tenants flowing out the door than entering them.
But a tipping point is seemingly in sight. There was “negative net absorption” of 1.85 million square feet in San Francisco in the third quarter of this year, according to CBRE data; at the same time, market demand reached 5.2 million square feet, which is the highest increase since the first quarter of 2020. Much of that shift can be traced to companies like OpenAI, suggests Yasukochi, who says that a new spate of outfits is starting to set up shop, enticed by the opportunity to rent sleeker space for the same or better prices than was possible several years ago, and in more central areas of the city. “It’s a huge opportunity for companies that are trying to bring back their employees,” says Yasukochi. (OpenAI CEO Sam Altman has long said he thinks companies are more effective when employees convene in person.)
Indeed, Yasukochi anticipates that if the economy improves in the second half of new year and interest rates come down, tech outfits in particular will be positioned to recover faster — and pull the city along with them. “Many tech companies were quick to cut excess employees, along with real estate and other costs,” says Yasukochi. He also says that while tech outfits are typically “early to cut back, they’re also early to grow. I don’t see any other industry that generate the volume of growth that tech can.”
Worth noting: Yasukochi does not think those tech companies will necessarily be growing in San Francisco’s Hayes Valley. Though the neighborhood has led a resurgence of interest in San Francisco and eagerly embraced the moniker “Cerebral Valley,” owing to its concentration of AI communities, most of those teams, he observes, are “meeting in restaurants and bars and working out of their apartments. There isn’t a lot of office space there.”
Pictured above: 1800 Owens Street in San Francisco, which is the site of Dropbox’s headquarters and now, Pear VC’s San Francisco office, too.
Attorneys for the government and defense delivered their closing arguments in United States v Sam Bankman-Fried, the trial over FTX’s multi-billion dollar collapse where prosecutors allege that the founder built his crypto empire atop a “pyramid of lies”.
The jury will receive the case for deliberation on Nov. 2, said Senior District Judge Lewis A. Kaplan who presides over the case. Trial bystanders postulated that a verdict could be announced sooner rather than later.
Assistant United States Attorney (AUSA) Nicholas Roos summarized the government’s case into direct points – the defendant Bankman-Fried deceived and defrauded thousands of FTX customers who deposited billions in the defunct crypto exchange, said InnerCityPress.
Bankman-Fried allegedly set up FTX as a feeder entity for Alameda long before Ellison joined as head of trading and was later appointed sole CEO after Sam Trabucco resigned.
The prosecutor pointed to Bankman-Fried’s evasive responses on the stand and his full knowledge of decisions at Alameda Research, the crypto trading firm he owned 90% of. Multiple accounts described the FTX founder saying “I don’t recall” some 140 times in court.
AUSA Roos said the MIT graduate favored the odds of stealing customers’ money and getting away with it, as corroborated by three-star witnesses in Caroline Ellison, Gary Wang and Nishad Singh.
Bankman-Fried courted world leaders and policymakers to bolster his public image as a legitimate business while purposefully orchestrating illegal operations behind closed doors, luring customers with fraudulent marketing schemes and celebrity endorsements according to the prosecution.
Federal prosecutors argued that Bankman-Fried’s advice-of-counsel and claims of ignorance failed to meet the burden of proof, adding that only the FTX founder had the access needed to greenlight decisions which ultimately plunged his twin crypto companies into bankruptcy.
AUSA Roos: Only one person had the motive. Who had the control of FTX, to give Alameda secret access? And access at Alameda, to spend that money? Only one person: the defendant.
Bankman-Fried doubled down on spending and looting customer crypto when his team informed him of the escalating risks, Roos continued, imploring the jury to focus on the evidence rather than storytelling tactics.
As AUSA Roos reminded the court, FTX’s founder is charged on seven counts that are built on four crimes namely defrauding FTX customers, fraud on FTX investors, fraud on Alameda’s lenders and money laundering.
Defense: Other executives to blame for FTX crash
Defense attorney Mark Cohen positioned Bankman-Fried’s closing argument as a tale of two cases – one where the government vilified FTX’s former CEO, and another where the defendant was a victim of his fast-growing crypto empire.
Cohen maintained that Bankman-Fried’s actions were not fraudulent and his decision to repay lenders rather than disappear with millions showed good faith. The defense lawyer insisted that Ellison and other former executives raised no alarm until FTX completely collapsed, pointing out that government witnesses only testified to secure plea deals and escape jail time.
SBF’s Cohen: Sam’s good faith is defense to all of the charges against him. Think about it: the CEO of Alameda wasn’t aware there was a bug in the system. She woke up and thought it was bankrupt. They lacked a CFO
“Sam did his best. Some decisions turned out very well. Some decisions turned out poorly. But it’s not a crime,” said Cohen, who finished by noting that former company captains like Ellison failed to execute their duties and moved to scapegoat Bankman-Fried.
Rebuttal summations are scheduled for trial day 16 followed by a verdict. While a decision is expected shortly, there’s no ironclad timeframe for jury deliberation.
Sam Bankman-Fried has concluded his last testimony in his criminal trial and now the fate of the former FTX CEO lies in the hands of Jurors with the power to convict him to his sentence or exonerate him.
Former FTX CEO Testimony Reaches Climax
Founder and former CEO of failed FTX Trading Ltd, Sam Bankman-Fried has been on trial after being accused of seven counts of fraud and conspiracy charges related to the collapse of the now-bankrupt crypto exchange.
The former CEO has constantly pleaded not guilty on all charges and took the stand for the first time last Friday to personally defend his case on the fraud trial.
Tuesday marked the Bankman-Fried’s last day of testimony in a court trial headed by Judge Lewis A. Kaplan and the FTX founder was seen to be struggling with the barrage of questions delivered to him by prosecutors.
When Assistant US Attorney Danielle Sassoon probed Bankman-Fried on his stance on cryptocurrency exchange regulations and if he advocated for it, the former FTX CEO affirmed he did so to Congress. However, the prosecutors revealed evidence of Bankman-Fried declaring profanities to regulators and customers.
Following the completion of his testimony, the defense rested its case and now the court’s focus is on the next phase of the trial which is the closing arguments, scheduled to begin on Wednesday.
During this phase, the prosecutors and defense will deliver their final arguments to the 12 Jurors consisting of nine women and three men some of whom are nurses, social workers, teachers, and more.
Sam Bankman-Fried is presently out of opportunities to further convince the Jurors, and the testimony of some of his closest work colleagues and employees, Gary Wang, Nishad Singh, Adam Yedidia, and former girlfriend, Caroline Ellison have made his defense and trial case more complicated.
Sam Bankman-Fried Denies Prior Knowledge Of Misappropriated Customer Funds
In his recent testimony, Sam Bankman-Fried denied all allegations of being aware of the billions of dollars in customer funds misappropriated before the collapse of FTX.
When asked by Danielle Sassoon during his testimony if he had warned his employees not to spend customer funds, Bankman-Fried’s primary response was not being able to remember giving any directive.
The former CEO repeatedly told the court that he had not defrauded anyone or embezzled customer funds. Instead, he spread the blame on his former employees and friends, stating that he regretted not properly looking into the $8 billion shortfall in FTX’s balance sheet.
Bankman-Fried testified that when he asked his executives about the shortfall, they stated that they were preoccupied and told him to stop asking questions since it was distracting.
Closing arguments were underway Wednesday in disgraced FTX founder Sam Bankman-Fried’s trial in New York. CBS News correspondent Errol Barnett has been covering the trial and has the latest on Bankman-Fried’s testimony.
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The trial of the former CEO of the defunct crypto exchange FTX, Sam Bankman-Fried (SBF), continued on October 31, with the prosecution cross-examining the defendant. Despite the line of questioning from the prosecutor, SBF managed to spin his narrative on what went on at the crypto exchange. However, it remains to be seen if this will be enough to sway the jury.
Sam Bankman-Fried Says He Didn’t Know Much About The Bug
So far, the prosecution had been able to establish that Sam Bankman-Fried was in the know of everything that went on at the defunct crypto exchange and trading firm Alameda Research and, in fact, was the mastermind of all the illicit activities that went on there.
With this in mind, the defendant was hell-bent on creating doubts in the minds of the jury members. While on cross-examination, the defendant feigned ignorance to some of the questions put forward by the federal prosecutor as to what went on at both companies.
The prosecution asked the defendant if his employees had told him about the bug in the fiat account. In response, he stated that he only became aware because he overheard when they were talking about it. However, he was too preoccupied to deal with the situation at the time.
As to why he didn’t follow up on it, Sam Bankman-Fried stated that his employees had told him that they were working on it, and considering the amount of faith he had in them, he trusted them to handle it. He also alluded to how they worked as a team at the crypto exchange, and he wasn’t necessarily in charge of handling everything, as everyone had tasks delegated to them.
FTX Founder Feigns Ignorance To Happenings At Alameda
While still on cross-examination, the FTX founder was asked about who made the trading decisions at Alameda, of which he suggested that he wasn’t aware of some of the things that went on in the firm despite being the CEO at the time.
He was quick to point out that former associate and Alameda’s ex-CEO Caroline Ellison was the head of trading at the time the North Dimension account was set up.
The defendant, however, seemed to shoot himself in the leg when he stated that he believed that spending customers’ deposits “folded” into risk management. Probably to show good faith, he then stated that he was simply concerned about customers’ portfolios during his time as CEO of Alameda.
Meanwhile, Bankman-Fried also admitted that he “was paying attention but not as much” but as much as he should have as the CEO of FTX. From his testimony, it is evident that the defendant is simply trying to counter the statements of his former associates that he was totally in control of everything that went on in both companies.
The trial is set to continue on November 1, with the defense expected to close its case this week, after which the case will move on to rebuttals. The case is expected to come to a close by the end of next week, with a verdict from the jury coming soon after.
FTX’s founder stuck to his guns on who to blame for Alameda’s spending and use of customer funds during the third day of his testimony in United States v Sam Bankman-Fried.
Day 15 and Sam Bankman-Fried’s third day on the stand displayed numerous questions from assistant United States attorneys. Simultaneously, the FTX founder’s lawyers’ direct examination elicited answers that all but blamed Caroline Ellison for Alameda Research’s unchecked use of FTX customer crypto and assets.
Bankman-Fried said Ellison, ex-CEO of Alameda, admitted to subpar hedging at the crypto trading firm and tendered her resignation. Eventually, the pair moved forward with running FTX and its sister firm Alameda with the intention of repairing the businesses.
In September, I asked her again about hedging. I asked what the scale was. She gave me some numbers. I told her I was glad but that it should be a bigger number, at least twice as much. She also sent me some spreadsheets.
Sam Bankman-Fried, FTX founder
Previously Ellison testified to preparing some seven to eight misleading spreadsheets for Bankman-Fried as executives haggled with crypto lenders and tried to hide gaping holes in Alameda and FTX’s balance sheet.
Between Nov. 2 when Alameda’s financial records leaked and Nov. 7, after Ellison offered to buy Binance’s $2 billion FTT trove at $22, net withdrawals increased from $1 billion to $4 billion according to the defendant as noted by InnerCityPress.
Cohen: How did you respond? SBF: Caroline sent a tweet, that we would buy FTT at $22 Cohen: Nov 7, what did you observe as to withdrawals? SBF: They increased. On Nov 7, $4 billion of net withdrawals, 100 times an average day. We might be at a liquidity crisis
Bankman-Fried said FTX was solvent to his knowledge and hadn’t taken customer crypto, explaining his reasoning for the “assets are fine” tweets on what at that time was Twitter. After observing Ellison’s hedges at Alameda fall and Binance’s takeover of FTX collapse, Bankman-Fried said he deleted his posts.
The FTX founder recounted speaking with private equity firm Apollo regarding a multi-billion dollar rescue package but the firm balked at investing following due diligence on Bankman-Fried’s crypto exchange.
“I was trying to help in any way I could,” said Bankman-Fried in response to the final questions from his defense attorneys during the direct.
Prosecutors probe Bankman-Fried’s credibility
The opening questions from prosecutors during cross-examination quickly established that Bankman-Fried was heavily involved in trading decisions at Alameda as he owned 90 percent of the trading firm while Caroline Ellison and Sam Trabucco were listed as co-CEOs.
Bankman-Fried was asked about a Twitter Spaces with Mario Nawfal in December 2022, a few weeks after FTX imploded. The audio recording of the interaction played in a New York federal court featured Bankman-Fried explaining his strategies to appear uninvolved in Alameda’s operations due to conflicts of interest.
“Sounds like me,” replied the defendant. Prosecutors also referenced an interview with the Financial Times prior to Bankman-Fried’s arrest where he claimed to be “walled off” from Alameda. Federal attorneys pointed out differences in statements made after FTX filed for bankruptcy and his testimony under oath.
AUSA Sassoon: You would not say you were not involved at all in Alameda trading? SBF: Depends what you mean by trading. AUSA: You were receiving information about Alameda throughout 2022? SBF: Yes. AUSA: You were not walled off, right? SBF: I was not
Prosecutors called up evidence of Bankman-Fried promoting FTX as a safe exchange where users truly owned their assets, a fundamental philosophy underpinning blockchain and cryptocurrencies.
The defendant countered, claiming lapses in his memory as tweets and interviews challenging his testimony were entered into court records.
Bankman-Fried admitted that Alameda held special privileges enshrined in the code powering FTX’s trading engine despite marketing the exchange as a “neutral piece of infrastructure”. Prosecutors contested Bankman-Fried’s credibility, arguing that the defendant had knowledge of Alameda’s operations while presenting the firm as a separate entity on par with any user at FTX.
AUSA: Do you deny Alameda had some accounts with the Allow Negative flag? SBF: No. AUSA: Do you deny that Alameda could withdraw billions with out the risk of being liquidated? SBF: That might be right. AUSA: You don’t deny it. SBF: I don’t deny it, no.
FTX’s former CEO directed a basket of investments into real estate, Genesis’ crypto mining arm, Michael Kives’ K5 Global, Modulo Capital and Robinhood to name a few. Bankman-Fried refrained from confirming or denying an apartment purchased for Mike McCaffrey, ex-CEO of crypto news site The Block.
Regarding repayment of Alameda’s loans to lenders like BlockFi and Genesis, Bankman-Fried said he was aware tapping customers’ assets on FTX might weaken the exchange but thought the odds of that happening were not significant.
Bankman-Fried’s testimony will likely conclude on Oct. 31 followed by two rebuttal witnesses for the government and a direct from his defense attorneys led by Mark Cohen, a former federal prosecutor.
In a week brimming with anticipation, the Bitcoin and crypto market is poised to witness a series of significant events that could steer the trajectory of digital assets. From pivotal price action in Bitcoin to crucial decisions by the US Federal Reserve (Fed), and from landmark trials to influential crypto conferences, the week is packed with developments that could have substantial implications for investors and the crypto industry alike.
So here’s a detailed look at the top four events that are expected to capture the market’s attention in the coming days.
#1 Bitcoin At $40,000 This Week?
Bitcoin’s recent performance has been nothing short of impressive. The leading cryptocurrency marked its highest weekly close since May 2022, with a 15% gain last week. The bullish sentiment is further fueled by the anticipation of a spot Bitcoin ETF. Currently, Bitcoin is in a consolidation phase, but renowned technical analyst, “Titan Of Crypto,” believes there’s more to come.
Bitcoin at $40,000 next week? BTC is trying to break out from both bullish pennant and the inside bar’s range. Tenkan starts pointing up. If the following conditions are matched: Kijun follows Tenkan, daily candle manages to close above the range and stay above $34.5k. [Then,] Bitcoin could teleport to $40k in a blink of an eye.
Bitcoin price prediction | Source: X @Washigorira
#2 Fed Rate Decision And FOMC
The Federal Open Market Committee (FOMC) is set to make its rate decision on Wednesday, November 1, 2023, at 2:00 pm, followed by a press conference with Fed chair Jerome Powell at 2:30 pm. The consensus among analysts is that the FOMC will maintain the target range for the federal funds rate at 5.25 to 5.5. The CME FEDWatch tool supports this, with 96.2% expecting no change.
CME FedWatch | Source: CME
Notably, market conditions have become far more fragile than they were a year ago. The Fed needs to navigate their battle against inflation carefully as it can’t afford a severe recession.
Bank of America commented on the upcoming meeting, stating, “We still do not expect a hike in November, as the Fed is clearly worried about the extent of financial tightening. But today’s robust spending and inflation data keep a December hike on the table.”
Goldman Sachs economists added, “Fed officials appear to have signaled that they will not be hiking at their November meeting next week… the story of the year so far has been that economic reacceleration has not prevented further labor market rebalancing and progress in the inflation fight.”
#3 Sam Bankman-Fried’s Trial Nears End
The high-profile trial of Sam Bankman-Fried, related to the collapse of the FTX exchange, is nearing its conclusion. As the trial resumes on Monday, October 30, 2023, Bankman-Fried will continue his direct examination by his defense lawyer, presenting an alternative narrative to the testimonies of former employees and witnesses against him.
Following this, the government will cross-examine him, potentially leading to a rebuttal case by the prosecution. This part of the trial is expected to consume most of the week, with the jury likely to make a decision by next week’s end.
#4 Solana Breakpoint Conference
Solana’s annual Breakpoint conference is set to kick off today in Amsterdam, the Netherlands. The event, which runs from October 30 to November 3, will feature Solana Labs CEO Anatoly Yakovenko, key project leaders from the Solana ecosystem, and speakers from Stripe and Visa.
Historically, Breakpoint has been a platform for significant announcements. Last year, Solana Labs unveiled a $100 million social media fund and a $150 million blockchain gaming fund. This year, there’s buzz around RNDR – Render Network’s team, which is expected to launch Render 2.0 soon. The entire conference will be livestreamed on X and Solana’s YouTube channel.
According to the latest on-chain data, wallet addresses linked to the now-bankrupt FTX exchange and Alameda Research have transferred substantial amounts in crypto assets over the past week. This series of funds movement was first brought to the limelight by prominent blockchain analytics firm Nansen, who reported that more than $60 million had been moved.
However, further on-chain revelation shows that nearly $80 million has been moved from FTX- and Alameda-linked addresses in the previous week.
Nansen Uncovers FTX And Alameda’s $60 Million Transfer
On Friday, October 27, Nansen disclosed – via a series of posts on X (formerly Twitter) – that FTX has been transferring millions in digital assets, including Chainlink (LINK), Solana (SOL), Ethereum (ETH), Polygon (MATIC), etc, to various exchange addresses.
Prior to this development, the analytics firm initially reported that around $8.6 million were moved to a Binance address. According to the latest Nansen data, FTX subsequently moved $24.3 million in various tokens to different addresses on Coinbase and Binance.
Additionally, 943K SOL (just under $32M) has been moved from the FTX Cold Storage wallet
This is the address: 9uyDy9VDBw4K7xoSkhmCAm8NAFCwu4pkF6JeHUCtVKcX
That means the total funds that have moved from FTX and Alameda wallets this week is currently more than $60M pic.twitter.com/yNgakImsoV
The now-defunct exchange would later transfer 943,000 SOL (worth around $32 million) from its cold storage wallet on Friday. Based on Nansen’s data as of October 27, the total funds moved from FTX and Alameda wallets was above $60 million.
Has There Been More Transfers?
On Saturday, October 28, another blockchain data tracker, Lookonchain, offered an update on the recent transfer activities of the FTX- and Alameda-associated addresses. In a post on the X platform, the analytics platform revealed that FTX and Alameda moved an additional $20 million in crypto assets on Saturday.
FTX assets transfer in the past week | Source: Lookonchain/x
According to Lookonchain, FTX addresses transferred 309,185 SOL (worth around $10 million), 2 million Band Protocol tokens (equivalent to $3.15 million), 3.82 Perpetual Protocol tokens (worth about $2.3 million), amongst other crypto assets. Using Lookonchain’s data, this brings the total value FTX has moved this week to $78.7 million.
While the purpose of these transfers is unknown, it remains to be seen whether they are associated with the exchange’s bankruptcy proceedings. And it comes after the FTX estate recently staked $122 million worth of Solana tokens.
FTX exchange has been looking to conclude its pending Chapter 11 court case, with a recent proposal offering customers more than 90% of their missing assets toward the end of Q2 2024. Meanwhile, former CEO Sam-Bankman Fried is currently on trial for seven counts of fraud-related offenses.
Solana price at $32.30 on the daily timeframe | Source: SOLUSDT chart on TradingView
Featured image from iStock, chart from TradingView
Sam Bankman-Fried takes the stand on FTX’s collapse
Sam “SBF” Bankman-Fried testified this week in his ongoing criminal trial in the Southern District of New York, denying any wrongdoing between FTX and Alameda Research while acknowledging making “big mistakes” during the companies’ explosive growth. Highlights of his testimony include denying directing his inner circle to make significant political donations in 2021, as well as claims that FTX’s terms of use covered transactions between Alameda and the crypto exchange. Additionally, Bankman-Fried testified that he requested additional hedging strategies for Alameda in 2021 and 2022, but they were never implemented. The trial is expected to conclude within the next few days.
‘Buy Bitcoin’ search queries on Google surge 826% in the UK
Google searches for “buy Bitcoin” have surged worldwide amid a major crypto rally, with searches in the United Kingdom growing by more than 800% in the last week. According to research from Cryptogambling.tv, the search term “buy Bitcoin” spiked a staggering 826% in the U.K. over the course of seven days. In the United States, data from Google Trends shows that searches for “should I buy Bitcoin now?” increased by more than 250%, while more niche searches, including “can I buy Bitcoin on Fidelity?” increased by over 3,100% in the last week. Zooming out further, the search term “is it a good time to buy Bitcoin?” saw a 110% gain worldwide over the last week.
US court issues mandate for Grayscale ruling, paving way for SEC to review spot Bitcoin ETF
The United States Court of Appeals has issued a mandate following a decision requiring Grayscale Investments’ application for a spot Bitcoin exchange-traded fund (ETF) to be reviewed by the Securities and Exchange Commission (SEC). In an Oct. 23 filing, the “formal mandate” of the court took effect, paving the way for the SEC to review its decision on Grayscale’s spot Bitcoin ETF. The mandate followed the court’s initial ruling on Aug. 29 and the SEC’s failure to present an appeal by Oct. 13. To date, the SEC has yet to approve a single spot crypto ETF for listing on U.S. exchanges but has given the green light to investment vehicles linked to Bitcoin and Ether futures.
Coinbase disputes SEC’s crypto authority in final bid to toss regulator’s suit
The U.S. Securities and Exchange Commission overstepped its authority when it classified Coinbase-listed cryptocurrencies as securities, the exchange has argued in its final bid to dismiss a lawsuit by the securities regulator. In an Oct. 24 filing in a New York District Court, Coinbase chastised the SEC, claiming its definition for what qualifies as a security was too wide, and contested that the cryptocurrencies the exchange lists are not under the regulator’s purview. The SEC sued Coinbase on June 6, claiming the exchange violated U.S. securities laws by listing several tokens it considers securities and not registering with the regulator.
Gemini sues Genesis over GBTC shares used as Earn collateral, now worth $1.6B
Cryptocurrency exchange Gemini filed a lawsuit against bankrupt crypto lender Genesis on Oct. 27. At issue is the fate of 62,086,586 shares of Grayscale Bitcoin Trust. They were used as collateral to secure loans made by 232,000 Gemini users to Genesis through the Gemini Earn Program. That collateral is currently worth close to $1.6 billion. According to the suit, Gemini has received $284.3 million from foreclosing on the collateral for the benefit of Earn users, but Genesis has disputed the action, preventing Gemini from distributing the proceeds. Genesis filed for bankruptcy in January. It had suspended withdrawals in November 2022, which impacted the Gemini Earn program.
Winners and Losers
At the end of the week, Bitcoin (BTC) is at $34,143, Ether (ETH) at $1,789 and XRP at $0.54. The total market cap is at $1.26 trillion, according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Pepe (PEPE) at 72.08%, Mina (MINA) at 55.47% and FLOKI (FLOKI) at 53.33%.
The top three altcoin losers of the week are Bitcoin SV (BSV) at -10.27%, Toncoin (TON) -3.14% and Trust Wallet Token (TWT) at -0.82%.
“I should say, I am not a lawyer, I am just trying to answer based on my recollection. […] At the time [at] FTX, certain customers thought accounts would be sent to Alameda.”
“Without prejudging any one asset, the vast majority of crypto assets likely meet the investment contract test, making them subject to the securities laws.”
Gary Gensler, chair of U.S. Securities and Exchange Commission
“I do not believe there has been a single serious conversation regarding a settlement between Ripple […] and the SEC. The SEC is pissed and embarrassed and wants $770M worth of flesh.”
“He [Sam Bankman-Fried] thought he was going to take that money, and […] he would out-trade the market and put the money back and end up as a half-a-trillionaire, but it never works like that.”
Bitcoin beats S&P 500 in October as $40K BTC price predictions flow in
Bitcoin surfed $34,000 at the end of the week as attention turned to BTC price performance against macro assets. Data from Cointelegraph Markets Pro and TradingView showed BTC/USD holding steady, preserving its early-week gains.
The largest cryptocurrency avoided significant volatility as the weekly and monthly closes — a key moment for the October uptrend — drew ever nearer.
“I think Bitcoin will hang around this range for some time,” popular pseudonymous trader Daan Crypto Trades told X subscribers in one of several posts on Oct. 27. “Roughly $33-35K is what I’m looking at as a range. Eyes on potential sweeps of any of these levels for a quick trade,” he wrote.
FUD of the Week
UK passes bill to enable authorities to seize Bitcoin used for crime
Lawmakers in the United Kingdom have passed legislation allowing authorities to seize and freeze cryptocurrencies like Bitcoin if used for illicit purposes. Introduced in September 2022, the passed legislation aims to expand authorities’ ability to crack down on the use of cryptocurrency in crimes like cybercrime, scams and drug trafficking. One of the provisions of the bill permits the recovery of crypto assets used in crimes without conviction, as some individuals may avoid conviction by remaining remote.
Scammers create Blockworks clone site to drain crypto wallets
Phishing scammers have cloned the websites of crypto media outlet Blockworks and Ethereum blockchain scanner Etherscan to trick unsuspecting readers into connecting their wallets to a crypto drainer. A fake Blockworks site displayed a fake “BREAKING” news report of a supposed multimillion-dollar “approvals exploit” on the decentralized exchange Uniswap and encouraged users to visit a fake Etherscan website to rescind approvals. The fake Uniswap news article was posted on Reddit across several popular subreddits.
Kraken to suspend trading for USDT, DAI, WBTC, WETH and WAXL in Canada
Kraken will suspend all transactions related to Tether, Dai, Wrapped Bitcoin, Wrapped Ether and Wrapped Axelar in Canada in November and December. The suspensions may not surprise many Canadian cryptocurrency users, as they come on the heels of several other notable exchanges taking similar actions throughout 2023. OKX ceased operations in Canada in June after Binance announced its intention to do so in May.
5,050 Bitcoin for $5 in 2009: Helsinki’s claim to crypto fame
The former CEO of the defunct crypto exchange FTX, Sam Bankman-Fried (SBF), took the stand once again on October 27. This time, it was in front of the jury as Bankman-Fried had a lot to say about what went on at his former company, including revelations about how he planned to sell the exchange to its one-time competition, Binance.
Why Sam Bankman-Fried Wanted To Sell FTX To Binance
According to a live report by CNN, SBF stated that he saw himself selling FTX to Binance when he and co-founder Gary Wang first started it in 2019 due to the number of crypto exchanges that already existed and the fact that he had no idea of how the company was going to get customers.
However, that idea was quickly shut down as Binance is said to have used an internal team to build its exchange platform. Following this, Sam Bankman-Fried noted that he was more motivated than ever to build something out of FTX despite the initial challenge of growing its customer base.
In the weeks after that, the defendant began to feel more hopeful and felt there was a “20% of success,” which he saw as “a huge opportunity” considering the profitability that the biggest exchanges enjoyed.
FTX went on to become one of the biggest exchanges, even surpassing the second-largest crypto exchange by trading volume, Coinbase, at some point. While on the stand, Bankman-Fried revealed that he felt the “design philosophies” of some exchanges then “didn’t make a lot of sense,” so the exchange capitalized on that to create a niche for itself.
The crypto exchange was seen as more alluring to high-volume traders due to its cheaper trading fees and the fact that the crypto exchange had a more advanced risk engine. The risk engine (which was responsible for liquidations) considered the trader’s account (rather than just a particular trade) whenever it liquidated a customer’s position.
Bankman-Fried Sticks To His Story
Meanwhile, SBF, who has continued to deny any wrongdoing in how he ran FTX and Alameda Research, once again stated on the stand that he didn’t defraud customers. The defendant responded in the negative while replying to a question from his primary counsel, Mark Cohen, on whether he defrauded anyone or not.
While giving his testimony, Sam Bankman-Fried sought to counter the testimonies of witnesses like Wang, Caroline Ellison, and Nishad Singh, as he suggested that they had more leeway than they seemed to have suggested. His close associates had earlier heaped all the blame on the defendant by suggesting that they simply followed Bankman-Fried’s orders as he was totally in control.
Ellison, in particular, had accused Bankman-Fried of directing her to commit the crimes when she used FTX customers’ funds to repay lenders and for other purposes. However, SBF noted that Caroline was the one in charge of Alameda Research and that she even declined when he asked her if she wanted another co-CEO after Sam Trabucco resigned.
During the ongoing trial of Sam Bankman-Fried, co-founder of the now-defunct FTX crypto exchange, startling revelations have emerged regarding his understanding of cryptocurrency.
FTX Co-Founder’s Shocking Testimony
According to live coverage of the trial by The Guardian, Bankman-Fried confessed to knowing “basically nothing” about cryptocurrency before launching FTX and its affiliated hedge fund, Alameda Research. On the stand, Bankman-Fried admitted:
I had absolutely no idea how they worked. I just knew they were things you could trade.
According to the report, when Bankman-Fried teamed up with co-founder Gary Wang, who testified against him in the trial, they had no idea how to attract customers.
As for FTX’s collapse, US Attorney Mark Cohen’s questioning suggested that there was nothing particularly wrong with the exchange’s operations or Bankman-Fried’s business decisions.
The attorney highlighted FTX’s terms of service, finalized in early to mid-2022, which included provisions allowing a client’s balance to be used to cover others’ losses in certain situations, such as futures trading.
Bankman-Fried also discussed FTT, the cryptocurrency created by FTX. Its role in the collapse of FTX and Alameda Research cannot be overstated. Customers rushed to withdraw funds from FTX after reports revealed that Alameda’s loans heavily relied on FTT.
Per the report, Bankman-Fried portrayed FTT as a beneficial token for FTX users, providing account benefits if held. He explained the concept of “buy and burn,” where FTX used a portion of its weekly earnings to buy and eliminate FTT tokens, effectively giving value to FTT holders.
Management Mistakes Admitted
According to The Guardian, Throughout his testimony, Bankman-Fried attempted to portray the growth of his exchanges as a result of growing pains rather than intentional wrongdoing.
Bankman-Fried argued that borrowing from FTX was in line with the setup of the exchange and its sister hedge fund, Alameda Research. As long as the risk was managed and assets exceeded liabilities, they did not concern themselves with how users utilized funds/
Furthermore, Bankman-Fried acknowledged making management mistakes, admitting that the lack of a dedicated risk management team was the most significant oversight. The defense sought to present Bankman-Fried as an overwhelmed math savant, mitigating allegations of criminal intent.
As the trial unfolds, the question of whether Bankman-Fried is a crypto criminal mastermind or an unfortunate “math nerd” remains central.
While Bankman-Fried denies committing fraud, he acknowledges significant oversights. Bankman-Fried’s personal history, including his time at MIT and associations with FTX co-founder Gary Wang and exchange developer Adam Yedida, has also come under scrutiny during the trial.
As of the time of writing, the exchange’s token FTT is trading at $1,2714, representing a 1.4% increase. This surge follows a substantial upward trend observed over the past 30 days.
Featured image from FOX Business, chart from TradingView.com
Former FTX CEO and Founder Bankman-Friend takes the stand today, blaming Caroline Ellison for poor management in Alameda and admitting to political donations from customer funds.
As the historic trial of FTX continues, Sam Bankman-Fried, the accused culprit and defendant, finally took the stand today at the Southern District of New York. Unsurprisingly, Bankman-Fried balmed his former girlfriend and Alameda CEO Caroline Ellison for poor management of loans and credit. He accepted that some mistakes were of his doing, but also denied several claims made by his former colleagues throughout the trial.
Here are the key highlights from Bankman-Fried’s testimony:
Testimony of Sam Bankman-Fried
Bankman-Fried denies defrauding anyone.
He initially borrowed from Genesis, Celsius, BlockFi and Voyegar for Alameda.
The internal name for Alameda was ‘Wireless Mouse’, Bankman-Fried denies anyone calling it ‘Sam’s Crypto Trading Firm’ – which was earlier alleged by his colleagues in the trial.
Bankman-Fried took a yearly $200,000 salary from Alameda.
He explained the move of FTX and Alameda to Hong Kong and then to the Bahamas was for a more flexible regulatory environment compared to the U.S.
The aggressive marketing strategies for FTX were funded by loans from Alameda, most of which came from FTX customer balances.
Stressed that Alameda was solely a market maker on FTX and had a massive line of credit that grew into billions over time.
Bankman-Fried said that Caroline Ellison was a good manager, but she had no focus on risk management.
He claimed ignorance about the “Allow Negative” code, written by FTX co-founder Gary Wang, which functioned as Alameda’s liquidation cushion.
He admitted that political donations were made to influence crypto regulations, and Alameda loans funded these donations.
Bankman-Fried said that there was a significant drop in Alameda’s liquidity from $40 billion to $10 billion by June 2022 and acknowledged internal concerns about the firm’s solvency.
He again blamed Ellison, saying that Alameda didn’t hedge its bets despite his recommendation for a $2 billion safety net.
He considered closing down Alameda in 2022, citing ‘there was no right management in place’.
Bankman-Fried called Nishad Singh ‘nervous and halting.’
The Testimony is set to continue on Oct. 30, with an impending cross-examination and rebuttal case from prosecutors.
A verdict is expected to be decided upon before Nov. 3.
FTX founder Sam Bankman-Fried testified before Judge Kaplan and a jury in a New York federal court claiming his team sometimes made decisions out of his purview and against his instructions.
Following a fraught mock testimony for Bankman-Fried, Judge Lewis A. Kaplan of the Southern District of New York ruled to allow FTX’s data retention policy during cross-examination.
The policy was supposedly drafted by the defendant’s general counsel Daniel Friedberg and speaks to the Signal auto-delete feature used by Bankman-Fried’s companies for internal communications, per InnerCityPress.
The FTX founder fielded an advice-of-counsel defense built around shifting blame to his legal representatives at the time. It’s unclear if this strategy will ultimately yield Bankman-Fried a not guilty verdict.
VLOG III Oct 27: After Sam Bankman-Fried on stand from 9:30 to 4:30, passing the buck to Caroline and dissing the (KC) Royals. Inner City Presss live tweeted, here: https://t.co/1xkZgs4EsM Cross on Monday- and Tuesday. Trial continues – as does UN failure on Gaza pic.twitter.com/Jz9aIkqfdp
Bankman-Fried categorically stated that he did not commit fraud at FTX, the crypto exchange he co-founded with his childhood buddy Gary Wang, or at Alameda Research, a trading firm with a massive role in FTX’s general operations.
The defendant said he earned $200,000 after starting Alameda from a Berkley office in 2017 at a time when crypto was increasingly capturing the world’s attention.
Within 18 months, Bankman-Fried had launched his futures exchange, FTX, and hired Caroline Ellison to join Alameda’s ranks, but admitted that he hid certain shortfalls in the trading firm from his former Jane Street colleague.
FTX and Alameda moved to Hong Kong in 2021 and then to the Bahamas shortly thereafter, growing organically, according to the former crypto tycoon, as the region’s regulatory environment was more flexible than in the U.S. comparatively.
The exchange would later employ more aggressive marketing tactics funded by Alameda loans, most of which were taken from FTX customer balances.
Alameda was strictly a market maker on the exchange with a mammoth line of credit. This credit line grew into billions over time and the firm received custom services to mitigate market-moving price actions, per the defendant’s testimony.
We increased the number of servers, for the risk engine. But we learned that if there was an erroneous liquidation of Alameda or any other large account, it would be catastrophic for FTX. So I told Gary [Wang], we have to stop such liquidations of Alameda’s account. They told me they’d done it.
Sam Bankman-Fried, FTX founder
Bankman-Fried’s testimony suggested that he was unaware of “Allow Negative”, the special code written by FTX co-founder Wang, which served as Alameda’s liquidation cushion or bypass. According to the defendant, the actions of his team and the absence of risk management protocols unraveled FTX, not his decisions.
Bankman-Fried said political donations were made to lobby policymakers on crypto regulations and support humanitarian initiatives, such as Michael Sadowsky’s Guarding Against Pandemics.
These donations, admittedly funded by loans from Alameda, would later buy the defendant time in front of the U.S. Congress.
By June 2022, Alameda’s liquidity had shrunk from $40 billion to $10 billion. Former chief developer Nishad Singh raised the alarm about an $8 billion bug, and ex-Alameda CEO Caroline Ellison voiced doubts about the firm’s solvency, per Bankman-Fried’s account.
Yes. Nishad expressed concerns about marketing, brand partnerships, and K5. I told him the marketing team was a mess. I said I didn’t greenlight certain new initiatives and told him other initiatives were succeeding, like the MLB umpire patch.
Sam Bankman-Fried, FTX founder
FTX’s founder said Alameda didn’t hedge its bets despite his purported advice to position a $2 billion safety net. In fall of 2022, Bankman-Fried considered shuttering Alameda and told Adam Yedidia that FTX wasn’t “bulletproof”.
Bankman-Fried’s testimony continues on Oct. 30, per Judge Kaplan’s directive, where prosecutors plan a lengthy cross-examination and a rebuttal case. The Judge hinted that a charge conference, where lawyers discuss final objections and jury instructions, could take place before Nov. 3.
After months of legal jockeying and three weeks of testimony, Sam Bankman-Fried finally had the opportunity to tell a jury how his crypto exchange collapsed—and why he shouldn’t be held criminally responsible.
After an unusual hearing without jurors present on Thursday, which saw the FTX founder put on a disastrous performance under cross examination by Department of Justice prosecutors, he got a do-over on Friday.
His decision to testify at all is atypical, with most defendants choosing not to take the stand for fear of self-incrimination. Still, prosecutors’ unrelenting case—including three star witnesses, all members of Bankman-Fried’s inner circle who testified they committed fraud at his direction—forced his team to pull what some are describing as a legal “Hail Mary.”
Bankman-Fried’s attorneys proposed a number of topics that the judge overseeing the case, Lewis Kaplan, said may not be admissible in front of a jury. Chief among these was Bankman-Fried’s defense that many of the exchange’s missteps had stemmed from the bad advice of previous lawyers.
After a dry run on Thursday that saw the defense and prosecution carry out their questions without a jury present, Kaplan ruled on Friday that much of the testimony should not be heard by jurors, including whether FTX lawyers had signed off on financial promissory notes and terms of service.
Despite the setback, Bankman-Fried retook the stand.
‘Smaller mistakes…larger mistakes’
With Bankman-Fried’s ability to blame earlier lawyers severely restricted, he sought out other targets. His attorneys—and personal writings—indicated that he would shift responsibility to Caroline Ellison, his one-time girlfriend and the former CEO of Alameda Research, FTX’s associated trading firm.
At the onset of his testimony, under defense attorney Mark Cohen, Bankman-Fried offered some contrition.
“I made a number of smaller mistakes and a number of larger mistakes,” he said, wearing a boxy suit that seemed oversized on his slighter frame.
The issues, Bankman-Fried said, stemmed from FTX’s lack of risk management. And even though he admitted to some fault, his answers made clear that others had committed errors, albeit under his loose approach to management.
In one incident from 2020, Bankman-Fried recalled how FTX’s lagging risk engine and Alameda’s role as a backstop liquidity provider—in other words, its responsibility to absorb losses from other users—caused the trading firm to wrack up a negative balance in the trillions of dollars, triggering the entire operation to shut down.
Alameda served an important role to FTX as a market maker—facilitating trades between users—and at one point early on was responsible for 50% of all volume on the exchange. To make sure that Alameda could continue to grease the engine and serve as a backstop liquidity, Bankman-Fried said that two of his key deputies—CTO Gary Wang and engineering chief Nishad Singh—instituted several fixes, without his explicit knowledge.
These eventually included two features that would lead to Alameda’s downfall, including one that allowed it to wrack up negative balances, and another that put its line of credit on FTX above $60 billion. In his testimony, Bankman-Fried implied that he was vaguely aware of the solutions, but allowed Wang and Singh to operate on their own. Both testified that they had made the changes under Bankman-Fried’s direction.
‘Better understanding’
Bankman-Fried kept repeating the same excuse: While he was nominally in charge of FTX, he was pulled in too many directions to know what was happening.
“I wish I had a better understanding than I had,” he said, responding to Cohen when asked about tracking assets on the exchange.
He said that he worked anywhere from 12 to 22 hours a day. Even though he was the founder, majority owner, and one-time CEO of Alameda, he put Ellison and Sam Trabucco in charge in mid-2021. They had complementing skills, with Trabucco adept at hedging strategies and Ellison better at managing employees. Trabucco soon “drifted” toward early retirement, said Bankman-Fried, laying all responsibility at the feet of Ellison. Bankman-Fried said he was not involved in the “day-to-day.”
His criminal trial revolves around the allegation that Alameda stole billions of dollars of customer assets, which Bankman-Fried denied at the start of his testimony. His direct examination will continue into Monday, his attorney said, at which point prosecutors will have the opportunity to poke holes in his story—this time, in front of a jury.
Sam Bankman-Fried, founder of collapsed cryptocurrency exchange FTX, testified Friday that he believed his company would fail.
Bankman-Fried testified in the U.S. District Court for the Southern District of New York that FTX was founded on the premise of offering a seamless solution to crypto investors. They could trade from one platform instead of relying on hundreds of wallets, he told jurors. But when the company struggled to get customers in the door, Bankman-Fried’s strategy shifted to selling to competitor Binance. That plan backfired when Binance created its own exchange platform.
“I thought there was maybe a 20 percent chance of success,” Bankman-Fried testified, giving the company an 80 percent chance of shutting down within a few months.
Bankman-Fried also testified Friday that he knew “basically nothing” about cryptocurrency before founding the exchange in 2019.
The 31-year-old has pleaded not guilty to seven counts of fraud and conspiracy charges. Prosecutors allege that Bankman-Fried and others involved in FTX’s operations defrauded customers out of billions of dollars to cover losses and pay back loans owed by sister fund Alameda Research. Caroline Ellison, Bankman-Fried’s one-time girlfriend, testified against him earlier this month.
Bankman-Fried’s Former Girlfriend Testified Against Him
As Newsweek previously reported, Caroline Ellison, 28, Bankman-Fried’s former girlfriend and the one-time chief executive officer of Alameda Research, FTX’s sister exchange, testified against Bankman-Fried in mid-October. Ellison said that she worked with Bankman-Fried to steal billions of dollars from customers to cover losses and debt owed by Alameda.
During her testimony, prosecutors accused Bankman-Fried of bullying Ellison by scoffing, laughing and shaking his head.
FTX’s downfall
FTX fell apart in November 2022.
First, industry news outlet CoinDesk published an article that said Alameda held a significant amount of FTX’s cryptocurrency token, FTT. This caused FTX competitor Binance to announce its plans to sell its FTT, sending the market price of FTT into a spiral. Customers then sought out withdrawals as the price crashed, causing FTX to scramble to keep up with withdrawal requests.
Binance, which had signed an offer to buy FTX, quickly withdrew it, and before long, anonymous sources were telling outlets like TheWall Street Journal and TheNew York Times that as much as $8 billion in customer funds were unaccounted for.
FTX Founder Sam Bankman-Fried arrives at Manhattan Federal Court on July 26, 2023. Bankman-Fried admitted in October that he thought FTX would fail. Michael M. Santiago/Getty Images
FTX, Alameda Research and about 100 affiliated entities filed for bankruptcy on November 11, 2022. Around that time, anonymous sources told TheWall Street Journal that FTX siphoned $10 billion in customer funds to Alameda Research, stating Bankman-Fried, Ellison and others knew about this.
Right after FTX’s bankruptcy, Bankman-Fried resigned. And then, about $473 million of FTX’s crypto assets were wiped out in what FTX characterized as “unauthorized transactions.” The price of Bitcoin tumbled to its lowest level since 2020.
In mid-December of 2022, Bankman-Fried was arrested in the Bahamas after prosecutors filed criminal charges against him. Shortly after Bankman-Fried’s arrest, Ellison and FTX chief technology officer Gary Wang pleaded guilty to fraud charges.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Former FTX CEO Sam Bankman-Fried has finally testified in court as his legal team begins to construct a defense against charges of two counts of fraud and five counts of conspiracy. It would seem the 31-year-old former billionaire is now taking a different tactic in his latest attempt to wiggle out of the fraud charges.
While taking the stand, SBF claimed his legal team gave the green light for all of his shady actions leading up to the epic collapse of the exchange.
The prosecution closed its case last week after 12 trial days after calling on several key witnesses, including Alameda Reserach’s ex-CEO Caroline Ellison, FTX’s co-founder Gary Wang, and former Director of Engineering Nishad Singh. Although these witnesses have also implicated Bankman-Fried, the defense continues to work on a not-guilty stand.
SBF’s defense team presented him as the third witness after Krystal Rolle, Bankman-Fried’s lawyer in the Bahamas, and database expert Joseph Pimbley. US District Judge Lewis Kaplan allowed SB to take to the stand at his fraud trial On October 26, outside the jury’s presence.
In his testimony, SBF claimed his lawyers at the time, including Dan Friedberg, approved all of his actions, making him believe he was acting in good faith and everything was fine.
The FTX founder said lawyers were involved in setting this system for diverting customer funds into an Alameda bank account. However, prosecutors have said SBF should not allowed to suggest that the involvement of lawyers in decision-making is an indication of innocence of any wrongdoing.
SBF counters that he was acting without criminal intent on the advice of his attorneys. But when the prosecution’s attorney Danielle Sassoon cross-examined him, he found it difficult to cite specific instances in which his attorneys gave their approval.
“The witness has what I’ll simply call an interesting way of responding to questions,” Judge Kaplan said.
The defense also made the point that testimonies from former FTX top employees were tailored to implicate Bankman-Fried in the hopes of them receiving lenient sentences.
What’s Next For The FTX Founder’s Defense?
Prosecutors say Sam Bankman-Fried was key in diverting customer funds to Alameda Research, while also donating more than $100 million to political campaigns in the US. If convicted, the former FTX CEO could spend up to 20 years in prison.
SBF’s defense seems bleak at the moment, and Judge Kaplan has already disqualified seven of its witnesses. Bankman-Fried is expected to testify to the jury on Friday, where Kaplan is to decide if he could speak to the jurors about lawyers approving his actions.
Addresses related to FTX, the bankrupt crypto exchange, and Alameda Research, the trading wing associated with the exchange, have cumulatively transferred $13.35 million of assets to Binance, a crypto exchange via Wintermute Trading, over the last 24 hours.
According to Lookonchain, an on-chain tracker, FTX and Alameda Research last deposited COMP, the governance token of Compound, and RNDR, the native token of Render, on October 26, an indicator that the project is actively liquidating assets after finding approval in late September 2023.
FTX transfer tokens to Binance| Source: Lookonchain on X
COMP prices are relatively stable at spot rates, steadying at a key resistance level. The token is also up 20% from October 2023 lows and is within a bullish formation, moving inside the range established from June to July 2023. Even so, for the uptrend to take shape, traders expect more gains that would push the token above September 2023 highs at $50, a psychological level.
On the other hand, RNDR is extending gains, marching higher when writing. To illustrate, the token is up 60% from September lows, with bulls remaining resilient, looking at the formation in the daily chart. Bulls have been shaking off bear attempts as they target to reclaim May 2023 highs at around $2.9. This is a critical liquidation line that, if broken, could see RNDR register new 2023 highs.
FTX received court approval to sell tokens and repay creditors in September 2023. Judge John Dorsey of the U.S. Bankruptcy Court in the District of Delaware approved the motion, allowing FTX to sell up to $100 million of tokens weekly, including Bitcoin and Solana, to repay its creditors.
Then, the exchange said the proceeds from the sale would be used to repay its creditors in a “fair, orderly, and efficient manner.” As part of this, FTX will also liaise with creditors to develop a distribution plan.
FTX Is Bankrupt And SBF Is Under Trial In Manhattan
FTX went bankrupt in late 2022, triggering a series of liquidations that saw leading crypto assets slump to worrying levels, including Bitcoin and Ethereum. By Q4 2022, Bitcoin was changing hands at around $16,000, worsened by sentiments that saw crypto users rush to exchanges, withdrawing their coins, worrying that there would be a contagion.
The leg down, however, marked the last phase of the bear run since asset prices spectacularly recovered in Q1 2023 before closing H1 2023 with solid gains. The Sam Bankman-Fried (SBF) trial in a Manhattan court is ongoing while FTX managers search for ways to make creditors whole. SBF is blamed for mismanaging the crypto exchange and pilfering user funds into billions.
United States v Sam Bankman-Fried continued its fourth week at trial with testimony from the FTX founder himself however, Judge Kaplan excused the jury until Oct. 27 to thrash out details of the defendants’ statements.
What has been described by some as America’s largest crypto fraud case could come to a close by early November 2023, with FTX founder Sam Bankman-Fried testifying in his criminal trial for fraud on Oct. 26 per InnerCityPress.
Bankman-Fried is one of four witnesses, and his testimony is expected to form the lion’s share of the defense’s bid to challenge arguments claiming that FTX’s former CEO broke federal financial laws.
Defense attorneys moved for a motion to dismiss the case, arguing a deficit of evidence that proves fraud and money laundering. The FTX founder is notably on trial for seven counts of these charges.
Judge Kaplan denied the motion after federal prosecutors cited testimony from BlockFi CEO Zac Prince and alleged fraudulent transactions exposed by previous witnesses.
SBF’s lawyer: Two witnesses – and then Mr. Bankman-Fried. The first two should be 15 minutes each. Judge Kaplan: I received the relatively lengthy defense letter. SBF’s lawyer: I think Mr. Bankman-Fried’s testimony will take about four hours before those issues
FBI agent Mark Troyano said Bankman-Fried was part of over 300 Signal group chats during his time leading crypto trading firm Alameda Research and FTX, his crypto exchange. The auto-delete function was active on at least 280 of these internal chat rooms according to the witness.
Ex-Alameda CEO Caroline Ellison claimed Bankman-Fried insisted on the auto-delete to shroud contentious conversations from regulators if they ever came probing.
FTX founder Sam Bankman-Fried testifies
Bankman-Fried told the court, absent jury, that auto-delete was not turned on for decision-making channels and Signal was employed to mitigate external attacks as FTX had suffered third-party breaches in the past.
The defendant confirmed that Alameda Research funded venture investments but noted that FTX general counsel Daniel Friedberg and Can Sun oversaw the legal paperwork that restructured these capital transactions as well as FTX’s terms of service.
Bankman-Fried admitted to not reading the whole document but instead trusted the work of internal lawyers and consultants from Fenwick & West. Friedberg and lawyers at the crypto exchange also knew about the auto-delete on Signal, according to the witness whose mock testimony featured several “I don’t recall” statements.
To his knowledge, the quant trading firm didn’t dip into customer funds and investments had to be made via loans to override perceived conflicts of interest.
Bankman-Fried’s strategy seemed to shift the blame to his legal advisers at the time, claiming ignorance regarding specific matters like Alameda’s exemption from liquidation protocols on FTX.
The witness also explained that in-house attorneys drafted payment agent agreements to manage deposits into Alameda’s North Dimension bank account on behalf of FTX customers.
Bankman-Fried’s full testimony before Judge Kaplan and the jury is scheduled for Oct. 27 in what is lined up to be the final witness testimony in his trial on fraud and money laundering charges.
Bankrupt crypto exchange FTX, led by newly appointed CEO John Ray III, has embarked on an intensive legal campaign to regain control and recover assets in its pursuit of financial restitution.
As founder Sam Bankman-Fried awaits possible conviction and faces a staggering 114 years in prison if found guilty, FTX’s asset recovery plan continues under Ray’s leadership.
FTX Bankruptcy Battle Escalates
In a recent filing with the US Bankruptcy Court for the District of Delaware, FTX issued a subpoena to the artificial intelligence (AI) firm Center for AI Safety (CAIS), demanding accounting records and information regarding payments, agreements, and contracts related to the $6.5 million investment.
The motion, filed on behalf of the debtors who sought Chapter 11 bankruptcy protection on November 11 and November 14, 2022, states that the Debtors are operating their businesses and managing their properties as debtors-in-possession under the Bankruptcy Code.
It also highlights the appointment of an Official Committee of Unsecured Creditors by the US Trustee. FTX’s investigations have revealed that CAIS received transfers totaling at least $6.5 million in debtors’ funds between May and September 2022.
As part of their ongoing efforts to understand the debtors’ financial landscape, transactions, and estate, FTX has requested CAIS to produce relevant documents and information related to payments, agreements, communications, and other pertinent details.
Debtors Seek Answers
According to the motion filed on October 25, despite the debtors’ attempts to engage in a cooperative dialogue and resolve the matter amicably, CAIS has rejected voluntary requests for accounting and failed to respond to formal correspondence. The filing reads:
The Debtors have attempted to engage in a cooperative meet and confer process to obtain information from the CAIS voluntarily. The Debtors have so far been unsuccessful. On a phone call on August 22, 2023, counsel for CAIS expressed unwillingness to make its records related to the transfers available to the Debtors. In emails between October 2-6, 2023, Debtors requested information concerning the amount of Debtor funds CAIS has spent, the amount of Debtor funds it has retained, and its financial condition. CAIS declined to provide that information.
The motion concludes by stating that notice of this action has been provided to relevant parties, including the US Trustee, the Committee’s counsel, the Securities and Exchange Commission, the Internal Revenue Service, the US Department of Justice, the US Attorney for the District of Delaware, and CAIS itself.
FTX’s native token FTT is experiencing a correction after reaching a new 2023 high on the 4-hour chart. Source: FTTUSDT on TradingView.com
FTX’s native token, FTT, is trading at $1.22, marking a return to the $1 level for the first time since November 2022. Although it has experienced a decline of over 5% in the past 24 hours, the token has exhibited noteworthy gains over the past seven days, amounting to a 17% upward trend.
The token’s value has diminished by more than 95% when considering the one-year timeframe.
Featured image from Shutterstock, chart from TradingView.com
