News - Everything you need to know about the FTX lawsuit

By Sam Fröling

Everything you need to know about the FTX lawsuit

Everything you need to know, about the FTX lawsuit

The trial of Sam Bankman-Fried has begun. The FTX founder is to stand trial for fraud. Read everything you need to know about the ongoing trial here.

Bank run on FTX: customers were withdrawing 100 million an hour

October 10, 2023: The trial of Sam Bankman-Fried continues. Gary Wang is still on the witness stand and is being cross-examined by the defense. In the course of this comes out: shortly before the bankruptcy on Nov. 9, there was a bank run on FTX. Customers withdrew their money en masse. According to Gary Wang, the outflow from the exchange was about US$100 million per hour.

Crown witness Caroline Ellision testifies tomorrow

On Oct. 9, 2023, the second week of the trial of Sam Bankman-Fried begins with a notable event. Caroline Ellision, the former CEO of Alameda Research and ex-girlfriend of SBF, is testifying in New York. Ellision is considered one of the prosecution's key key key witnesses. Along with FTX co-founder Gary Wang and chief technology officer Nishad Singh, she was part of the inner circle of SBF's crypto empire.

"SBF is convinced he is the victim"

October 6, 2023: Howard Fischer is an attorney in New York and is closely following the trial of Sam Bankman-Fried. He reports, " Bankman-Fried believes he is the smartest person in the room. He is firmly convinced of his own victimhood." Read more here: How Sam Bankman-Fried's lawyers are trying to keep him out of jail.

SBF provides $65 billion loan to Alameda

October 6, 2023: Gary Wang remains on the witness stand the next day. The co-founder of FTX and Alameda Research says SBF gave his crypto hedge fund a total loan of $65 billion. No other client even came close to that volume, he says. "There were maybe a few dozen that had a volume of one million US dollars." Alameda had used the loan to withdraw money from FTX.

FTX co-founder Gary Wang: "Alameda was able to raise money indefinitely."

Oct. 5, 2023: With Gary Wang, prosecutors are calling one of their key witnesses. The co-founder of FTX and Alameda Research was one of SBF's closest confidants. In his crypto empire, he acted as CTO for a long time. Early on, he admits to committing criminal acts at FTX along with Caroline Ellison, Nishad Singh and the defendant Sam Bankman-Fried. In response, the prosecutor demanded more details about the fraud allegations. Wang replied, "We allowed Alameda to withdraw money indefinitely." These "privileges" were in the code. Wang also revealed the ownership of Alameda and FTX. According to him, he owned 10 and 17 percent of the companies, respectively. SBF owned 90 and 65 percent of the companies, respectively. According to Wang, his main activity was writing codes, while SBF mainly spoke to investors and media representatives. The hearing was then postponed until the next day.

Crypto VC Paradigm: 'We wrote off our investment'

Oct. 5, 2023: Matt Huang is the next to be called as a witness. The Paradigm co-founder invested US$278 million in FTX in 2020 through his crypto VC as part of a Series B financing. The investment has since been fully amortized. Huang says he would not have made the investment if he had known FTX was outsourcing customers' money to Alameda.

An $8 billion hole at Alameda?

October 5, 2023: The trial continues. SBF's longtime friend, Adam Yedidia, remains under oath and continues his testimony. According to Yedidia, FTX transferred its customers' money to an account owned by North Dimension, an e-commerce company controlled by Alameda Research. Later, Yedidia was hired to automate deposits and withdrawals from FTX customers. He made a programming error, which eventually led to discrepancies in Alameda's balance sheet. In June 2022, Yedidia corrected the error, at SBF's direction. In total, there was an US$8 billion gap. Later, Yedidia had approached the FTX founder about the missing funds. SBF seemed "concerned." It could take six months to three years to be "bullet free" again.

First witnesses accuse SBF

Oct. 4, 2023: Two people are called to testify in court: Marc-Antoine Julliard, a French cocoa trader from London who lost $134,000 on FTX, and Adam Yedidia, an old friend of SBF who was a programmer at both Alameda Research and FTX. The two knew each other from their college days at MIT and later lived in the Bahamas in a luxury shared apartment along with other FTX/Alameda executives. Julliard says he did not know his deposits at FTX had been transferred to Alameda: "When I trade, I bear the consequences of my decisions ... If someone else trades my account and then loses money, that's not what I signed up for." Yedidia says he left FTX after learning that the company was transferring money from customers to Alameda. The lawsuit is subsequently suspended. Yedidia will continue testifying the next day.

Opening arguments of the prosecution and defense.

Oct. 4, 2023: After the jury is assembled, the two sides present their opening statements. They are two completely different stories. The prosecution tells the story of SBF the fraudster who allegedly "lied to the world." The FTX founder's lawyers go in the opposite direction. They blame the crypto empire's failure on a lack of risk management. "There was no theft," SBF's lawyers argue.

Court sets jury for SBF trial

Oct. 4, 2023: The court headed by Judge Lewis Kaplan assembles the jury for the trial. Twelve jurors must ultimately judge SBF. The jury consists of nine women and three men. In addition, six reserve candidates are available.

The process begins in New York

October 3, 2023: The trial of Sam Bankman-Fried begins in New York. The United States charges the founder of the bankrupt cryptocurrency exchange FTX and the cryptocurrency hedge fund Alameda Research in seven indictments. They involve conspiracy to defraud in multiple cases, fraud against investors and lenders, as well as money laundering. Bankman-Fried denies the charges and pleads "not guilty" to all charges. If convicted, he could face up to 115 years in prison.

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