The trial of Bankman-Fried, the founder of the failed cryptocurrency brokerage FTX, will begin Tuesday with jury selection. Prosecutors from the
While the case will involve the complicated world of cryptocurrencies, prosecutors are expected to try to boil it down to the simplest of terms for jurors: Bankman-Fried took money from customers and used it in ways he wasn’t supposed to.
“Prosecutors are going to say, ‘look at where the money went and how it was spent,'” said
Before FTX collapsed and filed for bankruptcy last November, Bankman-Fried was one of the most powerful people in the cryptocurrency industry. “SBF” had an estimated net worth of
The 31-year-old Bankman-Fried founded FTX in 2019, and it grew rapidly. The son of
Bankman-Fried and his inner circle of executives ran their then-growing crypto empire from The
FTX had effectively two lines of business: a brokerage where customers could deposit, buy, and sell cryptocurrency assets on the FTX platform, and an affiliated hedge fund known as
The house of cards that Bankman and his lieutenants built came crashing down in early November, when reports surfaced about the condition of Alameda’s balance sheet. Spooked investors, who had already seen several crypto firms collapse during the year, quickly pulled their money out of FTX and within days the firm was bankrupt.
John Ray III, the restructuring expert who was tasked with cleaning up FTX in bankruptcy, described the conditions inside of FTX as worse than Enron, long considered the benchmark for corporate malfeasance in popular culture.
Bankman-Fried is expected to come face-to-face with his former lieutenants at FTX for the first time since its collapse. Several of them have agreed to plead guilty to lesser crimes in exchange for testifying against him. This includes
Ellison is expected to be the prosecution’s central witness. Prosecutors are likely to count on her to demonstrate that the collapse of FTX was not due to a few mistakes, as Bankman-Fried alleges, but to fraud. She has previously said in a statement through her lawyers that she knew funneling FTX customers' money into
“I expect the government is going to be able to show that Bankman-Fried knew what he was doing was wrong, and here are the people in the room who can corroborate that story,” said
The defense is expected to argue that while Bankman-Fried made some mistakes, the mistakes do not amount to fraud and FTX was just the latest casualty in the broad collapse of the cryptocurrency market last year. Until he had his computer privileges taken away by the presiding judge in the case, Bankman-Fried himself spent months reaching out to reporters and posting on social media to explain his actions.
“Look, I screwed up,” he said in a remote interview with The New York Times’
Bankman-Fried was extradited from The
Broadly, the crypto industry has still not recovered since FTX’s collapse. The price of Ethereum and Bitcoin, the two most widely used cryptocurrencies, are still down two-thirds from where they were a year ago and the volume of trading in crypto is half what it was. The market for NFTs, artificially scarce digital objects meant to create unique digital versions of memorabilia or photographs, has all but evaporated. Roughly 3,000 NFTs trade hands daily now, compared to more than 40,000 a day a year ago, according to NonFungible.com.
Even Bankman-Fried’s former competitors are facing their own legal scrutiny. This summer the
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