The U.S. Department of Justice (DoJ) has confirmed that it will proceed with the trial of SBF, the co-founder of FTX, on the original eight charges of fraud and conspiracy. The trial is scheduled to start on October 2, 2023.
SBF, whose full name is Sam Bankman-Fried, was extradited from the Bahamas, where FTX was based, to the U.S. in December 2022.
He was indicted on eight counts of fraud and conspiracy, accusing him of orchestrating “one of the biggest financial frauds in American history” that resulted in the loss of over $1 billion of customer funds.
Following his extradition, the DoJ added five more charges against him in February and March 2023, involving fraud, fraud conspiracy, and bribery of Chinese officials.
SBF filed a motion in the Bahamas, claiming that these new charges violated the principle of specialty, which prohibits prosecution for offenses other than those specified in the extradition request.
On June 14, 2023, the Supreme Court of the Bahamas ruled that SBF must have the opportunity to formally challenge the new charges before the country can accept them.
The DoJ acknowledged that resolving this matter could take a long time and expressed willingness to proceed with the trial on the counts detailed in the original indictment.
FTX’s rise and fall
FTX was one of the leading crypto exchanges in the world, offering trading services for various digital assets and derivatives. SBF, a former Wall Street trader and MIT graduate founded it along with Gary Wang and Caroline Ellison in 2019.
The exchange claimed to have over 10 million users and processed over $100 billion in daily transactions at its peak.
However, FTX collapsed in November 2022 after a series of events exposed its financial troubles and mismanagement. The exchange suffered a massive hack that stole $150 million worth of crypto assets.
In addition, it faced regulatory scrutiny and lawsuits from various jurisdictions, including Hong Kong, Singapore, Japan, and the U.S.
Binance.US, which had agreed to purchase FTX for $400 million, backed out after discovering the company’s liabilities.
The DoJ alleges that SBF and his co-founders lied to investors and customers about FTX’s financial condition, security measures, and compliance status.
They also claim they diverted customer funds abroad and used them for personal and speculative trading. Ellison and Wang, who ran FTX and Alameda Research, confessed to fraud and collaborated.
SBF has maintained his innocence and said that FTX’s collapse was due to management errors, not fraud.
The trial will shed more light on the allegations against SBF and the events leading up to FTX’s demise. It will also have implications for the crypto industry, which has faced increased regulatory scrutiny and challenges in recent years.
