Trial begins for disgraced FTX founder Sam Bankman-Fried, accused of embezzling US$8 billion in cryptocurrency fraud

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3rd October 2023 – (New York) The highly anticipated trial of Sam Bankman-Fried, the former billionaire founder of FTX, commenced today in a Manhattan court. Nearly one year after the collapse of his cryptocurrency exchange, Bankman-Fried faces allegations of embezzling $8 billion from FTX customers. The charges include using the funds to support his hedge fund, Alameda Research, purchase luxury properties, and make substantial political donations. The trial is expected to shed light on the shocking downfall of Bankman-Fried and the subsequent loss suffered by FTX customers.

In a Manhattan court today, Sam Bankman-Fried, the 31-year-old former billionaire and founder of FTX, faced a jury trial on charges of embezzlement. The allegations revolve around Bankman-Fried’s alleged misappropriation of $8 billion from FTX customers to bolster his hedge fund, Alameda Research, acquire luxury properties, and make significant political contributions to U.S. candidates.

Bankman-Fried, who launched FTX in 2019, quickly transformed the company into a multibillion-dollar enterprise. He leveraged the support of A-list celebrities such as Tom Brady and Larry David, as well as prominent politicians like Bill Clinton, to promote FTX. However, the cryptocurrency platform suffered a catastrophic collapse in November 2022, leaving customers with losses estimated at around $10 billion. This event sent shockwaves through the markets and severely tarnished Bankman-Fried’s once-revered reputation within the crypto industry.

The trial is expected to feature explosive testimony from Caroline Ellison, Bankman-Fried’s ex-girlfriend and former top lieutenant, who will serve as the prosecution’s star witness. Additionally, three former members of Bankman-Fried’s inner circle, including Ellison, have already pleaded guilty to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney’s office.

The trial, presided over by Judge Lewis Kaplan, commenced with the selection of jurors at 9.30am. Bankman-Fried’s defence has acknowledged inadequate risk management but vehemently denies any accusations of stealing funds. In court documents, his legal team has indicated plans to argue that FTX’s handling of customer funds was appropriate and that others within FTX and Alameda bear the majority of the responsibility for the failure.

The trial is expected to last up to six weeks and will delve into complex financial evidence, similar to the trial of Elizabeth Holmes, the founder of Theranos. Jurors will be asked about their views on cryptocurrency and their familiarity with attention-deficit/hyperactivity disorder (ADHD), a condition Bankman-Fried has.

Bankman-Fried, who was once revered as a key figure in the crypto industry, now finds himself at the centre of one of the highest-profile cases brought against a former cryptocurrency executive. His indictment in December marked a stunning fall from grace for an individual who had been seen as a legitimate player in an industry plagued by scams and get-rich-quick schemes.

Bankman-Fried has been held at the Metropolitan Detention Center in Brooklyn since 11th August, following allegations of witness tampering, including sharing Ellison’s personal writings with a reporter. He will be transported to court early each day to allow for preparation with his legal team.