FTX’s Sam Bankman-Fried set to appear in federal court Tuesday
Yahoo Finance’s David Hollerith joins the Live show to discuss the expectations for Sam Bankman-Fried’s arraignment hearing happening on Tuesday afternoon.
Video Transcript
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JULIE HYMAN All right, Sam Bankman Fried will appear in Manhattan Federal Court later today to face allegations that he cheated investors out of billions and wire fraud, conspiracy to commit money laundering, and other charges.
David Hollerith from Yahoo Finance has been following this story. Because he is at the trial, he’s here with us in the studio. What can we expect from Dave? The arraignment hearing will take place this afternoon.
DAVID HOLLERITH That’s right. This was within 24 hours of his extradition. Today is his formal hearing, where he will be read his charges. Then he will be asked to plead guilty, or not guilty. It’s quite likely that he will plead not guilty, according to his spokesperson and other reports.
There will be a conference with a set of schedules so that they can talk through. However, I’ll be focusing on his body language, posture, and how he behaves. So that will probably give us some insight into his strategy and how he’ll handle the case.
Evidently, he is being investigated by the Justice Department on eight counts of fraud. It’s a huge task. A lot of legal sources state that it really comes down to the individual’s wishes, like what he is willing and able to sacrifice during negotiations.
BRAD SMITH How is the crypto sphere continuing to evolve, and how does it impact the proceedings?
DAVID HOLLERITH Yes, it is. I mean, anyone who works in this industry would want to dismiss it as a case fried–fraud, evidently. Fired. But, I think it doesn’t impact the market as much. In terms of actual prices, it’s the exact same as the bankruptcy hearings. It’s clear that it is not a good look from a sentiment perspective and the general way people view the asset class.
BRIAN SOZZI What does this all mean? How will it affect the direction of Bitcoin? Last week was a reminder that Bitcoin has been largely unreliable since June. I think this is in large part due to the above case.
DAVID HOLLERITH You know, I think there is also– yes, there is also this liquidity issue– or lack thereof. Ether and Bitcoin are two of the most popular cryptocurrencies, which means they have more liquidity.
A recent observation was that these smaller tokens are much more volatile because they have little liquidity. So some are arguing that Bitcoin is trading but that it fluctuates less outside of the huge selloffs that have been seen. These large selloffs are usually those companies in financial trouble. Because of its liquidity, it’s often the easiest to buy and sell.
JULIE HYMAN Does the thinking include me? We all know that prominent crypto names were invested with Sam Bankman Fried, and therefore have lost money. For example, have they sold their Bitcoin and Ethereum positions. I don’t think we know everything. We have to wonder, however, if this has already occurred or if it’s still possible.
DAVID HOLLERITH So, yeah, it was a much bigger selling event for the major cryptocurrencies. FTX was a third of the total.
Many people believe the SBF situation may be over. However, contagion is still a constant concern. It’s unclear if this is affecting other companies such as Genesis Lending. They have halted withdrawals. People are closely watching this for signs of a major stock market selloff.
BRAD SMITH David Hollerith, Yahoo Finance’s founder. David, we are sure that you will be closely following this federal court appearance and keeping us informed of the latest developments. David, thank you so much. Appreciate it.