Good day everyone,
I hope you are all well and having an excellent week, welcome to CryptoGod-1's blog on all things crypto. Today I will be following up on the articles I published last week regarding how Sam Bankman-Fried was allegedly spotted transferring funds from a number of Alameda wallets and sending the crypto to mixers and instant exchanges. Since then, he has been banned from touching those wallets any further by a judge in the US. You can find those articles here:
SBF visited by "Big Short" author for 'several hours' while under House Arrest
Prohibition from Accessing or Transferring Funds
On the 3rd of January 2023, Sam Bankman-Fried had his arraignment hearing in Manhattan where he pleaded 'not guilty' to the eight counts he faces as former CEO of FTX cryptocurrency exchange. These eight counts which SBF face from the federal prosecutors in the Southern District of New York include:
- Conspiracy to commit wire fraud on customers
- Conspiracy to commit wire fraud on lenders
- Conspiracy to commit commodities fraud
- Conspiracy to commit securities fraud
- Conspiracy to commit money laundering
- Conspiracy to defraud the United States and violate campaign finance laws.
- Wire fraud on customers
- Wire fraud on lenders.
These charges are not all that SBF is facing, as he is also up against additional government bodies which will include an SEC lawsuit, while the CFTC has charged SBF and FTX with two counts of violating antifraud provisions as part of the Commodity Exchange Act.
Disgraced from his former position as a Billionaire who apparently cared about the people, SBF has been accused by blockchain researchers of transferring funds from wallets associated with Alameda Research, the sister company of FTX, and converting the funds into Bitcoin via mixers and instant exchanges. On December 30th 2022 SBF released a tweet stating he was not behind this sudden movement of funds, however federal prosecutors were reported as investigating the transfers.
During his arraignment hearing in Manhattan the assistant U.S. Attorney Danielle Sassoon made a request that SBF be restricted from accessing or transferring any funds which may have been allocated to either of his former companies as part of changes to his bail conditions. This was specifically in relation to the reports the previous week of the strange movement of crypto, and while Sassoon acknowledged there was no concrete evidence that SBF was involved in the transfer, she stated:
the court should not “put full stock” in his denials, given that he has previously tweeted false information.
Further to this, she added that the government no longer had access to these funds and there was concern that further assets could suffer a similar fate. She also made it clear the lack of trust and faith that SBF had in the U.S. government and their system, stating that SBF had previously worked with Bahamian regulators after FTX’s bankruptcy in which he helped to transfer customers funds because he believed that foreign regulators would be more lenient than the U.S. government.
Speaking on behalf of SBF as his legal representative, Mark Cohen addressed the court and explained that they were not linked to those transfers, and denied the allegations. Cohen went on to state that:
Bankman-Fried’s legal team had been in contact with the government to help figure out the source of the transactions, but that Bankman-Fried no longer had access to the wallets.
SBF's team, Mark Cohen and Christian Everdell, also explained how they had been in touch with the prosecutors to work on the language in his bail conditions, aiming to work out the finality of the wording within them and requested Judge Lewis Kaplan to allow more time for this request to be finalised. Judge Kaplan objected to this request as it was felt that updated bail conditions for SBF were warranted.
Trial Date Set
The trial for SBF has been set for the 2nd of October 2023, meaning the former CEO of FTX will have ten months or so to prepare for what could be one of the biggest court case the crypto industry has witnessed so far. The US prosecutors have given word that they will produce all the evidence they intend to use in the case over the next four weeks, which means SBF and his team will have plenty of time to prepare a defence.
Currently out on a $250 million bail bond, as part of the updated bail conditions SBF also must be monitored constantly, undergo regular mental health checks, surrender his passport, and is unable move out of the Northern District of California. Another important part of the conditions was that the court redacted the names of the co-signers of his bail, which was cited as being due to safety concerns for the individuals.
As part of the case, former Alameda Research chief executive Caroline Ellison (who was known to have had a romantic relationship with SBF) and FTX chief technology officer Gary Wang have both pleaded guilty to fraud charges. This has been done in cooperation agreements, meaning their testimonies will be of use to the US prosecutors in the case against SBF assuming the case goes to trial. If SBF is found guilty, he could face life in prison or 115 years for his participation in his company’s demise.
While SBF was being extradited from the Bahamas to the United States, 28 year old Caroline Ellison was apologizing before a federal judge in New York on the 19th of December 2022. She admitted that herself and her former associated knowingly stole billions of dollars from customers of FTX and tried to cover it up. She went on to explain to the court that Alameda had a "virtually unlimited borrowing facility in FTX, and that she knew the exchange would need to use customer funds to finance loans to the hedge fund."
This information was kept hidden from investors and customers, and “materially misleading financial statements" were created between July and October 2022 for Alameda's lenders. Ellison has been charged with seven criminal counts, which include conspiracy to commit wire fraud and money laundering. Below is a now famous video of Caroline Ellison doing an interview where she made reference to operating Alameda, and some of the more questionable things they did.
Meanwhile Gary Wang, currently 28 years old, explained to the courts that as part of his role as FTX’s former chief technology officer he would "make changes to the exchange’s code that would grant Alameda 'special privileges' on FTX." His part in the collapse of FTX is assigned to the fact he agreed to make certain changes to the platform’s code between 2019 and 2022 while others in the company knowingly represented to investors and customers that Alameda had no such special privileges.
Wang faces up to 50 years in prison in accordance with federal sentencing guidelines referenced in court. Ellison faces up to 110 years in prison for her seven counts. However, seeing as they are cooperating with the US prosecutors in the trial against SBF, chances are they may recieve more favourable and lenient sentences. Both are currently out on bail, and both will be sentenced on the 19th of December 2023.
One more member of the FTX / Alameda Research fiasco is still a large, a crucial figure in the case known as Nishad Singh, former Director of Engineering at FTX. He has been missing since FTX filed for bankruptcy on the 11th of November 2022, and was known to hold a 7.8% stake in the cryptocurrency platform.
Dark days ahead for all involved with FTX, and all the while it is the customers who are out of pocket. SBF will either change his plea and strike a deal, or go to trial and likely try place blame on Ellison and Wang (and Singh if he is located). Either way expect his name to never be far from the media, and his every action, and that of Alameda / FTX wallets, to be scrutinised on the blockchain.
I hope you enjoyed my article, have a great day.
Peace. CryptoGod-1.
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