Former FTX CEO Sam Bankman-Fried (SBF) is set to go on trial today, almost a year after the leading crypto exchange’s devastating collapse.
The trial of Sam Bankman-Fried (SBF), the founder and former CEO of crypto exchange FTX, is set to commence today at 9:30 AM (EDT) in a lower Manhattan courthouse.
Genesis of SBF’s Woes
Recall that SBF’s dealings in FTX were brought to light by CoinDesk. The media outlet reported in November 2022 that Alameda Research – SBF’s associated hedge fund – held billions in FTX’s native cryptocurrency, FTT.
Per CoinDesk, the famous crypto hedge fund used the FTT tokens as backing for its loans. Reacting to the report, Binance CEO and founder Changpeng Zhao (CZ) announced that the exchange would sell its $50 million FTT holdings.
Sensing trouble, FTX users hurried to withdraw their funds from the exchange, leading to a giant withdrawal surge. The development led to FTX’s collapse, with the exchange filing for bankruptcy protection and SBF subsequently resigned as CEO.
SBF went into hiding and was later arrested in the Bahamas on December 12, 2022. Authorities later extradited him to the US in January 2023.
Charges Against SBF
Notably, SBF, previously ranked among the most influential crypto stakeholders, faces seven counts of conspiracy and fraud from federal authorities, including the SEC, CFTC, and the US attorney office of the Southern District of New York (SDNY).
According to federal prosecutors, the 31-year-old crypto mogul siphoned FTX’s customers’ funds into risky trades and other unlawful purposes.
The SDNY’s office accused SBF of using investors’ funds to pay loans at Alameda Research. In addition, authorities alleged that the erstwhile crypto star channeled customers’ assets to fund political donations and purchase fancy properties.
Despite acknowledging inadequate risk management, SBF denied all seven counts of charges.
The first step of the trial will involve selecting a 12-member jury, who will decide whether to convict the FTX founder.
Judge Lewis Kaplan will ask multiple New York residents about their experiences with the 12-member jury to weed out biased prospective jurors.
The trial commences today and is expected to last six weeks, featuring testimonies from SBF’s close associates, including Alameda CEO Caroline Ellison.
In December 2022, Ellison pleaded guilty to her role in the alleged conspiracy. Prosecutors have already indicated that they would submit as evidence a November 9, 2022, recording of an Alameda meeting where Ellison diminished staff concern.
Meanwhile, Bankman-Fried’s attorneys have indicated plans to challenge the credibility of the witnesses. They plan to argue that the witnesses, especially SBF’s inner cycles, have accepted deals of reduced sentences to implicate SBF.
It bears mentioning that if Bankman-Fried is convicted, he faces a maximum sentence of 115 years.