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NEW YORK: Sam Bankman-Fried will stand trial on charges of… steal billions of dollars from customers of his FTX cryptocurrency exchange that began Tuesday, nearly a year after the company’s collapse, shocked the markets and destroyed its reputation.
Federal prosecutors say the 31-year-old former billionaire embezzled from FTX clients since its founding in 2019 through its November 2022 bankruptcy to support his hedge fund Alameda Research, buy luxury properties and donate more than $100 million to American political candidates.
Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has acknowledged inadequate risk management but denied stealing money. His lawyers have indicated in court filings that they plan to argue that FTX’s handling of client funds was proper, and that others at FTX and Alameda bore the brunt of the blame for their failures.
The first step in the trial will be selecting the 12-member jury that will ultimately weigh the competing narratives in deciding whether to convict Bankman-Fried.
Starting at approximately 9:30 a.m. EDT (1330 GMT) in Manhattan federal court, U.S. District Judge Lewis Kaplan will ask a group of New York residents questions about their backgrounds and experiences in an effort to screen out potential jurors who may be biased.
The process is expected to take six weeks. It will include testimony from three former members of Bankman-Fried’s inner circle who have themselves pleaded guilty to fraud charges and agreed to cooperate with the U.S. Attorney’s Office in Manhattan.
Bankman-Fried’s attorneys have indicated they plan to challenge the credibility of these witnesses — including former Alameda chief Caroline Ellison and former FTX executives Gary Wang and Nishad Singh — by arguing that they are motivated to protect their client to get a lower sentence, a common measure. strategy in cases of white-collar fraud.
They also laid the foundation for the argument that Bankman-Fried believed his exchange was allowed to invest customers’ deposits as long as they could eventually withdraw their money, and that a series of corporate bankruptcies – not deliberate fraud – left the exchange. without sufficient funds to fulfill withdrawal requests.
Bankman-Fried’s case is the most high-profile case brought by US prosecutors yet against a former cryptocurrency executive.
His indictment last December marked a spectacular fall from grace for Bankman-Fried, who had built a reputation as a legitimate player in an industry whose image has been tarnished by scams and so-called get-rich-quick schemes.
Prosecutors say Bankman-Fried built that reputation on lies and bolstered it with endorsements from celebrities and top athletes.
Bankman-Fried has been held at the Metropolitan Detention Center in Brooklyn since August 11, after a judge ruled he was likely guilty of witness tampering, including by sharing Ellison’s personal writings with a reporter. Ellison and Bankman-Fried are former romantic partners.
He will be brought to court early on most days so he can prepare with his lawyers.
Federal prosecutors say the 31-year-old former billionaire embezzled from FTX clients since its founding in 2019 through its November 2022 bankruptcy to support his hedge fund Alameda Research, buy luxury properties and donate more than $100 million to American political candidates.
Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has acknowledged inadequate risk management but denied stealing money. His lawyers have indicated in court filings that they plan to argue that FTX’s handling of client funds was proper, and that others at FTX and Alameda bore the brunt of the blame for their failures.
The first step in the trial will be selecting the 12-member jury that will ultimately weigh the competing narratives in deciding whether to convict Bankman-Fried.
Starting at approximately 9:30 a.m. EDT (1330 GMT) in Manhattan federal court, U.S. District Judge Lewis Kaplan will ask a group of New York residents questions about their backgrounds and experiences in an effort to screen out potential jurors who may be biased.
The process is expected to take six weeks. It will include testimony from three former members of Bankman-Fried’s inner circle who have themselves pleaded guilty to fraud charges and agreed to cooperate with the U.S. Attorney’s Office in Manhattan.
Bankman-Fried’s attorneys have indicated they plan to challenge the credibility of these witnesses — including former Alameda chief Caroline Ellison and former FTX executives Gary Wang and Nishad Singh — by arguing that they are motivated to protect their client to get a lower sentence, a common measure. strategy in cases of white-collar fraud.
They also laid the foundation for the argument that Bankman-Fried believed his exchange was allowed to invest customers’ deposits as long as they could eventually withdraw their money, and that a series of corporate bankruptcies – not deliberate fraud – left the exchange. without sufficient funds to fulfill withdrawal requests.
Bankman-Fried’s case is the most high-profile case brought by US prosecutors yet against a former cryptocurrency executive.
His indictment last December marked a spectacular fall from grace for Bankman-Fried, who had built a reputation as a legitimate player in an industry whose image has been tarnished by scams and so-called get-rich-quick schemes.
Prosecutors say Bankman-Fried built that reputation on lies and bolstered it with endorsements from celebrities and top athletes.
Bankman-Fried has been held at the Metropolitan Detention Center in Brooklyn since August 11, after a judge ruled he was likely guilty of witness tampering, including by sharing Ellison’s personal writings with a reporter. Ellison and Bankman-Fried are former romantic partners.
He will be brought to court early on most days so he can prepare with his lawyers.
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