In a significant development in the Bankman-Fried fraud trial, a Manhattan federal court jury began deliberations on Thursday to determine the veracity of seven fraud-related charges against Sam Bankman-Fried, the founder of the now-bankrupt cryptocurrency exchange FTX. The commencement of the jury’s assessment follows a meticulous month-long trial in which the former billionaire defended himself against accusations of defrauding investors worldwide.
Sam Bankman-Fried, 31, an MIT graduate and the son of Stanford University law professors, refuted claims that he illicitly transferred billions of dollars from his customers’ accounts. The demise of FTX in November 2022 triggered a cascade of failures across the crypto industry, resulting in substantial financial losses for clients.
The trial, unfolding in the Manhattan federal court, highlighted the swift and monumental collapse of FTX, which had once been the second-largest cryptocurrency exchange globally. Jurors were presented with Bankman-Fried’s social media assurances to customers juxtaposed against internal communications about FTX’s financial deficiencies.
Assistant U.S. Attorney Danielle Sassoon concluded the closing arguments by portraying Bankman-Fried as a figure who, while building a seemingly successful enterprise, was clandestinely diverting funds from FTX. She accused him of lying and covering up his unlawful activities. On the defense side, Mark Cohen, representing Bankman-Fried, argued that while his client may have made errors in judgment, these were not criminal acts but rather business decisions made in good faith.
The jury, having been instructed on the pertinent laws by the presiding judge, is set to meticulously sift through evidence that includes internal messages and public statements made by Bankman-Fried during the week leading up to FTX’s bankruptcy filing.
Prosecutors have presented a narrative where Bankman-Fried, to support his other venture, Alameda Research, misappropriated customer funds from FTX, and his reassurances to customers during the period of tumult were part of a broader fraudulent scheme.
The origins of FTX’s downfall can be traced back to early November 2022, when a balance sheet published by CoinDesk suggested alarming connections between FTX and Alameda Research. This revelation, followed by a massive customer withdrawal spree and damaging tweets by Changpeng Zhao, chief of rival crypto exchange Binance, set in motion the unraveling of Bankman-Fried’s empire.
As the crisis intensified, internal communications revealed Bankman-Fried and his associates grappling with a multibillion-dollar shortfall. Testimonies by Caroline Ellison, Alameda’s former CEO, Nishad Singh, FTX’s former chief engineering officer, and Gary Wang, former FTX chief technology officer, who have all pleaded guilty to fraud charges, shed light on the frenzied efforts to manage the situation.
In a critical moment during the trial, Bankman-Fried attempted to portray a resilient front on Twitter, claiming, “FTX is fine.” This statement, however, was later denounced as misleading by Ellison, Wang, and Singh during their testimonies.
Bankman-Fried’s legal team focused on his belief that the Twitter post was accurate at the time it was made and underscored the subsequent retraction after the value of cryptocurrencies held by Alameda plummeted. The defense also emphasized the chaotic and complex nature of running a large-scale business, suggesting that operational missteps do not equate to criminal behavior.