Week 3 of the ongoing FTX and Sam Bankman-Fried (SBF) trial has now come to an end, with proceedings now on pause until October 26th.
In this article, we’ll take you through how the third week of court proceedings concluded, what’s next in the 6-week case, and why FTX creditors are now more optimistic over the prospect of receiving their lost funds.
SBF Trial: Week 3 Antics
As previously reported, week 3 saw former FTX employee Nishad Singh take to stand to testify against his ex-roommate and friend - wherein he stated that he left the company after learning that Alameda Research owed $13 billion dollars to unbeknownst FTX users.
When it comes to discovering where such mass amount of funds disappeared to, jurors were shown spreadsheets and flow charts which detailed how billions of dollars were spent on endorsement deals with the likes of Tom Brady, Larry David, and the naming rights to the Miami Heat’s basketball arena.
Additionally, it was revealed that FTX user funds were used to purchase real estate, as well as fuel political donations that would’ve given FTX a helping hand in congressional matters.
Last week also saw FTX’s (former) top lawyer Can Sun take to stand to testify under a non-prosecution agreement. Here he stated that SBF had asked him to come up with ‘legal justifications’ as to why FTX had lost billions of user funds just four days before the exchange officially filed for bankruptcy.
Such demand of SBF came in wake of Apollo - an emergency investment fund that FTX was in talks with - reviewing the company’s dire financial statements and asking for an explanation.
Additionally - and in an interesting ploy from the defence side of things - SBF lawyers asked Judge Kaplan for an adjournment in the trial under the grounds of SBF wanting access to his Adderall prescription (i.e. a medication that he claimed he can’t ‘concentrate at the level he ordinarily would’ without). In response, Judge Kaplan denied the request while stating that he hadn’t observed any issue of such accord.
For some, such request has been seen as an effort to disrupt court proceedings under the premise that SBF isn’t able to properly participate in his defence (as he’s claiming that he doesn’t know what’s going on around him). In turn, this point of law could potentially lead to an appeal from the defence if an undesirable ruling is made.
On a more trivial note, Judge Kaplan was also able to demonstrate his notorious no-nonsense approach to court ongoings by calling it a ‘joke’ that Google custodian Corey Gaddis - a self-proclaimed ‘non metadata expert’ - was called to the stands to testify about the metadata of an in-question Google sheet.
The SBF Trial: What’s Next
As of now, the court is adjourned until Thursday 26th October. On such date, the prosecution will conclude its case after consulting almost 20 testifiers (spanning across FTX employees, customers, investors, government officials, and law enforcement agents).
On the defence side of things, it’s still unknown as to whether SBF’s attorneys Mark Cohen and Christian Everdell will present a case to defend their client against charges relating to the multi-billion dollar theft of FTX user funds. If yes, the defence’s presentation will commence on Thursday 26th October (i.e. the same day in which the prosecution ends theirs).
However as of now, Cohen and Everdell have had trouble defending SBF against crucial arguments and evidence put forwards by the likes of Caroline Ellison, Nishad Singh, Adam Yedidia, and Gary Wang (which all relate to their client instructing former FTX and Alameda Research execs to engage in unlawful activities).
FTX Creditors Breach 50c Mark
With regards to the most important people involved in the story - the FTX creditors that is - things are looking more and more optimistic when it comes to their chances of receiving a full recovery of funds.
This is due to confirmations that over $20 million worth of over-the-counter (OTC) trades of FTX creditor claims have been sold for between $0.52-$0.53.
In practice, what this signals is that the market currently expects over half of users’ assets to be recovered from within the multi-billion dollar fund retrieval process (however per experts, only the ‘largest and cleanest claims’ can expect to fetch these sort of prices).
Nonetheless, such momentum was gained in wake of Anthropic - an AI leader that received $580 million from FTX in an April 2022 Series B funding round - experiencing a substantial valuation hike in recent times (thanks to multi-billion dollar investments from the likes of Amazon).
Anthropic to raise from Google at 20-30B valuation, putting FTX's stake at 3-4.5B.
— FTX 2.0 Coalition (@AFTXcreditor) October 3, 2023
FTX customers now stand to be made whole. pic.twitter.com/Vy9mZc8bEl
In turn - and with its sights now set on a $30 billion valuation - many now tout FTX’s initial investment in the company to be worth between $3-$4.5 billion (a sum that could perhaps be substantial-enough to facilitate a full fund-recovery).
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This article is intended for educational purposes and is not financial advice.
