With criminal proceedings underway just as Michael Lewis’s new book on the FTX founder hits shelves, Boardroom explores the most important details behind the SBF trial.
Sam Bankman-Fried‘s criminal trial is underway this week nearly 10 months after he was arrested for allegedly defrauding FTX investors — among a slew of other criminal charges. The proceedings are playing out at the US District Court for the Southern District of New York in downtown Manhattan; the SBF trial is expected to last up to six weeks.
Bankman-Fried’s life and business dealings have stayed in the limelight for about the past two years. He quickly became a wealthy cryptocurrency enthusiast everyone wanted to know just as quickly as he became the disgraced FTX founder that people mostly refer to him as today.
The criminal trial isn’t the only thing in the 31-year-old’s orbit grabbing headlines this week. Renowned journalist and financial writer Michael Lewis also dropped his highly-anticipated book about the man himself, Going Infinite: The Rise and Fall of a New Tycoon, on Oct. 3, which happened to be the same day jury selection started in the trial. Lewis conducted countless interviews to shed new light on not just the arc of FTX, but the character and proclivities of its eccentric founder.
Indeed, there is a seemingly endless stream of information to parse on Sam Bankman-Fried, and we’ll only learn more over the next several weeks. To chop through the weeds, here are five key facts to know about the SBF trial, the man himself, and the alleged fraud, conspiracy, and other financial crimes that landed him in federal court in the first place.
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Who is Sam Bankman-Fried?
SBF was born to two Stanford Law School professors on March 6, 1992. His parents discovered at a young age that he was gifted, so they put him on an advanced educational track focused on his strong suit: math. He went on to attend MIT, graduating in 2014 with a degree in physics and a minor in mathematics. He dabbled in a few different jobs before setting his sights on the crypto industry in late 2017.
Bankman-Fried is the founder and former CEO of FTX, a crypto exchange and crypto hedge fund operator that launched in early 2019. To comply with regulatory requirements, FTX operated a US-focused exchange known as FTX US while also running FTX.com, an exchange accessible to a wider international audience. SBF was at the helm of both businesses, and he went on in 2017 to found the crypto trading firm Alameda Research, which was closely linked financially to FTX.
SBF wasn’t just on his way to becoming the richest crypto investor in the world; he was also earning mainstream fame, with Forbes once ranking him as the 41st-richest American and the 60th-richest person in the world — but the more his name ended up in the media, the closer regulators were keying on his companies’ business practices and financials.
The Fall of FTX
While it was viable, crypto investors typically used FTX’s platforms to buy, sell, and trade cryptocurrency assets. The combined FTX and FTX US operations were valued at up to $40 billion in early 2022. The business was only active for roughly three years, but at its peak in July 2021, the exchanges attracted over one million users.
All of that began to change in early November of 2022 when FTX began experiencing a liquidation crisis. Users were relocating or withdrawing their assets at an alarming rate, and it quickly became obvious that the company didn’t have the reserves to handle all of that activity. Rumors started circulating that Bankman-Fried was moving customer assets between FTX and Alameda to fund his own lavish lifestyle.
At one point, FTX temporarily halted processing withdrawal requests from customers entirely. This is when talks of an acquisition came into play, with crypto exchange Binance signing a letter of intent to acquire FTX.com after conducting full due diligence. A day after that news was announced, however, Binance quickly backed out of the deal due to “reports regarding mishandled customer funds and alleged US agency investigations.”
About $1 billion a day was pulled out of FTX during the November collapse. Within days, FTX was unable to return customer money because more than $8 billion of investors’ funds had been diverted into Bankman-Fried’s privately held fund, Alameda. https://t.co/tSyxY6qkzd pic.twitter.com/WCbsLmxpHP
— 60 Minutes (@60Minutes) October 1, 2023
By mid-November, SBF stepped down as CEO of FTX.com, FTX US, and Alameda Research, all three of which subsequently filed for bankruptcy alongside about 130 other companies affiliated with FTX. Around this same time, news came to light that SBF was running his businesses from a penthouse in the Bahamas along with nine other affiliated executives (some of whom were engaged in romantic relationships with one another).
Sam Bankman-Fried was arrested in the Bahamas on Dec. 12 and extradited back to the US to face legal charges.
SBF’s Net Worth Before Trial
In his book, Michael Lewis refers to SBF as having previously been the richest person in the world under the age of 30 for his estimated $22.5 billion net worth via Forbes — an amount that Bankman-Fried apparently told Lewis was far less than his actual net worth somewhere in the tens of billions of dollars. As for that number in question, it’s simply hard to say. Forbes reported that his net worth touched $26.5 billion at its highest.
The Criminal Charges
At the time of his arrest, SBF was charged with eight counts that include allegations of wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering. These charges would be taken up in US District Court in Manhattan. In February, that same court hit the disgraced FTX founder with four additional counts of fraud primarily focused on his political donations, upping the total number of charges against him to 12.
He pleaded not guilty to all of the charges against him earlier this year.
Bankman-Fried posted $250 million in bail in December when he was extradited to the US after 10 days in a Nassau prison. He was slated to remain free ahead of his trial, but that changed when his bail was revoked in August over witness tampering allegations. SBF returned to prison the same month.
"Without a doubt he's guilty," says FTX Creditor Activist @sunil_trades about Sam Bankman-Fried. "To be honest he's going to go to jail for a very long time." pic.twitter.com/2t2I0vJUhM
— Last Call (@LastCallCNBC) October 6, 2023
Key Witnesses at the SBF Trial
SBF’s trial officially kicked off on Oct. 3, and both sides gave their opening statements the following day. As the proceedings carry on, here are some of the key witnesses slated to take the stand:
- Caroline Ellison, former co-CEO of Alameda Research and SBF’s alleged ex-girlfriend.
- Nishad Singh, an FTX co-founder who served as the exchange’s Director of Engineering.
- Sam Trabucco, former co-CEO of Alameda Research.
- Gary Wang, an FTX co-founder who served as CTO.
Trabucco is the only former executive listed above who has not been accused of wrongdoing himself; he actually left Alameda in August of 2022 before everything hit the fan. Ellison, Singh, and Wang, meanwhile, all pleaded guilty to similar fraud, money laundering, and conspiracy charges.
Federal prosecutors did not offer SBF a plea deal. If this trial doesn’t go his way, he’s facing up to 115 years in prison.
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