Former FTX CEO, Sam Bankman-Fried, is set to face trial in New York City on federal charges of wire fraud, securities fraud, and money laundering. Bankman-Fried, once regarded as a leader in digital currencies, allegedly defrauded customers of his digital currency exchange, FTX, and lenders to his cryptocurrency hedge fund, Alameda Research. The trial is expected to last about six weeks, following jury selection scheduled to begin on October 3. While Bankman-Fried has pleaded not guilty to all charges, if convicted, he could face maximum sentences of 20 years in prison.
Bankman-Fried initially rose to prominence with the founding of Alameda Research in 2017 and FTX in 2019. FTX quickly became one of the largest players in the field, offering low trading fees and benefiting from the booming crypto market. Bankman-Fried’s personal wealth skyrocketed, reaching an estimated $26 billion. He positioned himself as an advocate for ethical practices in the industry and became a significant political donor. However, trouble started when it was revealed that Alameda Research’s balance sheet relied heavily on FTT tokens issued by FTX, leading to financial liabilities for the firm. The subsequent sale of FTT tokens by rival company Binance further damaged Alameda’s balance sheet, causing customers to withdraw their funds from FTX. The intertwined relationship between FTX and Alameda became apparent, and both companies filed for bankruptcy in November 2022, revealing billions of dollars missing.
Bankman-Fried’s fall from grace continued as he faced a criminal investigation and was arrested for leaking diary entries by his former girlfriend and ex-CEO of Alameda, Caroline Ellison. He was extradited to the US and initially placed under house arrest, but was later jailed in August after prosecutors discovered the witness tampering. Ellison and other FTX insiders are expected to testify against Bankman-Fried during the trial. Additionally, Bankman-Fried is expected to face trial on five additional counts, including bribery of a foreign official, in March 2024.
