NEW YORK: Sam Bankman-Fried will likely defend himself at his fraud trial, due to begin on Tuesday, by arguing he did not think the use by his FTX cryptocurrency exchange of customer funds was improper and by challenging the credibility of those who say otherwise.
Thousands of pages of evidence, ranging from internal documents to audio recordings, will be presented and fought over in the next six weeks as U.S. prosecutors try to prove that the former FTX founder knowingly defrauded customers and business partners.
Arguably the most damning evidence – or lack thereof – could come from the recollections and personal opinions of Bankman-Fried’s former colleagues, friends and housemates.
Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has long acknowledged failing to manage risk at FTX, but denied prosecutors’ claims he stole billions of dollars in FTX customer deposits to plug Alameda’s losses.
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Here are the key things to know about the case:
What are the charges?
SBF faces seven counts, including wire fraud and securities fraud.
Prosecutors alleged that SBF stole billions of dollars from FTX customer funds for his own personal use and to cover huge losses incurred by Alameda Research, a crypto hedge fund he also controlled.
They also say SBF defrauded investors in FTX by covering up the scheme.
Prosecutors opted in June to sever five other charges that were brought after Bankman-Fried’s extradition from the Bahamas, where FTX was based. A separate trial is scheduled to begin on those charges in March.
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What happened to FTX?
FTX marketed itself as an easy, safe portal into cryptocurrency trading. It made money by collecting fees on customers’ trades, much like a typical brokerage.
As digital asset valuations shot up in 2021, so did FTX’s profile. At its peak, the company fetched a private valuation of more than $30 billion. It plastered its name across a Miami basketball arena and won celebrity endorsements from Tom Brady and Larry David, both of whom starred in Super Bowl ads for FTX.
But crypto market turmoil took root in the spring of 2022, gutting the entire industry’s value down to $1 trillion from $3 trillion.
How long will the trial last?
Jury selection begins on Tuesday, October 3, in Manhattan federal court. The trial is expected to last up to six weeks.
During that time SBF will remain in the Metropolitan Detention Center in Brooklyn, where he has been since Judge Lewis Kaplan revoked his bail on August 11 over SBF’s efforts to intimidate witnesses.
What will happen if he’s convicted?
If he’s found guilty of all seven criminal counts and is given the maximum sentence, SBF would face the prospect of 110 years in prison.
