Sam Bankman-Fried Breaks Silence: ‘Haunted’ by FTX Collapse, Vows to Appeal and Criticizes Legal Process

April 1, 2024 Bitcoin.com

The Alameda gap and crypto liquidity crisis explained

November 7, 2023 Coin Telegraph

Alameda

The November 2022 Alameda gap exposed vulnerabilities in the crypto market, shedding light on FTX and Alameda Research’s fraud.

FTX collapse: Unraveling the cryptocurrency crisis of November 2022

In November 2022, the cryptocurrency world was rocked by the collapse of FTX, one of the largest cryptocurrency exchanges. The collapse was triggered by a liquidity crisis at FTX, which was caused by a combination of factors, including mismanagement of customer funds and risky trading practices by FTX’s sister company, Alameda Research.

The collapse of FTX had a ripple effect across the crypto market, causing a sharp decline in cryptocurrency prices, a drain of liquidity and a loss of confidence in the crypto industry. It also raised serious questions about the safety and security of customer funds on cryptocurrency exchanges. The crypto industry’s lack of risk management standards was exposed through the crisis.

FTX has filed for bankruptcy, revealing a debt of over $3 billion to its creditors. Additionally, the exchange is unable to locate approximately $8.9 billion worth of customer assets. The exact amount of money lost by customers is difficult to determine, as some customers may have been able to withdraw their funds before the exchange suspended withdrawals. However, it is estimated that customers lost billions of dollars in the FTX crash.

The collapse of FTX caused a sharp decline in cryptocurrency prices. The total market capitalization of the crypto market fell from over $1 trillion in November 2022 to under $800 billion in December 2022. This represents a market collapse of over $200 billion in dollar terms.

Sam Bankman-Fried’s strategic path

SBF saw an opportunity to create wealth at an unparalleled pace by combining the ICO method of token creation and subsequent leveraging.

SBF saw an opportunity to profit by creating a new cryptocurrency exchange that would exploit the shortcomings of existing exchanges. Bankman-Fried began by setting up a quantitative trading firm called Alameda Research.

Alameda Research used sophisticated algorithms to trade cryptocurrencies on a variety of exchanges. Alameda Research was very successful, and it quickly became one of the largest cryptocurrency traders in the world.

In 2019, Bankman-Fried launched FTX, a cryptocurrency exchange designed to be more user-friendly and efficient than existing exchanges. FTX also offered a number of features that were not available on other exchanges, such as margin trading and derivatives trading. However, none of the regulatory controls typically needed by mainstream financial services trading platforms were addressed.

Relationship between FTX and Alameda Research

FTX and Alameda Research were closely linked. Bankman-Fried and Caroline Ellison were the CEOs of FTX and Alameda Research respectively. However, Bankman-Fried controlled a majority of the shares in both companies. Alameda Research also used FTX as its primary exchange.

The close relationship between FTX and Alameda Research allowed Bankman-Fried to engage in a variety of fraudulent activities, including:

Misappropriating customer funds: Bankman-Fried transferred customer funds from FTX to Alameda Research without the customer’s consent. He used these funds to cover Alameda Research’s losses and to fund his own lavish lifestyle.
Manipulating the cryptocurrency market: Alameda Research used its large trading volume to manipulate the prices of cryptocurrencies on FTX. This allowed Bankman-Fried to profit from insider trading.
Offering fraudulent financial products: FTX, under Bankman-Fried’s leadership, offered unregulated financial products like margin and derivatives trading. This lack of oversight allowed him to defraud customers by selling these products without disclosing the associated risks.

FTX scam and Alameda gap unveiled

The scam began to unravel in November 2022 when it was revealed that Alameda Research held a large position in FTT, the native token of FTX.

The report sparked a sell-off of FTX Token (FTT), which caused the token’s price to plummet. It also raised concerns about the financial health of Alameda Research and FTX. This led to a liquidity crisis at FTX, as customers rushed to withdraw their funds from the exchange.

FTX was unable to meet the withdrawal demands, and it was forced to suspend withdrawals. FTX also filed for bankruptcy on Nov. 11, 2022. The collapse of FTX had a devastating impact on the crypto market.

In November, a significant decrease in liquidity within the crypto market was coined as the “Alameda gap” by blockchain data firm Kaiko. This term emerged due to the notable role played by Alameda Research, the largest market maker during that period.

The Alameda Gap represented a substantial decline in available liquidity, impacting trading volumes and market stability. This phenomenon underscored the influence of major market participants and highlighted the intricate dynamics that govern cryptocurrency markets.

While the FTX episode may have been the last domino to fall in a series of bankruptcies that were filed during 2022, it was easily the biggest event of the year, and it put the industry under a legal and regulatory microscope.

The Bankman-Fried trial

SBF was arrested in the Bahamas on Dec. 12, 2022, after United States prosecutors filed criminal charges against him. He was extradited to the U.S. in January 2023 and went on trial in October 2023.

The arrest and trial of SBF was a major development in the crypto industry. It was the first time that a major crypto founder had been arrested and tried on criminal charges. Bankman-Fried was charged with seven counts of fraud and conspiracy.

The key witnesses for the prosecution were:

Caroline Ellison, Bankman-Fried’s ex-girlfriend and the former CEO of Alameda Research
Nishad Singh, former FTX engineering director
Gary Wang, co-founder of FTX

Ellison, Singh and Wang all pleaded guilty to multiple charges and cooperated with the prosecution. They testified that Bankman-Fried knowingly misled investors and customers about the financial health of FTX and Alameda Research. They also testified that Bankman-Fried used FTX customer funds to cover losses at Alameda Research and to fund his own lavish lifestyle.

Bankman-Fried was found guilty of all seven charges on Nov. 2, 2023. He faces a maximum of 115 years in prison. Bankman-Fried denied all of the charges against him. He said that he made mistakes but that he did not commit any crimes.

The seven charges against Sam Bankman-Fried

Post-FTX reforms in the cryptocurrency industry

There is often a silver lining with black swan events. A black swan event is one that is impossible to predict and has severe consequences. In the wake of the FTX and Alameda Research scam, several things have gained momentum, and the industry has focused on getting itself regulated. Across the world, regulators and crypto firms have worked collaboratively and consciously to protect investors.

The following are some notable developments in the crypto industry post the FTX crisis:

Increased regulation: Governments worldwide have started to develop and implement comprehensive regulations for the crypto industry. These regulations would focus on protecting investors and preventing fraud.
Transparency: Cryptocurrency exchanges have come forward and offered transparency around their operations and financial condition through proper documentation and risk management practices. This helps investors make informed decisions about where to invest their money.
Audits: Cryptocurrency exchanges are being regularly audited by independent auditors. This helps to ensure that the exchanges are operating honestly and that customer funds are safe.

Investors also need to be vigilant and do their own research before participating in any cryptocurrency exchange-related activities. Investors should look for exchanges that are regulated, transparent and have a good reputation.

Secret Alameda recording reveals exact moment staff learned about FTX deposits

October 13, 2023 Coin Telegraph

Alameda Research

A 75-minute recording, obtained by Cointelegraph, shows the exact moment former Alameda Research CEO Caroline Ellison told employees about their use of FTX customer deposits.

A 75-minute secretly recorded audio clip of Caroline Ellison has revealed the exact moment 15 former Alameda Research staff found out the hedge fund was “borrowing” user funds from FTX.

The full-length recording, obtained by Cointelegraph, provides fresh insights into the palpable tension felt by Ellison and Alameda staff in the lead-up to FTX’s collapse.

“Alameda was kind of borrowing a bunch of money via open-term loans and using that to make various illiquid investments. So like a bunch of FTX and FTX US equity [...] Most of Alameda's loans got called in in order to meet those recalls,” Ellison explained during an all-hands meeting in Hong Kong on Nov. 9, 2022.

“We ended up like borrowing a bunch of funds from FTX, which led to FTX having a shortfall in user funds.”

“[FTX] basically always allowed Alameda to borrow users’ funds,” she added, speaking to the 15 or so staff in the meeting.

Select segments of the audio recording of the meeting were also played before the court on the eighth day of Sam Bankman-Fried’s criminal trial on Oct. 12, which was part of a witness testimony from Christian Drappi, a former software engineer at Alameda.

Drappi’s appearance on the witness stand came immediately following nearly three days of Ellison’s testimony. It is understood that before the meeting, Drappi and many other Alameda employees had no idea that the hedge fund had allegedly been using FTX customer deposits to prop up its trading activity.

In the recording, Drappi is also overheard asking Ellison when she became aware that FTX user deposits were being misused by Alameda, and who else at the company had known about it.

Initially Ellison flinched away from answering, but Drappi pressed again:

“I’m sure this wasn’t, like, a YOLO thing, right?”

According to court reporting from the trial, the playback of this audio led to one of the more humorous moments in court, where Drappi had to explain the term “YOLO” to everyone in attendance, saying that he wanted Ellison to confirm that the use of FTX deposits hadn’t just been a “spontaneous” decision.

In his testimony, Drappi also described Ellison’s conduct at the meeting as “sunken” and didn’t display much in the way of confidence to Alameda employees. He said that he was “stunned” to learn about the extent of the relationship between FTX and Alameda, and he quit the next day.

Speaking to Cointelegraph, Alameda Research engineer Aditya Baradwaj, who was also present at the meeting said the room was “extremely tense,” with Ellison surfacing a wealth of new information that had “never been discussed internally” — including the later-abandoned acquisition of FTX by its then-largest competitor Binance.

“It became pretty clear that there was no future for the company and that we all had to leave. And we did that right after,” said Baradwaj.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

FTX used Python code to fake its insurance fund figure: Gary Wang

October 9, 2023 Coin Telegraph

Coin Telegraph

FTX’s so-called “Backstop Fund” figure was a big lie, according to the former chief technology officer of the crypto exchange

Crypto exchange FTX used hidden Python code to misrepresent the value of its insurance fund — a pool of funds meant to prevent user losses during huge liquidation events — according to testimony from FTX co-founder Gary Wang.

In a damning new testimony on Oct. 6, FTX's former chief technology officer, Gary Wang, said that FTX’s so-called $100 million insurance fund in 2021 was actually fabricated, and also never actually contained any of the exchanges’ FTX tokens (FTT) as claimed.

Instead, the figure shown to the public was calculated by multiplying the daily trading volume of the FTX Token by a random number close to 7,500.

The 5.25 million FTT we put in our insurance fund in 2019 now makes the fund worth over 100 million USDhttps://t.co/tMYgJOAdqI pic.twitter.com/vQDkmkufD2
— FTX (@FTX_Official) February 14, 2021

When the prosecution surfaced the above tweet — among other public statements of its value — and asked Wang whether this amount was accurate he replied with a single word: “No.”

“For one, there is no FTT in the insurance fund. It's just the USD number. And, two, the number listed here does not match what was in the database.”

An exhibit in the Oct. 6 trial shows the alleged code used to generate the size of the so-called "Backstop Fund” or public insurance fund.

From yesterday's exhibits in US v. Sam Bankman-Fried:

The prosecution shows that the "insurance fund" that FTX bragged about was fake, and just calculated by multiplying daily trading volume by a random number around 7500 pic.twitter.com/EDiVPOHODP
— Molly White (@molly0xFFF) October 7, 2023

FTX's insurance fund was designed to protect user losses in case of huge, sudden market movements and its value was often touted on its website and social media.

According to Wang’s testimony, however, the amount contained within the fund was often insufficient to cover these losses.

For example, in 2021, a trader was able to exploit a bug in FTX's margin system to take an outsized position in MobileCoin, which resulted in a loss to the tune of hundreds of millions dollars for FTX, according to Wang.

When Bankman-Fried realized that the insurance fund had all but been exhausted, Wang said he was told to make Alameda “take on” the loss. This was supposedly in an attempt to hide the loss, as Alameda’s balance sheets were more private than those of FTX.

In addition to revealing the allegedly fraudulent nature of FTX’s insurance fund, Wang claimed that he and Nishad Singh were prompted by Bankman-Fried to implement an “allow_negative” balance feature in the code at FTX, which allowed Alameda Research to trade with near-unlimited liquidity on the crypto exchange.

On Oct. 5 Wang — who has already pleaded guilty to all charges pressed against him — admitted to committing wire fraud, commodities fraud and securities fraud with Bankman-Fried, former Alameda Research CEO Caroline Ellison and former-FTX director of engineering Nishad Singh.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

SBF was ‘very resistant’ to investors on FTX board: Paradigm co-founder

October 6, 2023 Coin Telegraph

Coin Telegraph

Matt Huang said he was led to believe that Alameda Research was not being provided any special treatment by FTX.

Sam Bankman-Fried was “very resistant” to having investors join the board of directors at FTX, claims Matthew Huang, the co-founder and managing partner of crypto investment firm Paradigm.

The sudden collapse of FTX saw more than a few investors burned, with Paradigm joining a number of venture capital firms including Sequoia, Temasek and BlackRock in funding the rise of the now-bankrupt crypto exchange.

Testifying on the third day of Bankman-Fried’s trial in a New York Federal Court, Huang claimed Bankman-Fried believed having investors on FTX's board of directors wouldn’t bring much to the table.

Huang engaged in a handful of conversations with Bankman-Fried ahead of Paradigm making a $125 million investment in the exchange’s staggering $900 million Series B funding round it closed in July 2021.

Huang admitted to not conducting enough due diligence and that he relied too heavily on information supplied by Bankman-Fried.

Despite being concerned by the lack of formal structure at FTX and its potential entanglement with its sister hedge fund Alameda Research, Huang said investors were lured in by the rapid expansion of FTX's market share in the crypto industry.

Still, Huang noted he and other investors at Paradigm were concerned that Bankman-Fried may have been spending more time working on Alameda instead of FTX, a distraction that would have been at the expense of Paradigm’s investment.

Additionally, Huang noted there were concerns that Alameda may have been receiving preferential treatment from FTX. If these concerns turned out to be true Huang said he was fearful of the reputation damage it may inflict on the company.

Huang said he was led to believe by Bankman-Fried that Alameda was not being provided with any privileged treatment by FTX. The same day, FTX co-founder Gary Wang testified that Alameda was given access to a near-unlimited flow of capital from the exchange.

Additionally, Huang said he had no knowledge of the alleged commingling of funds between FTX and Alameda Research.

The prosecution asked Huang if his decision to invest in FTX would’ve changed if he’d been told the exchange was allegedly using customer deposits for investment purposes.

“Yes,” Huang replied. “It's generally understood that customer deposits are sacred.”

Magazine: Blockchain detectives — Mt. Gox collapse saw birth of Chainalysis

Judge Shoots Down Disgraced FTX Founder Sam Bankman-Fried’s New Request for Pre-Trial Prison Release

September 29, 2023 The Daily Hodl

How long could Sam Bankman-Fried go to jail for?

September 29, 2023 Coin Telegraph

Coin Telegraph

“I think he’ll get the maximum sentence” — one lawyer predicts the former FTX CEO could look at life behind bars if convicted of all seven charges.

FTX founder Sam Bankman-Fried, once described as the “golden boy” of crypto, is set to stare down a jury next week for his role in the collapse of his $32 billion crypto exchange.

After a jury selection process on Oct. 3, the trial begins in earnest on Oct. 4, with Bankman-Fried staring down seven charges. If found guilty on all counts, he faces a maximum sentence of 115 years in prison.

However, the judge won't likely go easy on him, crypto lawyers tell Cointelegraph.

Here's a first look at the calendar for SBF's criminal trial this October.

The former CEO of FTX has plead not guilty to all charges brought against him.https://t.co/xRA27iUwGJ pic.twitter.com/RqMJErDPMW
— Cointelegraph (@Cointelegraph) September 28, 2023

In mid-November last year, Bankman-Fried suffered one of the most rapid and public reputational declines of all time, when his crypto exchange and its sister hedge fund Alameda Research collapsed and filed for bankruptcy, leaving a $10 billion hole in its wake.

Life behind bars?

Now less than a week out from the trial, Michael Kanovitz, partner at Loevy & Loevy law firm, told Cointelegraph that things don’t look particularly good for Bankman-Fried.

He predicts that if the government finds him guilty of committing fraud, he’s likely looking at spending the rest of his life behind bars.

“If he’s found guilty, I think he will get the maximum sentence.”

Kanovitz explained that courts look mainly at the severity of the crime and how the defendant behaved during the judicial process when handing down a sentence.

“If the government can prove he knowingly stole billions of dollars and destroyed documents to cover it up, that pushes the sentence toward the high end of the range,” he said.

WSJ called SBF a savior... ‍♂️ pic.twitter.com/ecNanSREIP
— CZ Binance (@cz_binance) September 26, 2023

Kanovitz also noted that courts reserve some discretion to be lenient during sentencing if the defendant “behaves themself” before the court. However, Kanovtiz believes Bankman-Fried hasn't been doing that.

“SBF hasn’t done himself any favors here, as the court already found cause to believe that he was tampering with witnesses.”

“That’s very bad. Also, there is not a lot of ‘mitigation’ going the other way. He did donate to charity, but they don’t give you credit for being charitable with other people’s money,” Kanovtiz said.

Slightly less resolute than Kanovitz, Jeremy Hogan, Partner at Hogan & Hogan told Cointelegraph that he predicts that while Bankman-Fried may not get the maximum sentence, he’s almost certainly spending a considerable period in jail.

“SBF is going to prison for quite some time. But, I don’t know enough about it to get into details. Just a long time — more than 10 years.”

Breaking down the charges

Bankman-Fried will face a total of seven fraud charges. The burden of proof is carried by the government, which must prove beyond reasonable doubt that Bankman-Fried is guilty of the charges pressed against him, including:

Committing wire fraud on FTX customers
Conspiring to commit wire fraud on FTX customers
Committing wire fraud on Alameda Research lenders
Conspiring to commit wire fraud on Alameda Research lenders
Conspiring to commit securities fraud against FTX investors
Conspiring to commit [commodities?] fraud against FTX customers
Conspiring to commit money laundering to hide the proceeds of wire fraud on FTX customers

Of these charges, only two — committing wire fraud on FTX customers and Alameda Research lenders — are “substantive,” meaning that the prosecution must prove that Bankman-Fried committed them.

The remaining charges are “conspiracy” allegations, which mean that the prosecution will have to prove that Bankman-Fried planned to commit these crimes with at least one other person.

UPDATE: SBF loses appeal to get out of prison temporarily to prepare for his trial. Jury selection begins OCT 3rd. Mark your calendars and conserve your chi. October will be a big month. pic.twitter.com/fhl6H31hZz
— Autism Capital (@AutismCapital) September 28, 2023

Kanovitz explained that government prosecutors are likely aware that they won’t be able to prove that Bankman-Fried was personally involved in every aspect of the FTX and Alameda violations, which is where the conspiracy charges come in.

However, if the prosecution can prove the conspiracy allegations, Bankman-Fried will be on the hook for the full brunt of the charges, he said.

“Whatever actions others took to achieve those illegal goals, the law treats it as if Bankman-Fried had done those things himself,” Kanovitz said.

SBF’s likely defense

Commercial litigator Joe Carlasare argues that Bankman-Fried’s lawyers are already running a “distraction and confusion playbook.”

“The defense will likely challenge the depiction of SBF as the central figure and instead portray him as a scapegoat, influenced by those around him who have already pleaded guilty.”

“I suspect his lawyers will highlight the quirky and eccentric aspects of SBF’s personality to depict him as easily influenced, immature, and impressionable,” Carlasare added.

1) What
— SBF (@SBF_FTX) November 14, 2022

Similarly, Kanovtiz said that the defense will seek to wrap SBF in a cloak of incompetence and uncertainty, by claiming that the other major custodians were doing similar things to FTX and that rules governing crypto were so unclear that he couldn’t knowingly violate them.

“He’ll bring forward evidence that other major crypto custodians were doing essentially the same thing and so he thought it was ok, which is the legal equivalent of telling the teacher ‘but CZ was doing it too!’"

Ultimately, however, Kanovitz predicts that these defenses will fall short, regardless of whether there are shadows of truth contained within them.

“How are you going to convince a jury of regular people that a man who built a multibillion-dollar fortune for himself was merely a bumbler when it came to taking care of other people’s money?”

“In that sense, he’ll be a victim of his own success.”

Deposit risk: What do crypto exchanges really do with your money?

Sam Bankman-Fried’s political donations can be surfaced in trial, rules judge

September 27, 2023 Coin Telegraph

Coin Telegraph

Despite campaign finance charges being dropped in July, the prosecution has been granted permission to present evidence of Bankman-Fried’s political donations in his upcoming fraud trial.

Prosecutors from the United States Department of Justice will be allowed to surface the details of Sam Bankman-Fried’s political donations as the evidence is directly relevant to his fraud charges, ruled U.S. District Judge Lewis Kaplan.

The decision was part of a series of rulings made by Kaplan in a 16-page pretrial order on Sept. 26, where he cleared up which evidence would be admissible in court during the FTX founders’ fraud trial, currently scheduled to begin on Oct. 3.

Federal prosecutors initially charged Bankman-Fried with conspiring to break United States campaign finance laws, as well as seven other fraud and conspiracy charges — however, later dropped the charges as part of an extradition agreement with the Bahamas.

"Evidence that the defendant spent FTX customer funds on political contributions is direct evidence of the wire fraud scheme because it is relevant to establishing the defendant's motive and allegedly fraudulent intent.”

In addition to allowing discussion of Bankman-Fried’s campaign donations, Kaplan also approved the prosecution’s motion to bring forward evidence that details Bankman-Fried’s alleged role in the creation of the FTX Token (FTT), and the ways in which he allegedly directed Alameda Research and its then-CEO Caroline Ellison to manipulate the price of the token.

*Judge Kaplan’s ruling on Bankman-Fried’s political donation evidence. Source: CourtListener*

"The alleged manipulation of the cryptocurrency tokens, which resulted in an alleged manipulation of Alameda’s balance sheet, was an act 'done in furtherance of the alleged conspiracy' and therefore is considered 'part of the very act charged,’” wrote Kaplan.

“Moreover, defendant’s alleged directive to Ms. Ellison to manipulate the price of FTT is direct evidence of their “relationship of mutual trust.” The probative value of this evidence outweighs any risk of unfair prejudice. It is admissible,” Kaplan concluded.

While Kaplan approved many submissions of evidence for the DOJ, he also approved Bankman-Fried’s lawyers to question government witnesses about their recreational drug use, as long as they provided prior notice to the court.

Government witnesses include Caroline Ellison, former FTX engineer Nishad Singh and FTX co-founder Gary Wang.

Kaplan also denied the DoJ's motions to block the defense from cross-examining witnesses on certain “privileged” issues. Additionally, he ruled that Bankman-Fried would not be able to discuss any details of his pre-trial detention, family background, wealth, or age before a jury.

Big Questions: What’s with all the crypto deaths?

Toughen up. Mt. Gox’s ex-CEO only had a ‘little calculator’ to prepare for trial

September 14, 2023 Coin Telegraph

Coin Telegraph

Mark Karpelès was seemingly drawing parallels to Sam Bankman-Fried's recent antics, claiming to have gotten through 20,000 pages of evidence in pre-trial detention with only a "simple calculator."

Mark Karpelès, the former CEO of the collapsed exchange Mt. Gox, seems to have little in the way of sympathy for former FTX CEO Sam Bankman-Fried, who’s been trying to get released from prison to prepare for his upcoming trial, citing poor internet.

“When I was arrested back in 2015, the most computing power I got was a simple calculator (+-*/√),” Karpelès wrote in a Sept. 13 post on X (formerly known as Twitter).

Karpeles was arrested on two separate occasions in 2015 for the alleged misappropriation of nearly $3 million of Mt. Gox customer funds.

When I was arrested back in 2015, the most computing power I got was a simple calculator (+-*/√). Had 20000 pages of evidence including over 5000 pages of accounting. Calculation I did at the time helped me to earn release under bail and eventually be cleared of all embezzlement…
— Mark Karpelès (@MagicalTux) September 13, 2023

Karpelès eventually earned release under bail using a trusty “little calculator” he bought from the prison commissary and was eventually cleared of all embezzlement and breach of trust charges.

“I spent a total of 11 months and 15 days in pre-trial detention, and didn't have access to any of the evidence until about 7 to 8 months in,” he said.

By using supplies he’d gotten from the jail's store, Karpelès used folders and stickers to create an index of all the evidence he’d been sent by his legal counsel, which was all squeezed into a very complex eight-page file, he said.

Karpelès said he was even initially going to brave it with an abacus — an ancient counting tool that uses sliding beads to add and subtract — which was the only item listed that could assist with calculations. Luckily, a prison guard told him that he could use a calculator for accounting cases and thus spared him the headache.

pic.twitter.com/XuNzAdBvsI
— Mark Karpelès (@MagicalTux) September 14, 2023

“I spent around $120 to buy the best calculator they had, which could do additions, subtractions, multiplications and divisions, square roots for some reason, and had buttons to add/remove consumption tax,” he explained.

Finally, four years after his initial arrest in August 2015, Karpelès was said he was cleared of all embezzlement and breach of trust charges, “all thanks to that little calculator” and “of course the tremendous work” done by his lawyers.

Karpelès’ comments come days after lawyers for Bankman-Fried filed a request to have him released from prison, claiming that his poor internet access was a significant impediment to the preparation for the upcoming trial.

District Court judge Lewis Kaplan denied the request for temporary release on Sept. 12, declaring that poor internet access wasn't sufficient grounds for release.

Bankman-Fried currently faces 12 criminal charges, which will be spread across two trials scheduled to begin on Oct. 2, 2023, and March 11, 2024. He has pleaded not guilty to all counts.

Big Questions: What’s with all the crypto deaths?

Sam Bankman-Fried is low on meds, living on $3 peanut butter in prison

August 23, 2023 Coin Telegraph

Sam Bankman-Fried is low on meds, living on peanut butter in prison

Coin Telegraph

Lawyers representing the former FTX CEO say he's being served a “flesh diet” in prison even though he's vegan, and has been subsisting on bread, water and peanut butter.

FTX founder Sam Bankman-Fried has seemingly been doing it tough behind bars, eating only bread with peanut butter to accommodate his vegan diet, while exhausting his supply of prescription medication.

In the same hearing where Bankman-Fried pleaded not guilty to seven fraud-related charges, Bankman-Fried’s lawyers pleaded for the former FTX CEO to receive better treatment inside Brooklyn’s notorious Metropolitan Detention Center (MDC), according to an Aug. 22 transcript shared by the Inner City Press.

Bankman-Fried’s attorneys claimed that due to the lack of vegan options provided by the prison, he had been forced to subsist on a diet of bread, peanut butter and water. The former FTX boss refused to eat the “flesh diet” being served at the MDC.

Mark Cohen: They are serving him a flesh diet. He is only eating bread and water, and sometimes peanut butter. This is one of the most complex cases in this courthouse. This is outrageous and it needs to be remedied.
Judge Netburn: I will look into this, today
— Inner City Press (@innercitypress) August 22, 2023

Bankman-Fried’s attorney, Mark Cohen, noted that his client hadn’t received his ADHD medication since arriving in prison and was “fearful” they would run out.

“My client takes Adderall... And like many people in the world, he follows a vegan diet. He had not received his Adderall at all, in the last 11 days,” said Cohen.

Cointelegraph uncovered a commissary list from 2020 which reveals that SBF could be paying $3.15 for peanut butter on a menu that consists almost entirely of meat, dairy and fast food.

U.S. Federal Court Judge Sarah Netburn said she’d look further into Bankman-Fried’s treatment.

Bankman-Fried’s legal team argued that his imprisonment was impacting their ability to prepare for his upcoming trials — the first of which is scheduled for Oct. 2 this year.

“There are serious Sixth Amendment issues. Our client cannot prepare for trial. He was remanded since August 11. No discovery for 11 days, six weeks from trial. It is voluminous, it can only be reviewed online. We have been offered only fictions as solutions.”

On Aug. 21 Judge Kaplan ordered that Bankman-Fried could contact his lawyers in a one-time release on Aug. 22. He was allowed access to one internet-enabled laptop connected to one WiFi device.

In the most recent hearing, Bankman-Fried’s lawyers said they had received an offer where he would potentially be able to visit the New York courthouse two days a week from 9am to 3pm.

However, they noted that Bankman-Fried would only be given access to a pencil and paper and would have to communicate with them by pressing what he’d written against the glass barrier between them.

Magazine: Crypto Twitter Hall of Flame, Gabriel Haines: Shirtless shitposting and hunting Bankman-Fried on the meme streets

sbf trial