The fraud trial of Sam Bankman-Fried, the founder of now-bankrupt cryptocurrency exchange FTX, began with jury selection on Tuesday. The trial comes almost a year after FTX’s collapse, which shocked markets and damaged Bankman-Fried’s reputation. U.S. District Judge Lewis Kaplan emphasized the need for a fair and impartial jury and stated that the decision of whether or not to testify in his own defense would ultimately be up to Bankman-Fried. Prosecutors have accused the former billionaire of embezzling funds from FTX customers to support his hedge fund, purchase luxury properties, and make donations to political candidates.
Bankman-Fried, who has pleaded not guilty to fraud and conspiracy charges, has acknowledged inadequate risk management but denies stealing funds. His defense team plans to argue that FTX’s treatment of customer funds was appropriate and that others within the company bore most of the responsibility for the exchange’s failure. The trial is expected to last up to six weeks and will feature testimony from former members of Bankman-Fried’s inner circle who have pleaded guilty to fraud charges and agreed to cooperate with the prosecution. Bankman-Fried’s lawyers intend to challenge the credibility of these witnesses, asserting that they are motivated to implicate their client in order to receive reduced sentences.
This trial holds significant importance as it represents the highest profile case brought against a former cryptocurrency executive by U.S. prosecutors. Bankman-Fried’s indictment in December 2022 marked a stunning downfall for an individual once regarded as a legitimate operator in an industry plagued by scams. Prosecutors claim that Bankman-Fried built his reputation on falsehoods and celebrity endorsements. The former billionaire has been in custody since August on charges of witness tampering, including sharing personal writings of his former romantic partner and cooperating witness Caroline Ellison with a reporter. He will be brought to court early each day to allow for preparation with his legal team.