Sam Bankman-Fried: FTX founder heads to trial on fraud charges

Disgraced cryptocurrency executive accused of stealing billions of dollars from customers on crypto exchange

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Jury selection began on Tuesday in the trial of Sam Bankman-Fried, the disgraced cryptocurrency entrepreneur who has been accused of stealing billions of dollars from FTX exchange customers.

Federal prosecutors have charged Mr Bankman-Fried with seven counts of fraud and conspiracy. He is accused of stealing from FTX customers to prop up his Alameda Research hedge fund, buy property and donate millions to US politicians. He has pleaded not guilty.

Prospective jurors began entering the Manhattan federal courthouse on Tuesday morning, where 12 will ultimately be chosen to be seated during the trial.

"The object is to select a jury of individuals who, no matter what they may know or not know about these parties or about this case, are willing and able to decide this case in a manner that's fair and impartial to both sides based solely on the evidence," US District Judge Lewis Kaplan told jurors.

The trial is expected to last six weeks and will include testimony from three former close associates of Mr Bankman-Fried who have already pleaded guilty to fraud.

FTX was a digital platform for people to exchange cryptocurrencies and made money by collecting fees on trades.

At its height, it was worth more than $32 billion. It won naming rights for the stadium of the NBA team Miami Heat and received numerous celebrity endorsements, from Shark Tank's Kevin O'Leary to NFL star Tom Brady.

Mr Bankman-Fried also donated significant amounts to Democratic and Republican fund-raising committees.

Records from the Federal Elections Commission show his Alameda Research fund donated millions of dollars to a political action committee backing then-candidate Joe Biden in 2010. Others to have received donations from Mr Bankman-Fried included US senators Kirsten Gillibrand, Susan Collins, Cory Booker and Lisa Murkowski.

House Minority Leader Hakeem Jeffries and others who received donations either returned the funds or gave them to charity.

Mr Bankman-Fried's empire collapsed last year after a report alleged unusually close ties between FTX and Alameda Research, triggering a rush of customer withdrawals.

FTX filed for bankruptcy on November 11, days after the company lost more than $6 billion in withdrawals. Mr Bankman-Fried resigned as its chief executive.

He was later arrested in the Bahamas and extradited to the US, where he was indicted on fraud and conspiracy charges.

Mr Bankman-Fried has acknowledged there was inadequate risk management but has denied stealing funds from his customers.

Defence lawyers are expected to argue that witnesses testifying against him are doing so to receive a more favourable sentence.

Lawyers were also expected to provide an “advice of counsel” defence, which suggests the disgraced FTX founder did not knowingly commit fraud and was relying on advice from the company's lawyers.

Judge Lewis Kaplan at the weekend ruled “advice of counsel” could not be included in defence lawyers' opening statements, outlining in a 10-page memo that doing so could prejudice the jury.

Mr Bankman-Fried has been held at Brooklyn's Metropolitan Detention Centre since August after Mr Kaplan ruled he had breached his bail conditions and attempted to tamper with witnesses.

He faces decades in prison if convicted.

Updated: October 04, 2023, 5:37 AM