The highly anticipated trial of Sam Bankman-Fried, the founder of FTX, commenced today, almost a year after the collapse of his cryptocurrency exchange, which allegedly involved a massive fraud of $8 billion. Bankman-Fried, a 31-year-old former billionaire, will stand before a jury in a Manhattan court, facing charges of embezzling funds from FTX customers to finance his Alameda Research endeavors and acquire luxury properties.
Established in 2019, Bankman-Fried’s company swiftly developed into a multibillion-dollar enterprise. Yet, in November 2022, it experienced a devastating downfall, leaving customers approximately $10 billion in losses, according to prosecutors. This shocking turn of events sent shockwaves through the market and significantly tarnished Bankman-Fried’s once esteemed reputation within the cryptocurrency industry.
Expected to be a bombshell trial, the prosecution’s star witness is anticipated to be Bankman-Fried’s former girlfriend and top lieutenant, Caroline Ellison, aged 29. Presided over by Judge Lewis Kaplan, the trial will commence with the selection of the jury at 9:30 am on Tuesday.
While Bankman-Fried has admitted to inadequate risk management, he vehemently denies any allegations of misappropriation of funds. His legal team has indicated their intention to argue, through court documents, that FTX’s handling of customer funds adhered to proper protocols, placing the majority of the blame for the company’s failure on others within FTX and Alameda.
The trial is expected to span up to six weeks and will feature testimony from three former members of Bankman-Fried’s inner circle, including Ellison, who have pleaded guilty to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney’s office.
Bankman-Fried’s defense team has signaled their intention to challenge the credibility of these witnesses, including former FTX executives Gary Wang and Nishad Singh, by asserting that they may be motivated to implicate their client in order to secure reduced sentences for themselves, a common strategy in white-collar fraud cases.
This case has drawn comparisons to the high-profile trial of Elizabeth Holmes, the disgraced founder of Theranos, who was sentenced to 11 years in prison for defrauding investors out of $945 million in her medical company.
Prospective jurors in Bankman-Fried’s trial are expected to be questioned on their perceptions of cryptocurrency and whether they have any personal experience with ADHD, a condition with which Bankman-Fried has been associated.
Prosecutors contend that Bankman-Fried cultivated his reputation through deceit and further bolstered it with endorsements from celebrities and prominent athletes.
Since August 11, Bankman-Fried has been detained at the Metropolitan Detention Center in Brooklyn after the judge found evidence of potential witness tampering, including the sharing of Ellison’s personal writings with a reporter.
To allow for ample preparation with his legal team, Bankman-Fried will be brought to court early on most days.