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FTX Founder SBF’s Detained Drama: Laptop Access Puts a Twist in Crypto Trial

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Sam Bankman-Fried, the founder of the now-defunct crypto exchange FTX, who is currently in custody, has been granted access to a laptop to review crucial discovery materials, according to a recent statement from the U.S. Department of Justice. This development comes as Bankman-Fried prepares for his trial scheduled for early October.

In a letter submitted to Judge Lewis A. Kaplan, the Department of Justice outlined the terms of Bankman-Fried’s laptop access while detained at the Metropolitan Detention Center (MDC). Bankman-Fried can utilize an air-gapped laptop in the MDC’s legal visiting room from 8:00 a.m. to 7:00 p.m. on weekdays and from 8:00 a.m. to 3:30 p.m. on weekends and holidays.

The letter, dated August 30, disclosed that the defendant’s access to electronic discovery materials began with an air-gapped laptop on August 31. Initially, there were no reported issues with the laptop’s functionality, but subsequent days saw reduced review time due to operational constraints.

Furthermore, the MDC has approved using a second air-gapped laptop, though its acquisition depends on the defendant’s decision to purchase it. The defendant also possesses three Etched Hard Drives, provided promptly, ensuring minimal discovery delays.

In addition to the procedures involving Etched Hard Drives, FTX’s Bankman-Fried’s legal team can bring their own Counsel Hard Drives during visits, enabling them to upload and download materials from the defendant’s air-gapped computer without MDC staff involvement.

FTX’s SBF: Ongoing Request for Temporary Release

However, the request for temporary release has been a recurring theme in Bankman-Fried’s legal battle. His attorneys continue to advocate for his temporary release, citing concerns about the reliability of internet access and laptop battery life at the 500 Pearl Street cell block, where he can access the internet-enabled laptop. 

Bankman-Fried’s attorneys argue that previous attempts at work in the cell block were hindered by unreliable internet connectivity and inadequate battery life.

Nevertheless, the courtroom drama surrounding FTX’s Sam Bankman-Fried’s access to essential resources remains an evolving narrative, with legal teams on both sides fiercely debating the conditions of his detainment and access to discovery materials.

Related Reading | Crypto Conundrum Down Under: Australia’s Senate Rejects Digital Asset Regulation Bill

FTX Kingpin SBF’s Bail Battle Escalates, Prosecutors’ New Counter

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In a dramatic turn of events, Samuel Benjamin Bankman-Fried, famously known as SBF and the mastermind behind FTX, has been recently ordered to serve time behind bars after a judge revoked his bail application on charges of alleged witness tampering. Since then, the legal team representing the embattled co-founder has been fighting against his imprisonment.

But now, the Department of Justice [DOJ] prosecutors have delivered a resounding response to the assertions made in SBF’s appeal, affirming their stance on denying bail. They dismissed the appeal as devoid of merit, highlighting the looming specter of witness tampering and asserting that no conditions of release could guarantee the safety of these crucial witnesses.

Prosecutors forcefully argued that SBF’s transgressions went beyond a single instance of witness tampering. They accused him of not only attempting but also successfully engaging in such actions twice, brazenly flouting court orders. Consequently, they contended that, given his prior conduct during pre-trial proceedings, he was highly unlikely to comply with any conditions of release.

The first breach occurred when SBF attempted to contact witnesses in January of this year, a group that notably included the former General Counsel of FTX.US, a potential trial witness with legal representation.

However, it was the second, more widely publicized incident of alleged witness tampering that sent shockwaves through legal circles. This was the sensational leak of the personal journal belonging to SBF’s ex-girlfriend and former associate, Caroline Ellison, as exposed by The New York Times in July 2023. To add a layer of ignominy, SBF’s own legal counsel’s confirmation of his involvement in the press leak sealed the deal.

SBF Awaits A Tough Legal Battle

The prosecutors wasted no time in pinning the blame squarely on SBF, alleging that he secretly provided private and potentially damaging excerpts from Ellison’s journal with the intent to discredit her and possibly influence the jury’s perception when the trial commenced. This became the linchpin of their appeal to revoke SBF’s bail, a plea that had been granted on August 11.

Until his incarceration, the former FTX CEO had been out on bail secured by a staggering $250 million bond since December 2022. Meanwhile, his legal defenders staunchly maintained that their client’s communication with the press regarding Ellison was constitutionally protected under the First Amendment, setting the stage for a fierce legal battle.

FTX Ex-CEO SBF Trial Unveils Discovery Disputes & Trial Date Dilemma

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The legal battle surrounding former FTX CEO Sam Bankman-Fried (SBF) took an interesting turn in a series of exchanges that unfolded on Twitter. Lawyers representing SBF declined to request an alternate trial date despite concerns over preparation time. However, Judge Lewis Kaplan, presiding over the case, extended a limited window for such a request.

Judge Kaplan’s discussion, shared by Inner City Press, sheds light on the ongoing legal maneuvering. The discussion primarily revolved around SBF’s complaints concerning the availability of discovery documents, the strength of Internet connectivity during courthouse visits, and his desire to return to Palo Alto.

SBF’s lawyer asserted that the government had charged the case swiftly, resulting in late discovery document deliveries. The defense stressed their client’s limited access to these documents due to his incarceration. In response, Judge Kaplan questioned whether SBF’s team had formally requested additional time, to which the lawyer responded negatively.

The focus then shifted to the case’s specifics, including the code base from FTX and the defense’s expert witnesses. SBF’s lawyer clarified that the code base in question was bespoke, tailored to FTX’s architecture. The defense was also concerned about receiving Slack messages and Google documents from FTX debtors, which the prosecution was working to provide.

Deadline Looms For Trial Date For FTX’s SBF

Judge Kaplan addressed these concerns, indicating he would not preemptively exclude any evidence. He emphasized the need for clear reasoning if the defense sought a trial date extension. The judge revealed that the deadline for requesting a jury for an October 3 trial was approaching, thus urging prompt action if a postponement was desired.

The proceedings also delved into logistical matters, such as SBF’s access to documents and the Internet while in detention. The defense expressed dissatisfaction with the arrangements, pointing to issues with laptop battery life and Internet connectivity. 

The prosecution countered that SBF had ample document review and preparation opportunities, both through counsel visits and laptop access. Nevertheless, with these developments, the legal battle surrounding SBF’s trial continues to unfold, with potential implications for the broader cryptocurrency landscape.

Related Reading | Bitcoin ETF Odds Soar: 75% Chance In 2023, 95% By 2024, Predict Bloomberg Analysts

SBF’s Defense Gambit Backfired? Ex-GF’s Memo Becomes Prosecution’s Weapon

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In a mind-boggling twist, FTX kingpin Sam Bankman-Fried, or SBF, finds himself trapped in an impasse. U.S. prosecutors have unveiled their intention to employ the personal diary of Caroline Ellison, former CEO of Alameda Research, FTX’s sister trading firm, as a piece of evidence against the indicted founder. This unexpected turn has significantly altered the dynamics of SBF’s defense strategy.

The once-private relationship between SBF and Caroline Ellison has evolved into a focal point of the Department of Justice’s expanding case. In a filing dated August 14, submitted to the U.S. District Court for the Southern District of New York, prosecutors unveiled plans to release a collection of Ellison’s personal to-do lists and notes from her tenure at Alameda as crucial evidence.

Of particular interest is a section titled “Things Sam is Freaking Out About,” which contains pivotal exchanges between Bankman-Fried and Ellison discussing matters pertinent to SBF’s business anxieties. These conversations encompass fundraising initiatives, trading safeguards, and the adverse media attention stemming from the affiliation between Alameda and FTX.

Prosecutors asserted that these notes are not mere “inadmissible hearsay.” Instead, they emphasized that Ellison meticulously documented these exchanges to “memorialize the information provided to her” and to “guide her role within the alleged conspiracy.”

Last month, the U.S. Department of Justice [DOJ] sought an order restraining SBF and other involved parties following the publication of a New York Times article that revealed personal Google documents written by Ellison at the behest of the former FTX founder.

SBF Found Guilty Of Witness Tampering

Prosecutors accused Bankman-Fried of intentionally leaking his former girlfriend’s private diary entries to The New York Times in an attempt to shift blame onto her for the downfall of FTX.

Following U.S. District Court Judge Lewis Kaplan’s ruling, which found him guilty of attempting to influence witnesses, the embattled crypto billionaire was remanded in custody on August 11. Kaplan noted that there is probable cause to believe SBF tampered with witnesses on multiple occasions. His legal team has refuted the allegations.

Caroline Ellison, previously at the helm of Alameda Research, a hedge fund co-founded by SBF, had faced fraud charges herself and was expected to testify against Bankman-Fried in court. This complex narrative highlights the unforeseen turns that legal battles can take within the cryptocurrency realm.

BALD’s Wild Ride: 87% Slump in the Wake of 5-Million% Surge – Uncovering the SBF Involvement

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Over the weekend, a new cryptocurrency token named BALD gained significant attention, experiencing a rapid surge in value of nearly 4,849,900%. However, the excitement was short-lived as the creator of BALD removed 11,137 ETH liquidity (equivalent to approximately $20 million), leading to an abrupt 87% crash of the token’s value.

Crypto

In the aftermath, members of the crypto community began speculating that Sam Bankman-Fried, the founder of FTX, could be associated with the project. A blockchain securities and analytics firm, PeckShield, added fuel to the rumors by using the hashtag “SBF” in one of its recent tweets, highlighting that the FTX platform was one of the major exchanges used by the address to transfer the affected ETH.

As allegations spread, more people noticed similarities in sentence structures and language usage between the BALD deployer and SBF. The deployer was also reportedly the first voter on all SushiSwap proposals and the largest dYDx farmer. Additionally, there were claims that the Twitter handle of Serum, another project associated with SBF, was changed and used to promote BALD.

Adam Cochran, a prominent figure in the crypto space, shared his thoughts on Twitter, suggesting that SBF or someone connected to Alameda (SBF’s firm) might be involved. Cochran pointed out that only a few people had access to the Serum Twitter account, and apart from senior members of Alameda, most of them were not present during the time of Sushiswap votes. Consequently, he surmised that SBF might have deceived people once again.

Cryptocurrency Twitterverse Gathers Proof in Search of Transparency

Community members have been actively investigating the on-chain activities of developers, attempting to establish connections between the BALD deployer and SBF. This interest arose because the Ethereum wallet address associated with the BALD deployer received substantial funding from wallets linked to FTX and Alameda Research, both associated with SBF. Some have speculated that SBF might be attempting to recover his losses through this project.

It is essential to clarify that SBF is not currently in prison but is under house arrest at his parents’ residence in California while awaiting trial in October. At first glance, the claims made about SBF’s involvement may seem questionable because his bail conditions limit his internet usage. According to Tiffany Fong, he has been using a “flip phone without internet connection” since his bail conditions were revised in April. She also mentioned that SBF’s writing style includes double spaces between sentences, making the linguistic similarities used to connect him to BALD seem unlikely, as he doesn’t have access to Twitter.

In summary, some community members have been trying to link SBF to the BALD project based on on-chain funding connections, but the evidence presented may not hold up when considering SBF’s current situation and restricted internet access.

Even the analyst known as ‘Wolf Of All Streets’ shared the same view, referring to Crypto Twitter as “ridiculous.” Nevertheless, some individuals highlighted that SBF has extensive connections in various spheres, which keeps the door open for speculation.

FTX 2.0 Now Targets $71M From SBF’s Charitable Arms

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Continuing its fund recovery policy FTX has now sought to recoup more than $71 million from the philanthropic arm and other life science entities, as the latest court documents filed on July 19 revealed. SBF-led FTX and its sister firm, Alameda, donated several million dollars to these firms for Bankman-Fried’s personal gain, according to the legal team representing the insolvent crypto exchange.

Per the petition, transfers were made to life science firms like Lumen Bioscience Inc. and Platform Life Sciences Inc. under the guise of effective altruism, a theory that advocates giving income from wealthy people to those in need. However, the firm’s lawyers argued, the philanthropic arms’ ultimate goal was not to serve the most needy.

“While purporting to make these investments for altruistic purposes (i.e., pandemic prevention and preparedness), Bankman-Fried in fact pursued these transactions because he believed that doing so would generate goodwill and amass political capital and influence for himself,” the lawyers said in the filing.

The New York Metropolitan Museum of Art reportedly agreed to return $550,000 in donations it received from FTX.

This comes after a week when the firm moved the court to get back over $323 million from the then-Swiss Company DAAG, which rebranded to FTX Europe after it was bought by the former CEO. According to the Delaware court filing dated July 13, the acquisition did not add much to the exchange’s operations beyond gaining access to European regulators through the ownership of a local entity.

FTX Releases Names Of Interested Parties

FTX CEO John Ray III, who’s overseeing the company’s restructuring, officially initiated the process of reaching out to potential bidders in the exchange’s revival.

On June 23, it published the names of parties under the 363 Sale section of the US Bankruptcy Code that allows the sale of a company’s assets. Notable names in the 363 Sales Parties include Nasdaq, Ripple Labs, Galaxy Digital, BlackRock, Tribe Capital, Robinhood, NYDIG, and OKCoin.

Previously, the defunct exchange published its second report, detailing the mishandling of customer deposits by the former management team and the staggering $8.7 billion it owed to the exchange debtors. FTX Debtors plan to conduct the sale process in Q3 or Q4 of this year and select a “stalking horse bidder.”

FTX Legal Team Stake Claim On SBF-Acquired European Entity

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Lawyers for the bankrupt crypto exchange FTX are attempting to get back over $323 million from the then-Swiss Company DAAG, which rebranded to FTX Europe after it was bought by former CEO Sam Bankman-Fried. Attorneys argued that the acquisition did not add much to the exchange’s operations beyond gaining access to European regulators through the ownership of a local entity.

According to the Delaware court filing dated July 13, the plaintiffs, FTX Trading Ltd., and Maclaurin Investments Ltd. [owned by hedge fund Alameda Research], requested the court order the return of funds sent to the current leadership of the European wing: Patrick Gruhn, Robin Matzke, Brandon Williams, and Lorem Ipsum UG.

“FTX Insiders pursued the DAAG acquisition because they believed DAAG’s founders could provide access to European regulators that would allow it to obtain the necessary licenses for activities in the European Economic Area, and because they wanted to benefit Williams and Matzke, who had preexisting relationships with Bankman-Fried,” the filing said.

The legal team also claimed that the leadership of the rebranded company received excessive earn-out payments totaling nearly $100 million in connection with the purchase of K-DNA, a company that was later incorporated into FTX Europe and had already been granted EEA operating authorization for only €2 million.

FTX: Path To Recovery

Consequently, they requested that the court halt the payment of any outstanding sum to the FTX Europe leadership. According to the petition, the agreement was for more than $376 million, of which $52.5 million is the remaining obligation.

As earlier reported, the defunct crypto exchange under the new leadership is aiming to claw back over $700 million from former CEO Bankman-Fried’s investment firms. In the June 22 filing, the exchange named investment firms K5 Global, Mount Olympus Capital, SGN Albany Capital, and their affiliated entities for aiding and abetting SBF.

FTX’s new CEO, John Ray III, has also initiated the process of reaching out to potential participants in the exchange’s revival. According to a report by the WSJ, the bankrupt trading firm is negotiating with investors about supporting a potential reboot through setups like a joint venture, citing people familiar with the conversations.

FTX Files Suit To Recoup $800M From SBF’s Benefactors

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FTX under the new leadership is seeking over $700 million from former CEO Bankman-Fried’s investment firms.

In the June 22 filing, the exchange named investment firm K5 Global, Mount Olympus Capital, SGN Albany Capital, and their affiliated entities for aiding and abetting SBF.

Bryan Baum and Michael Kives, co-owners of K5 Global and a former Hilary Clinton adviser, were accused of being SBF’s “profligate patron” and receiving monetary gifts from the latter as part of an ongoing plot to fraudulently use corporate resources for personal advantage.

According to a complaint filed in Wilmington, Delaware, bankruptcy court, Bankman-Fried transferred $700 million to K5 businesses in 2022 and used K5’s high-profile connections to secure rescue finance just before FTX filed for bankruptcy in November 2022.

In response to the allegations, K5 said that the lawsuit was without merit. Referring Bankman-Fried with his initials, Elizabeth Ashford, a spokeswoman said in a written statement.

“K5 was under the impression – like many others – that SBF was completely legitimate, and that they were entering into a fair, long-term, and mutually beneficial business relationship.”

The new management at FTX has amassed almost $7 billion in assets since the bankruptcy filing, which they can use to reimburse consumers whose funds were frozen when the crypto exchange crashed.

Sam Bankman-Fried a.k.a SBF’s litigation saw many twists and turns.

FTX- SBF’s Trial Split Up

The former FTX CEO would now have to appear in two separate trials, one on the original Oct 2 and the second on March 11, 2024, according to a June 15 ruling from United States District Court Judge Lewis Kaplan.

SBF has pleaded not guilty to all 13 accusations against him and is currently awaiting trial in court, which is set for October. Now, five of the charges will be tried separately on March 11, 2024, with the remaining three on the original date.

The most recent detour comes after a court filing on June 14 in which DoJ prosecutors informed Judge Kaplan in a letter that they would try Bankman-Fried on the eight accusations they brought against him in December 2022.

The eight counts that were imposed in the original grand jury indictment, included violations of campaign finance laws, securities fraud, money laundering, and conspiracy to commit wire fraud against lenders and customers.

SBF Case Update: New Twist In Bahamas Court Ruling

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SBF’s bid to context the additional charges imposed by the DOJ has been bolstered by the latest ruling of the Bahamas Supreme Court.

“Leave is granted to the claimant to commence proceedings for judicial review. All of the grounds advanced by the claimants disclose arguable claims with a real prospect of success,” Judge Loren Klein wrote in the court order.

In other words, the court has temporarily restrained the government from approving the addition of further charges to Bankman-Fried’s US indictment.

It needs to be told that SBF lawyers sought leave from the court to apply for judicial review of the orders.

The disgraced founder is currently locked up in the US and awaiting trial set in Oct after pleading not guilty. 

The high-profile case has taken a new turn as a result of Bahmas’ court ruling, which also creates prospective trial delays and increases uncertainty in the legal process.

The aforementioned issues were recently brought up by SBF’s lead attorney Mark Cohen, who said that the Bahamas legal proceedings could take “months or years” longer than expected, delaying the October U.S. trial date or leaving him with little time to build a defense against the additional allegations.

Bankman-Fried’s attorneys are contesting the additional charges levied against him in the U.S. which they argue breached the extradition agreement with the Caribbean nation.

SBF Lawyers Accused US Gov Of Not Following Extradition Norms

The government is believed to have moved swiftly to indict Mr. Bankman-Fried on December 9, 2022, less than a month after FTX’s bankruptcy and before it had even been granted, by skipping over the regular civil regulatory procedures, according to the 12th June filing.

Eight counts were imposed in the grand jury indictment, including violations of campaign finance laws, securities fraud, money laundering, and conspiracy to commit wire fraud against lenders and customers.

After the Bahamas agreed to extradite on seven of the original eight charges, the Government ignored and decided to prosecute on all eight charges, the filing alleged.

The Manhattan US attorney’s office, which is in charge of prosecuting Bankman-Fried, has not yet made any remarks regarding the Bahamian court’s ruling.

In response to SBF’s claims in the US court, prosecutors had previously suggested that they would dismiss the extra charges if the Bahamas’ permission was not secured.

SBF Could Face Delays Due To US Gov’s Action-Lawyers

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Former FTX CEO Sam Bankman-Fried a.k.a SBF is awaiting his court trial slated on Oct after pleading not guilty. However, lawyers representing SBF have expressed concern that the legal proceedings might be delayed by “months or years” after the latest action.

According to the 12th June filing, the government allegedly skipped over the customary civil regulatory procedures and instead moved quickly to indict Mr. Bankman-Fried on December 9, 2022, less than a month after FTX’s bankruptcy and before it had even been given.

Last year, Bankman was arrested in the Bahamas after U.S. prosecutors filed criminal charges.

Eight counts were included in the grand jury indictment, including violations of campaign finance laws, securities fraud, money laundering, and conspiracy to commit wire fraud against lenders and customers.

After Bahamas agreed to extradite on seven of the original eight charges, the Government ignored and decided to prosecute on all eight charges, the filing alleged.

In addition, US authorities brought six more accusations without first requesting [or receiving] The Bahamas’ permission, as required by the extradition agreement.

Prior to the latest filing, the legal team of the former FTX CEO submitted documents on May 8th, requesting the court to drop 10 out of 13 criminal counts arguing that the government “classic[ally] rushed to judgment.”

The three exempted charges are conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering.

Attorneys claimed that additional allegations against Bankman-Fried in a supplemental indictment breach the extradition agreement with the Bahamas.

Crypto researcher Molly White who first broke the news noted that “at least part of it seems to come down to the fact that additional charges were added after SBF’s extradition agreement was made.”

US Prosecutors Slammed SBF’s Dismissal Plea

The then filling also alleged that FTX’s new CEO John Ray III and his team were compiling evidence on behalf of the prosecution.

On the other hand, US prosecutors have criticized the arguments as “meritless,” in response to the dismissal plea, and insisted that Bankman-Fried’s alleged misbehavior clearly violates the relevant statutes.

According to the source, US District Judge Lewis Kaplan will hear the case’s oral arguments on June 15.

The ousted CEO-led FTX and sister firm Alameda collapsed in November after concerns over their balance sheet sparked a bank run leading to their bankruptcy.