When it collapsed, FTX had a $500 million stake in artificial intelligence (AI) firm Anthropic.
Now, prosecutors want to keep FTX founder Sam Bankman-Fried from using the funds Anthropic has raised since that investment in his defense during his ongoing fraud trial, according to a Sunday (Oct. 8) court filing.
The Department of Justice (DOJ) says it understands the defense may try to raise the issue of Anthropic’s growing value in court, and says prosecutors plan to introduce evidence showing that Bankman-Fried funded the investment using stolen customer money.
“Evidence regarding the current value of the defendant’s investments could only be used to support the argument that FTX customers and/or other victims will ultimately be made whole, which the Court has recognized is an impermissible purpose,” the filing says.
The DOJ notes that Anthropic is in the middle of raising more funds from investors such as Google and Amazon at a valuation of $20 billion to $30 billion. This has led to speculation that this valuation would up the value of Bankman-Fried’s investment, and thus provide greater potential recovery for FTX customers and creditors.
“There is no relevant purpose to admit evidence about the current value of the Anthropic investment,” the filing says. “The Indictment alleges that the defendant committed wire fraud by misappropriating FTX customer deposits to make investments and other expenditures. It is immaterial whether some of those investments might ultimately have been profitable.”
Bankman-Fried, 31, is facing what could be a lifetime behind bars if convicted of orchestrating the FTX collapse, which prosecutors have called one of the largest fraud cases on record.
His trial began last week, with defense attorney Mark Cohen describing his client as “a normal guy … a math nerd who didn’t drink or party” during his opening statement.
“Sam didn’t defraud anyone. Sam didn’t intend to defraud anyone. Sam acted in good faith and took reasonable business measures,” Cohen added. “There was no theft.”
Jurors last week heard from Gary Wang, FTX’s co-founder and chief technology officer and former math camp friend of Bankman-Fried. He testified that FTX, under Bankman-Fried’s leadership, lied to customers about a number of things, including the company’s “backstop fund,” a supposed amount of cash-on-hand that FTX kept for emergencies.
Although FTX displayed a dollar amount for the backstop fund on its site, Wang testified that the figure “had no basis in reality” and was calculated using a formula that was not based on anything real.
The trial is set to resume Tuesday (Oct. 10), with Caroline Ellison, head of FTX’s sister firm Alameda Research, set to take the stand.
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