Sam Bankman-Fried, once hailed as a crypto superstar and philanthropist, is now facing trial for what federal prosecutors are calling one of the largest frauds in US history. Bankman-Fried, the founder of crypto-trading platform FTX, has pleaded not guilty to seven counts of fraud and conspiracy. Prosecutors allege that he stole billions from FTX customer funds for personal use and to cover losses incurred by a crypto hedge fund he controlled. They also claim that Bankman-Fried defrauded FTX investors by concealing the scheme.
FTX, marketed as a safe and easy portal into cryptocurrency trading, gained significant popularity and a valuation of over $30 billion. However, the crypto market’s downturn in 2022 led to FTX’s collapse. When a report questioned the financial links between FTX and Bankman-Fried’s other businesses, investors and customers panicked and rushed to withdraw their funds, exposing an $8 billion shortfall. FTX filed for bankruptcy, and Bankman-Fried resigned as CEO. He was later arrested in the Bahamas and extradited to the US.
Bankman-Fried has maintained his innocence, portraying himself as an inexperienced businessman who unintentionally made mistakes. His defense may invoke an “advice of counsel” argument, claiming he followed guidance from FTX’s lawyers and was unaware of any illegal actions. However, several former high-level associates, including Bankman-Fried’s ex-girlfriend and Alameda’s CEO, have pleaded guilty and are cooperating with prosecutors. Additionally, the current management of FTX, led by a restructuring expert, has shown hostility towards Bankman-Fried.
Jury selection for Bankman-Fried’s trial begins on October 3, and the trial is expected to last up to six weeks. Bankman-Fried could face a maximum sentence of 110 years in prison if found guilty on all charges.