On Tuesday former CEO of FTX Sam Bankman-Fried (SBF) showed up in court with his newly appointed lawyer Mark Cohen. His legal team posed questions to him and his staff, and the Bahamian Judge Joyann Ferguson-Pratt refused to grant bail to SBF. Reports state that SBF’s parents, Joseph Bankman and Barbara Fried, were present at the court hearing.
AFR reports FTX members utilized a hidden signal chat room to perpetrate wire fraud.
The initial week of November saw the world of SBF, co-founder of FTX, flipped upside-down. It all began when Coindesk published an exposé about SBF’s quant trading firm, Alameda Research, which also held a substantial number of FTT tokens. After the report, FTX and Alameda were the focus of everyone’s attention. Binance CEO Changpeng Zhao (CZ) said that his exchange would sell all of the FTTs.
This speculation about FTX was further fueled when Alameda declared themselves insolvent, and on November 8, 2022, Binance announced that it had done due diligence on the company’s financials, and had decided to buy FTX. The deal was not finalized, however, and the transaction was cancelled at 4:00 PM (ET) on November 9, 2022. Binance declared that it was ceasing to purchase FTX, the world’s largest crypto-asset trading platform.
All customers were able to withdraw or redeem digital assets from FTX’s bank account, which was a large number of customers. Bahamian natives, and vanished. Two days after Binance cancelled the deal, SBF resigned from the deal and announced that FTX and Alameda had filed for Chapter 11 bankruptcy protection, and approximately 130 related businesses.
SBF also revealed that he was stepping down from his CEO position at FTX. John J. Ray III took over the responsibility for the restructuring and bankruptcy. Since SBF filed bankruptcy, he began a media tour and conducted many interviews. Multiple reports in the media stated that SBF had significant evidence.
Prior to SBF’s arrest in the Bahamas, the report prepared by Australian Financial Review (AFR) outlined how FTX’s SBF used a private chat room called “The Secret Chat Group” with his inner circle. This chat room was called “Wirefraud.” AFR correspondent in the USA Matthew Cranston said: “[AFR] has [learned] FTX founders Sam Bankman-Fried and Zixiao ‘Gary’ Wang, FTX Engineer Nishad Singh, and Former Alameda Research CEO Caroline Ellison, used a chatroom on Signal in the hope that such information would remain secret,”
On the 24th day after the AFR Report was published, Bankman-Fried was arrested. The Federal Grand juries also indicted FTX founders in Manhattan on eight counts of financial fraud. The Southern District Of New York (SDNY) Attorney Damian Williams. SBF was further indicted by the US Securities and Exchange Commission (SEC), and sued by the Commodity Futures Trading Commission (CFTC).
SBF legal team attempts release of co-founder, Bahamian Judge denies bail, Disgraced Cofounder of FTX escorted to court in handcuffs
On Tuesday, SBF was also present, and his legal team attempted to get bail. According to reports, Joseph Bankman and Barbara Fried, SBF’s parents, attended the court hearing. SBF’s mother laughed loudly at the call to her son a “runaway,” and her father put her fingers in her ears. His attorney, Mark Cohen, the attorney who represented Ghislaine Maxwell during her trial, tried to get SBF released, a request that was denied by the judge. Judge Joyann Ferguson-Pratt ordered SBF to remain in prison until February 8, 2023.
Sam Bankman-Fried, the CEO of the cryptocurrency derivatives exchange FTX, will be held in a Bahamian jail for two months, according to reports. The news follows the arrest of Bankman-Fried in the Bahamas on charges of sex trafficking. He was denied bail and will be kept in custody until his court date on February 8th, 2023.
Adding to the complexity of the case, a New York Times report claims that Bankman-Fried and other FTX executives had a secret chat channel referred to as ‘wire fraud’. The report also mentions the arrest of Ghislaine Maxwell, a close associate of Bankman-Fried and the daughter of late media mogul Robert Maxwell.
According to the report, Bankman-Fried’s father, Joseph Bankman, was a salaried employee of FTX who frequently traveled to the Bahamas. The family is now the subject of much gossip on the Stanford campus.
Mark Cohen, Bankman-Fried’s lawyer, claimed that his client had suffered from depression, insomnia and ADD for over a decade. However, Judge Ferguson-Pratt did not seem to be swayed by Cohen’s argument and denied bail.
The SEC, CFTC, and the U.S. Attorney’s Office of the Southern District of New York (SDNY) are all investigating the FTX collapse. The case is being handled by the U.S. Attorney Damian Williams and the SDNY’s Wirefraud Group.
The public awaits further news on the case and the possible involvement of Bankman-Fried’s inner circle in the ‘wire fraud’ chat channel. The court date is set for February 8th, 2023, and the outcome of the case will be closely watched.
