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The Trial of SBF: A deep dive with Inner City Press's Matthew Russell Lee | E1833

This Week in Startups

Tue Oct 24 2023



Jury and Trial Dynamics:

  • The jury pool consists of professional individuals, including lawyers, firefighters, secretaries, and a supermarket checkout worker.
  • Jurors have shown strong engagement during the trial, particularly focusing on testimonies from cooperating witnesses.
  • Key moments that received strong reactions from the jury include evidence of extravagant spending by Sam Bankman-Fried, his connections to high-profile individuals like Shaq and Tom Brady, and misusing investors' money for political contributions and personal expenses.
  • The defense may attempt to create a narrative emphasizing good intentions while downplaying their lack of controls and governance. They might highlight Sam's charismatic personality and claim he was caught up in an under-regulated field.

Charges and Defense Strategy:

  • Prosecution is focused on proving fraud charges related to diverting investor funds without authorization and misleading investors about financial conditions.
  • The defense strategy may involve claiming ignorance due to mental health issues or drug use (such as Adderall) affecting decision-making abilities. However, this has not been explicitly mentioned in court yet.
  • Bahamian authorities arresting Sam Bankman-Fried could limit some charges brought against him in the U.S., potentially resulting in only certain charges being considered.

Family Involvement:

  • Barbara Freed (Sam's mother) runs a nonprofit called Mind the Gap that funded progressive candidates through Alameda money. She requested donations be made through Nishad Singh to avoid suspicion.
  • Joe Bankman (Sam's father), known for helping low-income individuals with tax filing, was involved in Signal chats discussing fraudulent activities despite his reputation.

Effectiveness of Altruism Concept:

  • Effective altruism is a concept where individuals make significant amounts of money before using it to "save the world" through philanthropic efforts.
  • Although Sam claimed effective altruism influenced his actions, evidence shows misappropriation of funds rather than charitable contributions.
  • Prosecutors have not used the phrase "effective altruism" in court, focusing instead on proving fraud and misuse of funds.

Bahamian Extradition:

  • Sam Bankman-Fried's arrest by Bahamian authorities led to his extradition to the U.S.
  • The Bahamas argues that only charges existing at the time of extradition should be considered, potentially limiting some charges brought against him in the trial.

Recovery of Funds:

  • No mention has been made during the trial regarding whether funds misappropriated by Sam Bankman-Fried have been recovered.

Campaign Finance Charges and Chinese Bribery:

  • The campaign finance charges and Chinese bribery issues go beyond Sam Raichman Freed.
  • Evidence in the case includes a snapshot of FDX debtors' Amazon Web Services full cloud account on November 6, 2022, which marked the day when everything fell apart for FDT token and people fled the country.
  • Civil lawsuits have been filed against the parents of FDX debtors who took money from the fraud. John Ray, the bankruptcy trustee, is trying to recover as much money as possible through lawsuits.
  • There are other individuals and organizations that received investments from FTX or Bankman-Fried, such as Semaphore (a news blog) and Michael Givis. Efforts are being made to recover the ill-gotten gains, whether it's through returning the money or obtaining equity shares.

Trial Proceedings:

  • The trial is expected to last four to six weeks.
  • The government will be closing its case soon, with Thursday being an important date in this regard.
  • Defense attorneys have requested additional breaks but were denied by Judge Kaplan. They will start presenting their side after lunch on Thursday.
  • It is anticipated that Sam Bankman-Fried may choose to testify during his trial.

Southern District of New York (SDNY):

  • SDNY has a reputation for handling high-profile cases and setting examples with strong sentences.
  • Judges in SDNY exercise significant discretion in sentencing, which can lead to varying outcomes depending on individual judges.
  • Matthew Russell Lee expresses confidence in the justice system based on his experience covering cases at SDNY.