FTX Founder Sam Bankman-Fried Faces Trial for Alleged $8 Billion Fraud
Sam Bankman-Fried, the head of the TX crypto empire, is now facing trial for what’s being called the ‘largest fraud in history’ after allegedly defrauding customers of a staggering $8 billion.
The trial of Sam Bankman-Fried, the founder of FTX, has begun, almost a year following the downfall of his cryptocurrency exchange due to allegations of an $8 billion fraud. The 31-year-old, once a billionaire, is now standing before a Manhattan jury, accused of misappropriating funds from FTX customers to finance his Alameda Research endeavors and purchase luxury properties.
In 2019, he launched the company, which rapidly grew into a multi-billion-dollar enterprise. However, the company’s abrupt collapse in November 2022 resulted in customers losing approximately $10 billion, as asserted by prosecutors. This shocking episode sent shockwaves through financial markets and tarnished Bankman-Fried’s once-godlike reputation in the crypto world.
The trial is expected to be a major spectacle, featuring his ex-girlfriend and former top aide, 29-year-old Caroline Ellison, as the star witness for the prosecution. Under the guidance of Judge Lewis Kaplan, the trial is set to commence with jury selection at 9:30 am on Tuesday.
Bankman-Fried has acknowledged shortcomings in risk management but vehemently denies any theft of funds. His legal team plans to argue in court that FTX’s management of customer funds was proper and that the primary blame for the failure lies with others at FTX and Alameda.
This high-stakes trial is projected to last up to six weeks and will involve testimony from three former members of Bankman-Fried’s inner circle, including Ellison, who have already pleaded guilty to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney’s office.
Bankman-Fried’s legal team has signaled their intention to challenge the credibility of these witnesses, including former FTX executives Gary Wang and Nishad Singh, by asserting that their motivation to implicate their client is driven by a desire for reduced sentences, a common strategy in white-collar fraud cases.
This case is drawing comparisons to the trial of Elizabeth Holmes, the Theranos fraudster who received an 11-year prison sentence for defrauding investors of $945 million in her medical company.
During jury selection, potential jurors are expected to be asked about their views on cryptocurrency and whether they have any experience with ADHD, a condition that Bankman-Fried has. Prosecutors allege that Bankman-Fried constructed his reputation on falsehoods and amplified it with celebrity endorsements.
Bankman-Fried has been in custody at the Metropolitan Detention Center in Brooklyn since August 11, following allegations of witness tampering, including sharing Ellison’s personal writings with a reporter. He will be brought to court early on most days to allow for preparation with his legal team.