introduction
FTX founder and former CEO Sam Bankman-Fried (SBF) faces trial and will take the stand in less than two weeks to defend himself. SBF is accused of knowingly committing fraud and conspiring to defraud investors and customers of FTX and Alameda Research.
Prosecutors need to seek a unanimous jury verdict of conviction. The trial is expected to begin on October 3, 2023, less than 10 months after SBF was first arrested and less than 11 months after the collapse of FTX.
To gain a deeper understanding of the trial, CoinDesk spoke with multiple legal experts, some of whom requested anonymity to discuss the high-profile case.
Jury selection
Although the trial is set to begin next month, it will be some time before evidence is actually presented. The first step could come next week, a final pretrial conference.
At this meeting, Judge Lewis Kaplan of the Southern District of New York will determine the final witness schedule, the expected duration of the trial and final rulings on any issues. Judge Kaplan may also consider some motions, said Martin Auerbach of the law firm Withersworldwide.
The second step is voir dire (pre-vetting), which will actually begin on October 3rd.
During the jury selection process, the judge will ask potential jurors a series of questions. A lawyer with experience in white-collar crime cases told CoinDesk that the judge will likely first ask potential jurors broadly whether they plan to travel in the coming weeks to ensure they can be away from work for several weeks.
Additionally, the judge may ask if any potential jurors have FTX accounts, and these individuals will be excluded from the jury pool. Once these broad jury questions are completed, the judge will begin asking each person questions from the prosecution and defense teams.
The defense and prosecution will probably fight for every juror and that will take a long time, Auerbach said. It wont be a yes or no question, it will be a back and forth process, so I think it will take a few days. time.
While attorneys may ask questions to potential jurors at the state court level, since this is a federal court, only the judge can ask them questions.
Some potential jurors may be excluded from the jury pool if they can prove they have financial hardship or similar problems. Others may be forcibly excluded, and attorneys can reject a limited number of potential jurors for a variety of reasons.
There are also potential jurors who may demonstrate clear bias against Defendant SBF or the Plaintiff Government and may be excluded without counting against the mandatory exclusion limits.
This process usually proceeds quickly. Given the importance of the SBF case, seating just 10 to 12 jurors could take days. However, it would only take approximately half a day, according to estimates in a Sept. 19 Justice Department filing.
Auerbach said there will also be a number of alternate jurors who could ultimately be omitted unless one of the original jurors has to withdraw.
Prosecution and defense ask questions
Both the prosecution and defense have asked the judge to ask each potential juror questions to weed out anyone who may be seriously biased or unfit to serve on the jury. Those questions include whether potential jurors are familiar with the case, have any opinions about the case and know (or know) Bankman-Fried or the attorneys involved.
SBFs defense team also raised issues related to effective altruism, political donations and lobbying, and ADHD. The U.S. Justice Department objected to the questions, saying they appeared to be designed to sway jurors to his side.
reasonable suspicion
Once the trial begins, jurors, reporters and members of the public in the gallery will watch the Justice Department and defense deliver opening statements, followed by the Justice Department presenting evidence and questioning witnesses. Pretrial documents from the U.S. Department of Justice show that in addition to written documents, prosecutors will present audio recordings during the trial.
One expert told CoinDesk that the first witness called by the Justice Department could help show the strength of the case, at least in the eyes of prosecutors. The DOJ may subpoena an FBI agent as the first witness, or it may “go straight to the source” and immediately subpoena members of FTX’s inner circle.
Both sides have also attempted to provide certain expert witnesses to describe details such as the FTX code and even explain encryption basics, although there remains dispute over whether some or all potential witnesses should be allowed to testify.
Given that this is a criminal trial, the Justice Department must obtain a conviction “beyond a reasonable doubt.” In contrast, in civil cases, the “preponderance of the evidence” standard is lower.
“There’s no specific percentage, but you can think of it as 90-plus percent beyond a reasonable doubt, where you have a deep and abiding belief in the defendant’s guilt,” one legal expert told CoinDesk.
Assistant U.S. attorneys hearing the case are likely to present each element of each charge and describe what evidence they have to support a conviction on each charge, they said.
“They’re following every testimony, every document to make sure there’s enough in the record,” the expert said, “[Bankman-Fried] will inevitably argue — because every defendant will after trial. Argue – they are all deficient in this or that piece of evidence.”
Once the prosecution adjourns, the defense will have a chance to present additional witnesses. An open question is whether SBF himself will testify in his own defense.
One of the people told CoinDesk that a growing number of defendants in white-collar crime cases are waiving their Fifth Amendment rights and testifying in court, as is the case with Theranos founder Elizabeth Holmes, who was convicted last year and sentenced to more than 11 years in prison.
“The thinking now is that jurors care so much about celebrity that even if they don’t know who [the defendants] are in the trial, almost all of them will probably be on Twitter and online during the trial to research them,” experts said. The judge will tell them not to do it ... but because theres this celebrity culture around these cases, the idea is that if they dont testify, essentially, the presumption is that theyre not testifying just because they dont want to admit to their guilt.
Concerns about disruption to the jury pool have emerged at some preliminary hearings. Bankman-Frieds defense team argued that more than 1 million negative articles had been written about the FTX founder, fueling the media narrative around him.
unanimous verdict
Federal criminal trials require a unanimous verdict to obtain a conviction. If the jury consists of 12 people, then all 12 must believe at the end of the trial that SBF is guilty beyond a reasonable doubt.
The defenses job may be relatively simple, simply convincing one juror that the evidence is insufficient or that prosecutors have failed to make their case for a different charge.
Auerbach said the judge will read a series of instructions explaining how they should evaluate what they hear and see. Both the DOJ and SBF teams came up with their own jury instructions.
He said: [Its] a piece of paper that sets out the legal elements that they have to convict beyond a reasonable doubt, and if they dont agree beyond a reasonable doubt they have to acquit, and if they cant agree they stick to it. That particular legal element.”
The jury can ask questions, but usually those questions are reserved during deliberations. Jurors can send written questions to the judge, who will read them in court and work with each attorney to provide answers.
I have to believe that in a case of this complexity the jury will ask one or more questions, one legal expert said.
Another complicating factor is that much of the conduct at the heart of the allegations has not actually been challenged, another person told CoinDesk. All prosecutors have to do is convince jurors that SBF acted within the statutes he was charged with.
Extraterritoriality or extraterritorial jurisdiction is one example. Neither the wire fraud nor the anti-fraud rules under the securities laws apply to defendants who conduct their activities primarily outside the United States. In other words, prosecutors must prove that SBFs conduct not only met the definition of wire fraud, but also that he targeted U.S. citizens or otherwise committed it in the United States.
Bankman-Fried was based in the Bahamas, where FTX’s global entity is headquartered.
Another person told CoinDesk that if a jury is divided, there are tools that judges can use to tell deadlocked jurors to “go back and try again.”
Its not like on the first ballot where one juror says I dont believe it, they will be told to go back and keep trying to reach a unanimous verdict, they said.
Auerbach said the judge could declare a mistrial if the jury, after multiple attempts to agree on a verdict, comes back and says they are irreconcilably conflicted on all fronts. Otherwise, the jury may agree to convict on all or part of the charges or to acquit on all or part of the charges.
sentencing
How long SBF will spend in prison if he is convicted on one or more of the charges he faces will largely depend on Judge Kaplan.
One of the people told CoinDesk that while sentencing guidelines used to be mandatory decades ago, following the Supreme Court ruling, they are now viewed more as a starting point than strict rules.
There are still statutory requirements that judges must comply with, but these requirements are different from the guidelines.
The person said the U.S. Probation and Pretrial Services System will first create a report that includes preliminary calculations of recommended sentencing ranges. The Justice Department and the defense team can raise any objections arguing for a longer or shorter sentence.
Judge Kaplan will then consider the recommendations and make an actual sentence, taking into account many other factors, including the seriousness of the crime. Often, if there are multiple convictions for similar charges, a judge may choose to distill the charges into core misconduct.
in conclusion
Given how the case has progressed so far, its also possible that SBFs team will file an appeal if hes convicted. Another said the Justice Department could not appeal the not guilty verdict because of the double jeopardy rule. Legal sources said: The government will not appeal in all but the rarest cases... Once you are released by a jury, you are basically freed for life. In any case, this is not the last criminal trial of SBF. He will face a series of additional charges filed by the Justice Department early next year following the initial indictment. Judge Lewis Kaplan granted the Department of Justice permission to set Friday, October 6, as the trial date given that Monday, October 9, is the U.S. holiday of Columbus Day.
