The trial of Sam Bankman-Fried, the founder of the failed cryptocurrency brokerage FTX, is set to begin on Tuesday with jury selection. Prosecutors from the Southern District of New York will present a case against Bankman-Fried, accusing him of stealing billions of dollars in FTX customer deposits. They allege that he used the funds to finance his hedge fund, purchase real estate, and make illegal campaign donations to both Democrats and Republicans in an attempt to influence cryptocurrency regulation in Washington.
Bankman-Fried, who was once considered one of the most powerful figures in the cryptocurrency industry, had an estimated net worth of $32 billion last year. However, FTX collapsed and filed for bankruptcy in November, leading to criminal charges against him.
Prosecutors plan to simplify the case for the jury, focusing on the allegation that Bankman-Fried misused customer funds. They will argue that he directed money from FTX’s customer accounts to his hedge fund, Alameda Research, to cover losses incurred during the cryptocurrency market decline. The collapse of FTX prompted investors to withdraw their funds, ultimately leading to the firm’s bankruptcy.
Several former FTX executives, including Caroline Ellison and Gary Wang, have agreed to plead guilty to lesser charges in exchange for testifying against Bankman-Fried. Ryan Salame, another top executive, has already pleaded guilty to making illegal campaign contributions on Bankman-Fried’s behalf.
The defense is expected to argue that while Bankman-Fried made mistakes, they do not amount to fraud. They will likely attribute FTX’s collapse to the broader decline in the cryptocurrency market.
Bankman-Fried, who was extradited from The Bahamas to New York in December, will face his former colleagues for the first time since FTX’s downfall. The trial is expected to shed light on the alleged fraudulent activities and determine Bankman-Fried’s culpability.