Sam Bankman-Fried, the former CEO of the cryptocurrency exchange FTX, appeared in a New York court to answer charges that his once-thriving financial empire was constructed “on lies.” Prosecutors allege that Bankman-Fried committed “massive scale” fraud, stealing billions from clients and investors. The trial is expected to last approximately six weeks.
Bankman-Fried, who gained notoriety for founding FTX in 2019, was dubbed the “King of Crypto” for his role in the cryptocurrency world. However, his reputation crumbled when FTX collapsed into bankruptcy amid allegations of missing billions.
Prosecutors contend that Bankman-Fried used customer funds to support his own risky investments in Alameda Research, his trading firm, and to fund an extravagant lifestyle. They allege that he took over $10 billion from unsuspecting FTX customers.
While Bankman-Fried has admitted to mismanagement at the firm, his defence team denies any wrongdoing, asserting that he acted in “good faith” and that there was no theft.
The US Department of Justice further alleges that Bankman-Fried used customer funds to purchase property and make substantial political donations. He is also accused of covering losses at Alameda Research and misleading investors and banks about the connections between the two companies.
Bankman-Fried’s trial opened after jurors and alternates were selected. His defence maintains that he followed legal advice and that his business practices were reasonable. They argue that certain details, like risk management, were overlooked due to the rapid growth of his company.
Bankman-Fried faces the possibility of decades in prison if found guilty. Several of his close associates, including ex-girlfriend Caroline Ellison, have already pleaded guilty, with some expected to testify against him.
The trial began with the testimony of a former FTX customer who claimed to have lost $133,000. While the trader acknowledged the risks of investing in cryptocurrencies, he had not considered the possibility that someone else would use his money for trading.
The trial is closely watched in the cryptocurrency industry, as it highlights the regulatory challenges and legal scrutiny faced by prominent figures in the sector.