CoinDesk: SBF is about to go on trial, legal experts analyze the case details

Author: CoinDesk

Introduction

FTX founder and former CEO Sam Bankman-Fried (SBF) is about to face trial, where he will defend himself in less than two weeks. SBF is accused of deliberately committing fraud and conspiring to deceive investors and customers of FTX and Alameda Research.

Prosecutors need to secure a unanimous conviction from the jury. The trial is expected to begin on October 3, 2023, less than 10 months after SBF's initial arrest and less than 11 months after the collapse of FTX.

To gain deeper insights into the trial process, CoinDesk interviewed several legal experts, some of whom requested anonymity to discuss this high-profile case.

Jury Selection

Although the trial will begin next month, the actual presentation of evidence will take some time. The primary step may take place next week, which is the final pre-trial conference.

Judge Lewis Kaplan of the Southern District of New York will determine the final witness schedule, the expected duration of the trial, and any final rulings on issues during this conference. Martin Auerbach from Withersworldwide stated that Judge Kaplan may also consider some motions.

The second step, "voir dire," will actually begin on October 3.

During the jury selection process, the judge will ask a series of questions to potential jurors. An attorney with experience in white-collar crime cases told CoinDesk that the judge may first broadly inquire whether potential jurors plan to travel for work in the coming weeks to ensure they can be away from their jobs for several weeks.

Additionally, the judge may ask whether any potential jurors have FTX accounts, as those individuals would be excluded from the jury. Once these broad jury questions are completed, the judge will begin asking everyone questions posed by the prosecution and defense teams.

Auerbach said, "The defense and prosecution may fight over each juror, which will take a long time. This will not be a yes or no question, but rather a back-and-forth process, so I think it will take several days."

While attorneys may ask questions of potential jurors at the state court level, only the judge can question them in federal court.

If some potential jurors can demonstrate financial hardship or similar issues, they may be excluded from the jury. Others may be forcibly excluded, as attorneys can reject a limited number of potential jurors for various reasons.

Some potential jurors may also exhibit obvious bias against defendant SBF or the plaintiff government and may be excluded without counting against the forced exclusion limit.

This process typically moves quickly. Given the significance of the SBF case, it may take several days to seat just 10 to 12 jurors. However, according to documents submitted by the Department of Justice on September 19, this only requires "about half a day."

Auerbach noted that there will also be some alternate jurors who may ultimately be overlooked unless one of the original jurors must withdraw.

Questions from the Prosecution and Defense

Both the prosecution and defense have submitted questions for the judge to ask each potential juror to exclude those who may have serious biases or are unsuitable to serve on the jury. These questions include whether potential jurors are familiar with the case, have any opinions about it, and whether they know (or are aware of) Bankman-Fried or the involved attorneys.

SBF's defense team has also proposed questions related to effective altruism, political donations, lobbying, and ADHD. The U.S. Department of Justice opposes these questions, arguing that they seem designed to sway jurors in his favor.

Reasonable Doubt

Once the trial begins, jurors, reporters, and the public in the gallery will see opening statements from the DOJ and the defense, followed by the DOJ presenting evidence and questioning witnesses. Pre-trial documents from the DOJ indicate that, in addition to written documents, prosecutors will also present recordings during the trial.

An expert told CoinDesk that the first witness called by the DOJ may help indicate the strength of the case, at least from the prosecutors' perspective. The DOJ may call an FBI agent as the first witness or may "go straight for the jugular" and immediately call members of FTX's inner circle.

Both sides are also trying to provide certain expert witnesses to describe details like the FTX code and even explain the basics of cryptocurrency, although there is still debate over whether some or all potential witnesses should be allowed to testify.

Given that this is a criminal trial, the DOJ must "prove beyond a reasonable doubt" to secure a conviction. In contrast, the "preponderance of evidence" standard is lower in civil cases.

A legal expert told CoinDesk, "There is no specific percentage beyond reasonable doubt, but you can think of it as being over 90%, where you have a deep and abiding belief in the defendant's guilt."

They said that the assistant U.S. attorneys handling the case may demonstrate each element of every charge and explain what evidence they have to support a conviction on each count.

Experts noted, "They are tracking every piece of testimony, every document, to ensure there is enough in the record that [Bankman-Fried] will inevitably argue—because every defendant argues after a trial—that there are flaws in this or that piece of evidence."

Once the prosecution rests, the defense will have the opportunity to present more witnesses. One pending question is whether SBF himself will testify in his defense.

One source told CoinDesk that an increasing number of defendants in white-collar crime cases are waiving their Fifth Amendment rights and taking the stand, with Theranos founder Elizabeth Holmes (who was convicted last year and sentenced to over 11 years in prison) being one example.

Experts stated, "The current thinking is that jurors are very concerned about the celebrity effect; even if they don’t know who the [defendant] is in the trial, almost all of them may be tweeting and researching them during the trial, and the judge will tell them not to do that… but because of the celebrity culture surrounding these cases, the thought is that if they don’t testify, it essentially implies they don’t want to admit their guilt."

Concerns have already arisen in some pre-trial hearings about the jury pool being influenced. Bankman-Fried's defense team argues that over a million negative articles about the FTX founder have been published, creating a media narrative around him.

Unanimous Verdict

Federal criminal trials require a unanimous verdict for conviction. If the jury consists of 12 members, all 12 must believe SBF is guilty at the end of the trial without reasonable doubt.

The defense's task may be relatively simple, needing to persuade just one juror that the evidence is insufficient or that the prosecution has not made a case for the various charges.

Auerbach stated that the judge will read a series of instructions explaining how jurors should evaluate what they have heard and seen. Both the DOJ and SBF's team have submitted their own jury instructions.

He said, "[This is] a piece of paper that lists the legal elements they must find beyond a reasonable doubt to convict, and if they do not find beyond a reasonable doubt, they must acquit, and if they cannot reach a consensus, they will stick to that specific legal element."

Jurors can pose questions, but these are typically reserved for deliberation. Jurors can send written questions to the judge, who will read them in court and provide answers with the attorneys present.

A legal expert remarked, "I have to believe that in such a complex case, the jury will have one or more questions."

Another source told CoinDesk that another complicating factor is that much of the conduct at the core of the charges is not actually in dispute. The prosecution merely needs to convince the jurors that SBF's actions align with the regulations he is accused of violating.

Extraterrestrial jurisdiction is one example. The wire fraud and anti-fraud rules in securities law do not apply to "defendants primarily engaged in activities outside the United States." In other words, the prosecution must prove that SBF's actions not only fit the definition of wire fraud but also that his targets were U.S. citizens or otherwise conducted within the U.S.

Bankman-Fried resided in the Bahamas, where FTX's global headquarters is located.

Another source told CoinDesk that if the jury is deadlocked, the judge can use certain tools to tell the hung jury to "go back and try again."

They said, "It's not like in the first round of voting, where one juror says 'I don't believe it,' and they will be told to go back and keep trying for a consensus verdict."

Auerbach stated that if the jury returns after multiple attempts to agree on a verdict and indicates they are irreconcilably deadlocked on all counts, the judge may declare a mistrial. Otherwise, the jury may agree to convict on all or some counts or acquit on all or some counts.

Sentencing

If SBF is convicted on one or more of the charges he faces, the length of time he will spend in prison will largely depend on Judge Kaplan.

One source told CoinDesk that while sentencing guidelines were once mandatory decades ago, they are now viewed more as a starting point rather than strict rules, according to Supreme Court rulings.

There are still statutory requirements that the judge must adhere to, but these differ from the guidelines.

The source indicated that the U.S. probation and pretrial services system will first create a report that includes "preliminary calculations of the recommended sentencing range." The DOJ and defense team can raise any objections, advocating for longer or shorter sentences.

Judge Kaplan will then consider various recommendations and take into account many other factors, such as the severity of the crime, to make the actual ruling. Typically, if there are multiple convictions for similar charges, the judge may choose to distill the charges into "core misconduct."

Conclusion

Given the progress of the case so far, if SBF is convicted, his team may also seek to appeal. Another source stated that due to the "double jeopardy" rule, the DOJ cannot appeal a "not guilty" verdict. Legal experts noted, "The government does not appeal in all cases, except in the rarest circumstances… once you are acquitted by a jury, it essentially means you are released for life." In any case, this is not SBF's last criminal trial. Early next year, he will face a series of additional charges brought by the DOJ following the initial indictment. Given that October 9, Monday, is Columbus Day, a U.S. holiday, Judge Lewis Kaplan has approved the DOJ to set October 6, Friday, as the trial date.