Your guide to the Sam Bankman-Fried trial — starting today

From charges to testimony to strategy, here’s everything you need to know to follow the biggest fraud trial of the decade.

This morning, Tuesday October 2, in downtown Manhattan, Sam Bankman-Fried’s criminal trial for a litany of alleged financial crimes will begin.

Bankman-Fried stands accused of effectively stealing roughly $8 billion dollars worth of cryptocurrency and other funds belonging to large and small speculators worldwide. His methods were a mix of complex related-party accounting, uncanny media magnetism, and simply giving money to his friends. If convicted, Bankman-Fried would be by many measures the biggest financial fraudster since Bernie Madoff.

Here’s how Sam Bankman-Fried’s alleged crimes, as well as some pretty wild stuff adjacent to the crimes, will be presented to a jury.

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The courtroom

The trial is scheduled to last six weeks, with court in session on average four days a week. The most notable thing about the SDNY courthouse proceedings of the Bankman-Fried trial is that no cameras will be allowed in the courtroom. For the nuance of events, you’ll be relying on a mix of sketch artists and in-person reporters. Like me.

Bankman-Fried will be coming to court from jail, where he was remanded last month by Judge Lewis Kaplan. He had been enjoying the pool at his parents’ home near Stanford University, until he leaked portions of former Alameda Research CEO Caroline Ellison’s diary to New York Times reporters. An article based on that leak was published on July 20, and on August 11 Judge Kaplan ruled that it amounted to attempted witness tampering and ordered Bankman-Fried back to jail.

One interesting question that will be answered early in the trial is how Bankman-Fried has been coping with conditions at the Metropolitan Detention Center where he is being held. Bankman-Fried may not have much heart for lockup. After his initial arrest in the Bahamas last December, he initially seemed poised to fight extradition to the US. But he reversed course after a matter of days, seemingly to escape conditions in Bahamian jail.

Bankman-Fried will be allowed to wear a suit to the trial, rather than his prison jumpsuit. This is generally helpful in creating a positive impression on a jury, though Bankman-Fried has rarely appeared comfortable in a suit, and it might simply highlight his strange adult-child demeanor.

He’s also been given permission to use a laptop to take notes during the trial, but it will be ‘air-gapped,’ with no access to the internet. It may have been the only way to prevent the former wunderkind from playing League of Legends during his own trial.

The judge

Judge Lewis Kaplan is a 78-year-old Harvard Law School graduate, appointed to the bench by President Bill Clinton.

Kaplan has seemed stern in an array of rulings and statements so far. When revoking Bankman-Fried’s bail in August. In his ruling, Kaplan said that Bankman-Fried’s behavior included apparent attempts to get FTX’s lead lawyer “to get together with Bankman-Fried” to make sure their stories “are on the same page.” This said Kaplan, “suggests to me that maybe he has committed or attempted to commit a federal felony while on release.”

More recently, in a September 28 proceeding, Kaplan denied Bankman-Fried’s request to be released from jail during the trial. Kaplan stated that he considered Bankman-Fried a flight risk, given that he could face a “very long sentence” if convicted.

Those statements don’t indicate that Kaplan is biased against Bankman-Fried, but it’s safe to say he isn’t biased in his favor either. This is significant given the efforts by Bankman-Fried and allies to paint him as an innocent bumbler rather than a calculating criminal. Kaplan doesn’t appear to have been as seduced by Bankman-Fried’s mythos as many others were.

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The jury

The first day at least will be taken up with jury selection, so big moments like opening statements won’t come until Wednesday at the earliest.

Jury selection could be difficult and even contentious, however. The defense has to deal with a huge amount of almost uniformly negative coverage of Bankman-Fried in the media, and may have to sift through a lot of jurors to find 12 who haven’t already made up their minds about him to some extent. The depth of that challenge was on display in the defense’s proposed jury questions, some of which seemed designed to screen out, for instance, jurors who were familiar with the effective altruism movement.

Then, just three days ago, the defense challenged the Justice Departments’ own proposed jury criteria, claiming included language that would prejudice potential jurors by implying Bankman-Fried’s guilt.

The witnesses

By far the most scintillating part of the trial is expected to be testimony from Bankman-Fried’s former colleagues, friends, and in one case, lover.

Caroline Ellison, former Alameda CEO and Bankman-Fried’s on-off girlfriend, was among former associates who accepted plea deals, agreeing to testify against their former boss in exchange for shorter sentences. Ellison is expected to testify that she engaged in fraud, including concealing personal loans to executives, on Bankman-Fried’s orders.

Also expected to take the stand is Nishad Singh, former FTX director of engineering, who played a role in Bankman-Fried’s alleged scheme of political ‘straw donors.’ Singh may also testify to being aware that FTX was misusing customer funds.

Gary Wang, a co-founder of both Alameda Research and FTX, is described by CoinDesk as both “mysterious,” and a close confidant of Bankman-Fried. The two met in high school math camp and were roommates at MIT. Wang is a former Google staffer and also helped oversee FTX’s charitable efforts, guided by the ethos of effective altruism.

Other major FTX figures won’t testify, including two who have already pled guilty: former FTX digital markets CEO Ryan Salame and Dan Friedberg, who held various top legal roles.

Nor will the final major FTX figure who hasn’t been charged, Sam Trabucco. Trabucco was co-CEO of Alameda Research for a time with Caroline Ellison but left the firm before its collapse and the revelations of fraud. He set sail on a yacht paid for by FTX, and his current location seems to be unknown.

Bankman-Fried’s defense team is not nearly so blessed with witnesses. In a particularly striking example of Kaplan’s seeming skepticism toward the Bankman-Fried team, the judge rejected all of Bankman-Fried’s proposed defense witnesses in a September 21 ruling. Kaplan agreed with Department of Justice arguments that the proposed testimony from those witnesses was vague, legally inappropriate, or off-topic.

That they were so hard up for favorable and legitimate witnesses doesn’t seem to bode well for the defense, either on substance or strategy. Bankman-Fried’s team, however, will have the opportunity to request two of its proposed witnesses to give testimony rebutting government witnesses.

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The defense

In addition to its trouble with witnesses, there are signs that the defense’s broader argument for letting Bankman-Fried go rests on shaky ground.

In pretrial filings, the defense has indicated most clearly that it plans to pursue, at least in part, an ‘advice of counsel’ defense. This would essentially argue that FTX’s lawyers, the firm Fenwick & West, told Bankman-Fried that it was perfectly fine to do things like loan himself $2 billion of customer money.

That seems like fairly thin gruel, and its limitations are deeper than being unconvincing. Judge Kaplan has ruled that Bankman-Fried’s defense team can’t blame the lawyers in their opening statement. Kaplan ruled that the claim, presented without detail, could confuse a jury.

Recent revelations do present a more compelling possible line of defense. Communication records presented in a recent filing by the FTX estate include strong evidence that Bankman-Fried’s own parents not only guided his actions but seemed occasionally to encourage his excesses. This included both Barbara Fried seeming to advise the use of straw donors, and Joseph Bankman pressuring his own son for an exorbitant $1 million annual salary.

It seems that instead of that raise, Bankman-Fried’s parents received a carefully structured $10 million gift, apparently out of commingled accounts including customer funds. However, this same gift may also discourage any attempt by the defense to throw the parents under the bus: that $10 million gift is reportedly funding the defense team.

The sentence

Bankman-Fried faces seven specific charges, including variations on wire fraud, securities fraud, and conspiracy to commit those crimes.

Even if convicted on all counts, he faces a potential total of 115 years in prison. But that number is almost entirely theoretical. In part, that’s because sentences for similar offenses would likely be served concurrently rather than successively, according to lawyers who spoke to CoinDesk.

The upshot is that even in a worst-case verdict, Bankman-Fried is more likely to be sentenced to something between 10 and 20 years in prison. For comparison, Elizabeth Holmes of Theranos infamy was recently sentenced to just over 11 years – though Theranos’ victims included largely very wealthy individual investors, so Bankman-Fried may be viewed more harshly by both judge and jury.

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The future

However, even a 20-year sentence for fraud might not be the end of Bankman-Fried’s jeopardy. Five other charges, including allegations that he bribed a foreign official and broke US campaign finance laws, were previously dropped from the trial. Partly, that was because of procedural issues with Bankman-Fried’s extradition from the Bahamas.

But in July, the New York Times reported that prosecutors intended to mount a second trial on those five dropped charges in March. It looks like we could be doing this all over again in a few months.

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