By Ari Redford, Head of Global Policy and Government Affairs at blockchain intelligence firm TMR Labs

  • The trial of FTX founder and CEO SBF is set to begin on Tuesday.

  • The main task on the first day of trial is to select the jury.

  • TMR Labs' Ari Record breaks down the highlights of the first day of the trial.

Exactly nine months and 20 days after his arrest in the Bahamas, FTX founder and former CEO Sam Bankman-Fried will stand trial in federal court in New York this week on charges of participating in a scam of the exchange’s customers.

SBF’s case is moving forward at lightning speed, involving extradition, multiple cooperating witnesses, and a vast amount of electronic evidence.

Cases of this size and level often take years to go to trial. But before both sides make their opening statements, a jury must be selected. That process, called a voir dire, begins tomorrow.

Voir dire, which means "tell the truth" in French, involves the judge or lawyer asking questions of potential jurors from the community to determine if they are suitable to serve on the jury.

In other words, the process allows the parties and the court to lock in fair and serious jurors. The judge will ask the potential jurors questions, including questions submitted by the government and defense attorneys.

Some of the questions are personal in nature (travel, work, medical care), while others are more substantive and intended to uncover whether a juror has connections to the parties in the case or is biased against the defendant.

For example: Have you ever held cryptocurrency? Or have you ever been a customer of FTX? Because the case is of great importance, lawyers on both sides can ask ten questions each to eliminate inappropriate jurors.

While these questions are largely part of the standard jury selection process, the preliminary hearing is also the first opportunity for attorneys on both sides to evaluate the candidates who will decide the sentence in the case.

It also provides an opportunity for the government and defense attorneys to conduct a preliminary hearing skillfully through questioning.

Experienced prosecutors and defense attorneys not only listen to jurors' answers but also evaluate their body language and other behavioral manifestations that reflect "bias."

Reading of the charges

During a preliminary hearing, the judge's first job is to read the charges against the defendant to a courtroom full of potential jurors.

The judge will interpret the indictment (not the evidence) as alleging that SBF and his associates defrauded FTX customers and investors and conspired to launder the proceeds of the fraud.

Specifically, the indictment charges SBF with seven criminal counts, including wire fraud, conspiracy to commit wire fraud against FTX customers and investors and Alameda lenders, securities fraud, and commodities fraud.

The indictment also charges SBF with conspiracy to launder money and attempt to conceal the proceeds of the fraud.

Of all the charges, only two — wire fraud against FTX customers and Alameda lenders — are “substantial” charges, meaning prosecutors must prove beyond a reasonable doubt that SBF himself actively participated in the crimes.

The Wire Fraud Statute, 18 U.S.C. § 1343, makes it a crime to use a wire (or in this case, the Internet) to engage in a scheme to obtain money or property by "false or fraudulent pretense, representation, or promise, transmission, or promotion."

The remaining five counts are "conspiracy" charges, meaning the government must prove SBF planned the crime with at least one other person.

In its jury questions, the Justice Department will ask the court to explain to the jury that conspiracy charges, unlike substantive charges, “do not require proof that a crime was actually committed.”

This distinction is important, and the judge will reiterate it in his jury instructions at the end of the trial.

Simplified procedures

This sounds fairly complicated, but prosecutors will likely streamline the process by introducing evidence to prove that SBF and its co-conspirators intended to commit a massive fraud on customers and investors.

If the government can successfully prove fraud, the defendant may be held liable for most or all of the charges.

SBF’s lawyers, on the other hand, will argue that SBF’s work was sloppy and incompetent, but that he had no criminal intent to deceive clients and investors.

Defense lawyers will also argue that SBF took a series of actions "on the advice of counsel," which may rule out criminal intent.

On the first day of trial, the above developments were all expected.

There will be more exciting events in the coming weeks, including opening statements, testimony from countless witnesses, and a huge amount of evidence, recordings, and testimony from SBF's inner circle.

Today is only 9 months and 20 days since SBF was arrested, and only 11 months since the collapse of FTX. The speed of progress of this case is unprecedented. Let us wait and see whether the trial process will be so fast.