The trial of Sam Bankman-Fried will be a tale of two realities

3 October 2023 | Applicable law: US | 3 minute read

Sam Bankman-Fried, the founder of FTX, goes on trial in federal court in Manhattan beginning October 3, 2023, on multiple charges including wire fraud and conspiracies to commit wire fraud, securities fraud, commodity fraud, and money laundering. The government alleges that SBF defrauded customers, investors and lenders of FTX, which was once the world’s third largest crypto exchange, leading to billions of dollars of loss and FTX’s collapse in November 2022.  

In the government’s view, what appeared to be the best of times, was actually the worst of times for those that trusted SBF and FTX.  

The government will likely contend that this is a straight-forward fraud case – that Sam Bankman-Fried knew exactly what was going on at FTX and Alameda and lied to his customers, his lenders, and his investors to allow him to speculate and build a crypto empire.  FTX was certainly to all outward appearances highly successful and highly regarded, garnering support from some of the most sophisticated players in traditional finance as well as the crypto world. This tale is a familiar one; it seems like every decade or so a seemingly successful, highly regarded and influential business gets exposed as a fraud at the hands of bad actor, with lasting impacts on the operating environment of an industry. 

SBF will likely contend that mistakes may have been made but that he thought everything he was doing was lawful.

In contrast, SBF will likely contend that mistakes may have been made but that he thought everything he was doing was lawful in the relatively unregulated world of crypto, that he thought FTX and Alameda were allowed to handle customers assets the way they did, that they never intended to cheat anyone, and that if FTX's systems weren't working the way he told people they were, that's because he didn't know, not because he knew and lied.  (He'll also likely argue that the people who are cooperating against him either weren't telling him the truth or have changed their view of what they were doing and now say it was wrong because they can't face the enormous risk and cost of fighting the government.)   

Whichever story you believe, and whichever story is true, one potential implication is that SBF's shadow may loom even larger over the crypto market. It remains to be seen how big and how dark that shadow may be and whether it will spur change in a market lacking regulatory clarity and tiring of regulation by enforcement. 

The case will begin with jury selection on October 3.  We will be monitoring the case closely, particularly for its implications in the world of crypto and digital assets.

In the media

You can find attorneys in our crypto and white collar teams quoted on the topic across media.  Christopher LaVigne and Martin Auerbach are frequently sought out to comment on the biggest digital asset themes including how the trial of FTX founder Sam Bankman-Fried will proceed in New York in the next few weeks.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


Related experience

As a full-service law firm, we are able to provide advice and information about a wide range of other issues. Here are some related areas.

Join the club

We have lots more news and information that you'll find informative and useful. Let us know what you're interested in and we'll keep you up to date on the issues that matter to you.