Sam Bankman-Fried heads for trial on charges of stealing billions from
FTX users
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[October 03, 2023]
By Jody Godoy and Luc Cohen
NEW YORK (Reuters) - Sam Bankman-Fried is set to go on trial on charges
of stealing billions of dollars from customers of his FTX cryptocurrency
exchange starting on Tuesday, nearly a year after the company's collapse
shocked markets and tattered his reputation.
Federal prosecutors say the 31-year-old former billionaire embezzled
from FTX customers since its founding in 2019 through its November 2022
bankruptcy in order to prop up his hedge fund Alameda Research, buy
luxury properties and donate more than $100 million to U.S. political
candidates.
Bankman-Fried has pleaded not guilty to seven counts of fraud and
conspiracy. He has acknowledged inadequate risk management, but denied
stealing funds. His lawyers have signaled in court papers they plan to
argue that FTX's treatment of customer funds were proper, and that
others at FTX and Alameda bore the bulk of the blame for their failure.
The first step in the trial will be selecting the 12-member jury that
will ultimately weigh those competing narratives in deciding whether to
convict Bankman-Fried.
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Starting at around 9:30 a.m. EDT (1330 GMT) in Manhattan federal court,
U.S. District Judge Lewis Kaplan will ask a pool of New York residents
questions about their backgrounds and experiences in an effort to weed
out any prospective jurors who may be biased.
The trial is expected to last up to six weeks. It will feature testimony
from three former members of Bankman-Fried's inner circle who have
pleaded guilty to fraud charges themselves and agreed to cooperate with
the Manhattan U.S. Attorney's office.
Bankman-Fried's lawyers have signaled they plan to challenge the
credibility of those witnesses - who include former Alameda chief
Caroline Ellison and former FTX executives Gary Wang and Nishad Singh -
by arguing they are motivated to implicate their client to get a lower
sentence, a common strategy in white collar fraud cases.
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![](../images/100323PIX/news_j17.jpg)
Indicted FTX founder Sam Bankman-Fried leaves the United States
Courthouse in New York City, U.S., July 26, 2023. REUTERS/Amr Alfiky/File
Photo
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They have also laid the groundwork to argue that Bankman-Fried
believed his exchange was allowed to invest customers' deposits as
long as they were ultimately able to take out their funds, and that
a series of business failures - not deliberate fraud - left the
exchange without enough money to meet withdrawal requests.
Bankman-Fried's is the highest profile case U.S. prosecutors have so
far brought against a former cryptocurrency executive.
His indictment last December marked a spectacular fall from grace
for Bankman-Fried, who had garnered a reputation as a legitimate
operator in an industry whose image was pockmarked by scams and
purported get-rich-quick schemes.
Prosecutors say Bankman-Fried built that reputation on lies and
bolstered it with endorsements from celebrities and star athletes.
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. Ellison and Bankman-Fried are
former romantic partners.
He will be brought to court early on most days to allow him to
prepare with his lawyers.
(Reporting by Jody Godoy and Luc Cohen in New York; Editing by Amy
Stevens and Lincoln Feast.)
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