Ex-crypto king Sam Bankman-Fried goes on trial for ‘biggest fraud in history’

Sam Bankman-Fried’s trial kicked off yesterday in what has been dubbed as a ‘watershed’ moment for the world of crypto.

The disgraced tycoon, who founded cryptocurrency exchange FTX in 2019, is facing trial for alleged financial crimes stemming from the collapse of the business in November last year.

The 31-year-old faces seven conspiracy and fraud charges over claims he siphoned investors’ money into risky bets and other unlawful purposes.

He has been accused by the Manhattan US attorney’s office of using FTX customer funds to cover swelling loan expenses at sister hedge fund Alameda, as well as buying lavish properties and paying out millions in political donations.

Bankman-Fried, the son of two Stanford professors, has denied all the charges. A conviction on all counts could mean 115 years in prison.

Disgraced: FTX founder Sam Bankman-Fried faces seven conspiracy and fraud charges over claims he siphoned investors’ money into risky bets and other unlawful purposes

The first stage of the trial started in New York yesterday when the selection process for the jury began.

US District Judge Lewis Kaplan told 50 prospective jurors gathered in the Manhattan courtroom that he would ask them questions to whittle them down to 12 and six alternates.

‘The object is to select a jury of individuals who no matter what they may know or not know about these parties or about this case are willing and able to decide this case in a manner that’s fair and impartial to both sides based solely on the evidence,’ Kaplan said.

The judge also told Bankman-Fried, who was dressed in a suit and striped tie with his once signature unkempt curly hair neater than often, it would be his decision whether to testify in his own defence. Asked if he understood, Bankman-Fried said: ‘Yes.’

The judge signalled that opening statements in the case could start today.

Defence lawyers have signalled plans to undermine the credibility of witnesses, including members of Bankman-Fried’s inner circle who have pleaded guilty to fraud charges and agreed to cooperate with prosecutors. 

These include Caroline Ellison, 28, Bankman-Fried’s ex-girlfriend and former chief executive of Alameda Research, as well as Gary Wang, 31, FTX co-founder and the accused’s former room-mate.

Lawyers are set to argue that Bankman-Fried did not have the criminal intent despite making mistakes that led to the collapsed exchange.

The FTX empire suffered a spectacular fall from grace when it filed for bankruptcy 11 months ago after attempts to raise £7billion in funding failed.

High profile: Bankman-Fried on a conference panel with Tony Blair and Bill Clinton

This collapse had a dramatic impact on the wider market – wiping more than $1trillion from crypto’s market capitalisation last year. 

It also undermined confidence in those behind crypto. Bankman-Fried was at one stage worth nearly £22billion and also shared conference stages with the likes of Tony Blair and Bill Clinton.

Prosecutors say Bankman-Fried built this reputation on lies and bolstered it with endorsements from celebrities and star athletes.

FTX had backing from high-profile people such as supermodel Gisele Bundchen (pictured)

FTX had backing from high-profile people such as supermodel Gisele Bundchen and American basketball player Stephen Curry.

‘We got overconfident and careless,’ Bankman-Fried wrote on X, formerly Twitter, five days after FTX filed for bankruptcy. ‘And problems were brewing. Larger than I realised.’

He was arrested in the Bahamas in December last year before being extradited to the US on charges that he allegedly he stole billions from the exchange’s customers to offset losses at Alameda.

And FTX’s collapse is estimated to have affected thousands of investors in Britain, with regulator the Financial Conduct Authority noting that 8 per cent of its 1m customers were in the UK – equivalent to 80,000.

Although Bankman-Fried was released on a £200million bail, one of the largest in US history, this was later revoked after he was accused of trying to tamper with potential witnesses – including attempted contact with his ex-flame Ellison. 

But the trial itself represents a key moment for the industry that is still trying to recover from the FTX fallout. 

Walid Koudmani, chief analyst at broker XTB, said the trial could ‘shape the destiny of the crypto industry’ calling it a ‘watershed moment’.

This post first appeared on Dailymail.co.uk