The U.S. Department of Justice (DOJ) has asked the court to prevent Sam Bankman-Fried (SBF), the former CEO and founder of crypto exchange FTX, from using his investment in Anthropic, an artificial intelligence (AI) startup, as part of his defense in his ongoing fraud trial.
SBF is accused of misappropriating over $1 billion worth of cryptocurrencies from FTX customers and investors in 2022. He allegedly used the funds to prop up his other ventures, including Alameda Research, a crypto trading firm, and Anthropic, an AI company that competes with OpenAI.
The DOJ Further Hinders SBF’s Defense Strategy
According to the prosecutors, SBF might want to introduce evidence about the current value of his stake in Anthropic, in which he invested $500 million in 2021, to show that he intended to repay the victims of his scheme.
However, they argued that such evidence is irrelevant and prejudicial, as the court has already ruled that it does not matter whether SBF planned to return the money or not.
This viewpoint is substantiated by a previous ruling in a case with similar circumstances. In the FTX bankruptcy case, the Court accepted the government’s unopposed request to limit the defense’s discussion of the recovered assets. The aim was to avoid any suggestion to the jury that the victims would be fully compensated.
The prosecutors also claimed that venture capital investments are highly speculative and unreliable, citing how FTX secured valuations of $18 billion and $32 billion in 2021 and 2022 respectively, but is now worth nothing after filing for bankruptcy.
On the other hand, the FTX 2.0 Coalition, a group representing FTX creditors, has suggested that SBF’s investment in Anthropic could be crucial in making the users whole. Anthropic is reportedly seeking to raise $2 billion from various investors, including Google, which could boost its valuation to $30 billion. This could mean that SBF’s stake in Anthropic could be worth as much as $4.5 billion.
The trial of SBF began on Oct. 6 and is expected to last for several weeks. If convicted, he faces up to 20 years in prison and a fine of up to $250 million.