Author: CoinDesk

Introduction

Sam Bankman-Fried (SBF), the founder and former CEO of FTX, is about to face trial and will soon be defending himself in court. SBF is accused of intentionally committing fraud and conspiring to deceive investors and clients of FTX and Alameda Research.

The prosecution needs 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 a deeper understanding of the trial process, CoinDesk interviewed several legal experts, some of whom requested anonymity to discuss this high-profile case.

Jury Selection

Although the trial is set to begin next month, the actual presentation of evidence will take some time. The first crucial step may take place next week, during the final pretrial conference.

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

The second step is "voir dire" (preliminary examination), which is set to begin on October 3.

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 may first broadly inquire whether potential jurors plan to travel in the coming weeks to ensure they can leave their jobs for several weeks.

In addition, the judge may inquire whether any potential jurors have FTX accounts, as these individuals would be excluded from the jury. Once these broad jury questions are completed, the judge will begin asking each person the questions posed by the prosecution and defense teams.

Auerbach said, "Both the defense and the prosecution may vie for each juror, which will take a long time. It won't be a yes or no question, but rather an ongoing process, so I think this will take several days."

While lawyers may question potential jurors at the state court level, since this is a federal court, only the judge can question them.

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

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

This process typically proceeds quickly. Given the significance of the SBF case, it may take several days to select just 10 to 12 jurors. However, according to documents submitted by the Department of Justice on September 19, it is estimated that this will only take "approximately half a day."

Auerbach stated that there will also be alternate jurors, who may ultimately be disregarded unless one of the original jurors must be excused.

Prosecution and Defense Questions

Both the prosecution and defense have posed questions, requesting the judge to ask each potential juror in order to exclude individuals who may harbor significant bias or are unsuitable to serve as jury members. These questions include whether potential jurors are familiar with the case, have any opinions on the case, and whether they know (or are familiar with) Bankman-Fried or the involved lawyers.

SBF's defense team has also posed questions involving altruism, political donations and lobbying, and ADHD. The U.S. Department of Justice opposes these questions, believing they appear to be aimed at swaying the jurors in their favor.

Reasonable Doubt

Once the trial begins, jurors, reporters, and the public in the gallery will witness opening statements from the Department of Justice and the defense, followed by the presentation of evidence and witness examination by the Department of Justice. Pretrial documents from the U.S. Department of Justice indicate that, in addition to written documents, the prosecutors will also present recordings during the trial.

An expert told CoinDesk that the first witness summoned by the Department of Justice may help demonstrate the strength of the case, at least in the eyes of the prosecutors. The DOJ may call FBI agents as the first witnesses, or they may "go for broke" and immediately summon members of FTX's inner circle.

Both sides are also attempting to provide expert witnesses to describe FTX's code and other details, and even explain cryptographic fundamentals, although there is still debate over whether some or all potential witnesses will be allowed to testify.

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

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

They said that the U.S. Assistant Attorneys prosecuting this case may present each element of each charge and explain what evidence they have to support a conviction for each charge.

The expert stated, "They are tracking every piece of testimony, every document, to ensure that there is enough in the record, and [Bankman-Fried] will inevitably argue—because every defendant does after a trial—that there were deficiencies in this or that evidence."

Once the prosecution rests, the defense will have the opportunity to present more witnesses. An unresolved question is whether SBF himself will testify for his defense.

One individual told CoinDesk that more and more white-collar crime defendants are waiving their Fifth Amendment rights and testifying in court, citing the example of Theranos founder Elizabeth Holmes (convicted last year and sentenced to over 11 years in prison).

The expert stated, "The current thinking is that juries are very concerned about the celebrity effect, even if they don't know who the defendant is in the trial, almost everyone is likely to be on Twitter and the internet during the trial to research them, the judge will tell them not to do that… but because there's this celebrity culture around these cases, the thinking is that if they don't testify, essentially, it's presumed that they're not testifying because they don't want to admit their guilt."

Concerns about the potential disruption of the jury pool have already arisen in some pretrial hearings. Bankman-Fried's defense team argued that there have been over a million negative articles about the FTX founder, sparking a media narrative around him.

Unanimous Verdict

A federal criminal trial requires a unanimous verdict for a conviction. If the jury consists of 12 people, then all 12 must believe SBF is guilty at the end of the trial, without any reasonable doubt.

The defense's job may be relatively simple, needing to convince just one juror that the evidence is insufficient or that the prosecutor has not made a case for the different charges.

Auerbach said the judge will read a series of instructions, explaining how they should evaluate what they have heard and seen. Both the U.S. Department of Justice and SBF's team have proposed their own jury instructions.

He said, "It's a piece of paper that lists the legal elements they must exclude reasonable doubt for a conviction, and if they don't exclude reasonable doubt, they must acquit, and if they can't reach a unanimous decision, they will stick to that particular legal element."

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

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

Another individual told CoinDesk that another complex factor is that most of the core behaviors being charged are not actually in dispute. What the prosecutors need to do is convince the jurors that SBF's actions fit the regulations he is accused of violating.

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

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

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

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

Auerbach said that if the jury comes back after multiple attempts to agree on a verdict and indicates that they have irreconcilable conflicts on all aspects, the judge may declare a mistrial. Otherwise, the jury may agree on a conviction for all or some of the charges, or acquit on all or some of the charges.

Sentencing

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

One individual told CoinDesk that while sentencing guidelines used to be mandatory decades ago, they are now more seen 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 requirements are different from the guidelines.

The individual stated that the U.S. Probation and Pretrial Services System will first create a report that includes "preliminary calculations of the suggested sentencing range." The Department of Justice and the defense team can present any objections, advocating for a longer or shorter sentence.

Then Judge Kaplan will consider the various recommendations and make an actual judgment, taking into account many other factors such as the severity of the crime. Typically, if there are multiple convictions for similar charges, the judge may choose to distill the charges into "core improper conduct."

Conclusion

Given the progress of the case so far, if SBF is convicted, his team may also file an appeal. Another individual stated that due to the "double jeopardy" rule, the Department of Justice cannot appeal a "not guilty" verdict. Legal experts stated, "Except in the rarest of circumstances, the government does not appeal in all cases… Once you are acquitted by the jury, it basically means you are acquitted for life." Nonetheless, this is not SBF's final criminal trial. Early next year, he will face a series of additional charges brought by the Department of Justice after the initial indictment. As October 9th, Monday, is a U.S. holiday, Columbus Day, Judge Lewis Kaplan approved October 6th, Friday, as the trial date.

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