The trial of Sam Bankman-Fried, the founder of FTX, commenced today, nearly a year after his cryptocurrency exchange’s collapse, which was allegedly linked to an $8 billion fraud.
Sam Bankman-Fried, a 31-year-old former billionaire, is now facing a Manhattan court jury on charges of embezzling funds from FTX customers to support his Alameda Research endeavors and acquire luxury properties.
In 2019, Bankman-Fried launched FTX, and it rapidly evolved into a multi-billion-dollar enterprise.
However, in November 2022, the company experienced a catastrophic collapse, resulting in customers reportedly losing around $10 billion. Prosecutors assert that this scandal sent shockwaves through the markets and tarnished Bankman-Fried’s previously stellar reputation within the cryptocurrency industry.
An explosive trial is anticipated to include testimony from his former girlfriend and ex-top lieutenant, Caroline Ellison, aged 29, who is expected to be the prosecution’s key witness.
Judge Lewis Kaplan is overseeing the trial, which is scheduled to commence with jury selection at 9:30 a.m. on Tuesday.
Bankman-Fried has admitted to inadequate risk management but denies any allegations of misappropriating funds. His legal team has indicated in court documents that they intend to argue that FTX’s handling of customer funds was proper and that others at FTX and Alameda bear the primary responsibility for their failure.
The trial is predicted to last up to six weeks and will involve testimony from three former members of Bankman-Fried’s inner circle, including Ellison. These individuals have previously pleaded guilty to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney’s office.
Bankman-Fried’s defense is likely to challenge the credibility of these witnesses, including former FTX executives Gary Wang and Nishad Singh, by asserting that they are motivated to implicate their client in order to receive reduced sentences—a common strategy in white-collar fraud cases.
This case has drawn comparisons to the trial of Elizabeth Holmes, the Theranos fraudster, who was sentenced to 11 years in prison for defrauding investors in her medical company of $945 million.
Potential jurors in Bankman-Fried’s trial are expected to be questioned about their attitudes towards cryptocurrency and whether they have any experience with ADHD, a condition that Bankman-Fried has.
Prosecutors allege that Bankman-Fried built his reputation on falsehoods and reinforced it with endorsements from celebrities and star athletes.
Since August 11, Bankman-Fried has been detained at the Metropolitan Detention Center in Brooklyn after the judge found evidence suggesting he had engaged in witness tampering, including sharing Ellison’s personal writings with a reporter.
He will be transported to court early on most days to allow for preparation with his legal team.