The trial for FTX founder Sam Bankman-Fried began today, nearly a year after the collapse of his crypto exchange due to an alleged $8 billion dollar scam.
The 31-year-old former billionaire will stand trial in Manhattan before a jury on charges that he stole from FTX customers to fund his Alameda Research and buy expensive residences.
He founded the company in 2019, and it swiftly evolved into a multibillion-dollar enterprise.
However, prosecutors believe that the firm suffered a catastrophic collapse in November 2022, costing clients over $10 billion. The story stunned investors and tarnished SBF’s once-glorious reputation in the crypto business.
Caroline Ellison, his ex-girlfriend and former senior lieutenant, is likely to be the prosecution’s key witness in a shocking trial.
The trial, presided over by Judge Lewis Kaplan, is set to begin with jury selection on Tuesday at 9.30 a.m.
Bankman-Fried admitted to poor risk management but denied skimming money. His attorneys have indicated in court documents that they intend to contend that FTX’s handling of customer monies was appropriate, and that others at FTX and Alameda shared the most of the burden for their failure.
The trial might run up to six weeks. It will include testimony from three former members of Bankman-Fried’s inner circle, including Ellison, who have pled guilty to fraud charges and agreed to cooperate with the U.S. Attorney’s Office in Manhattan.
Bankman-Fried’s attorneys have indicated that they intend to challenge the credibility of those witnesses, who also include former FTX executives Gary Wang and Nishad Singh, by claiming that they are motivated to implicate their client in order to receive a lesser sentence for themselves, a common strategy in white collar fraud cases.
The trial has been compared to that of Theranos fraudster Elizabeth Holmes, who was sentenced to 11 years in prison for scamming investors in her medical company of $945 million.
Potential jurors in Bankman-Fried’s case are expected to be asked if they oppose cryptocurrency and if they have any experience with ADHD, a disease that Bankman-Fried has.
Prosecutors claim Bankman-Fried created his brand on lies and backed it with celebrity and star athletes endorsements.
Bankman-Fried has been detained at the Metropolitan Detention Center in Brooklyn since Aug. 11, after the judge found he had likely engaged in witness tampering including by sharing Ellison’s personal writings with a reporter.
He will be brought to court early on most days to allow him to prepare with his lawyers.