Oct 2, 2023 - Economy

What to expect from SBF's trial — and after

Sam Bankman-Fried, wearing a suit, exits a courthouse with cameramen taking shots behind him.

Former FTX chief Sam Bankman-Fried following his bail hearing in July. Photo: Angela Weiss/AFP via Getty Images

The criminal trial of Sam Bankman-Fried, the fallen founder of the cryptocurrency exchange FTX, begins Tuesday in Manhattan.

Why it matters: The trial will decide whether or not one of the greatest financial boondoggles in history was, in fact, a fraud.

  • The 31-year old founder, known widely as SBF, faces seven counts — two of wire fraud and multiple counts of conspiracy — in connection with events that caused $8.7 billion of customer money to go missing.

Catch up fast: Bankman-Fried has been in state custody since his bail was revoked over witness tampering in August.

  • All of his key lieutenants at his two companies (FTX and sister trading firm Alameda Research) have pled guilty and turned against him.

Quick take: Their testimony, if it happens, is likely to be the most interesting parts of the case.

  • SBF has previously claimed he was unaware of the depth of the company's financial troubles, and those at Alameda — framing the collapse as a result of poor risk management.

The big picture: The high-profile trial is set to bring another wave of negative attention to an already battered industry, but it could also be helpful for the industry to move on.

  • "We can't psychologically recover as an industry until we have catharsis," Nic Carter of Castle Island Ventures tells Axios. "This applies to all of the scoundrels from 2022."

What to expect: At a pre-trial hearing Thursday, the prosecution estimated they would need four or five weeks to present their case. The defense said it would need no more than a week and a half.

  • If all goes according to plan, the judge in the case, The Hon. Lewis Kaplan, estimated a judgement a week or so before Thanksgiving.

What we're watching: SBF's parents. More and more it seems possible that charges could be brought against the family. If that happens, it could be to leverage SBF for a guilty plea.

  • At the hearing Thursday, the defense floated the possibility that it may not even make a case at all, depending on how the trial goes.
  • Or, one suspects, if their client makes a late-stage decision to change his plea.

Yes, but: A plea change is unlikely to change much for SBF at this point, with the trial underway, a former criminal lawyer tells Axios. He can change his plea, but he would be unlikely to get a deal with the state.

  • If he did though, the trial would end and the judge would move to schedule sentencing.

The bottom line: The judge raised the possibility Thursday that the proceedings might leave the defendant feeling very bleak about his future — not a line of speculation his defense team wants to hear.

  • For the crypto industry, there are the important goals of making customers whole and holding bad actors accountable, but there's also restoring the public's trust in markets.

Go deeper: Sam Bankman-Fried faces his day in court

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