The fake insurance, Caroline Ellison’s possible testimony and the alleged bribe to LedgerX: how the Sam Bankman-Fried trial is going.
- Sam Bankman-Fried is currently on trial for charges of fraud and conspiracy
- Evidence presented by the prosecution challenges the portrayal of FTX as a start-up without adequate infrastructure
- Details emerge of an alleged illicit payment to Julie Schoening and a bogus “insurance fund” run by FTX
Sam Bankman-Fried, the former CEO of FTX, is facing a trial for seven charges of fraud and conspiracy to commit fraud against investors and clients of FTX. This case has attracted widespread attention in the industry due to the unique defense strategy adopted by the legal team of Bankman-Fried.
The charges and the defense
Began on October 3rd, the trial is unfolding in a federal court in New York. The Department of Justice has adopted a strong legal approach in trying to prove Bankman-Fried’s guilt, while the defense team seems to have been unable to effectively counter.
Bankman-Fried’s legal team is formed by two lawyers, Mark Cohen and Christian Everdell, both former federal prosecutors. They have tried to portray Bankman-Fried as a young entrepreneur who made mistakes during a period of rapid growth of his company.
FTX, the start-up led by Bankman-Fried, was depicted as a young company lacking the necessary infrastructure, a common mistake among start-ups. However, the prosecution presented evidence contradicting this position, arguing that Bankman-Fried in 2019 requested changes to FTX’s code that would have given Alameda Research special privileges as an FTX client.
Further Developments
In light of the gathered evidence, the defense has not yet proposed alternative theories or attempted to minimize the charges. In a further twist, Caroline Ellison, former CEO of Alameda Research, has come forward willing to testify against Bankman-Fried. Ellison will provide details on the alleged illicit interaction between FTX and Alameda, through which Bankman-Fried would have transferred funds improperly.
The case promises further drama, with suspicion of an unaccounted for $5 million payment to Julie Schoening, former Chief Risk Officer of LedgerX. What was this payment? FTX is said to have offered the sum to ensure Schoening’s silence, who had discovered a secret channel that allowed Bankman-Fried to transfer money from FTX to Alameda.
Not forgetting the revelation that a supposed “insurance fund” managed by FTX was fictitious. The trial will resume from where it was suspended on October 10th, with anticipation for Ellison’s testimony which could bring more details and a new perspective.
