Sam Bankman-Fried: FTX crypto empire ‘built on lies’ – prosecutors

  • By Natalie Sherman & Max Matza
  • BBC News

Image caption,

A sketch from the courtroom the place Judge Lewis Kaplan is presiding

Former crypto CEO Sam Bankman-Fried has appeared in a New York courtroom to reply to prices that his bankrupted monetary empire was “built on lies”.

Prosecutors instructed the courtroom on Wednesday that the previous FTX boss stole billions from purchasers and buyers to “commit fraud on a massive scale”.

His attorneys deny all prices, saying the so-known as “crypto king” is a “math nerd” who was appearing in “good faith”.

The blockbuster trial is anticipated to final about six weeks.

Mr Bankman-Fried rose to fame after founding FTX in 2019, as soon as one of many world’s greatest cryptocurrency exchanges.

“It looked like Sam Bankman-Fried was on top of the world,” lead prosecutor Thane Rehn instructed the packed Manhattan courtroom because the trial kicked off.

“All of it was built on lies.”

Mr Bankman-Fried grew to become a sort of crypto spokesman in Washington DC, recognized for his curly mop, sports activities sponsorships and for hobnobbing with celebrities.

As markets for digital currencies soured in 2022, he stepped in as a saviour for smaller corporations, which earned him the nickname the “King of Crypto”.

But a couple of months later, he was arrested and charged with fraud after FTX collapsed into chapter 11 with billions being reported lacking.

The 31-year-previous is accused of stealing billions by means of wire fraud and cash laundering in what quantities to one of many largest monetary crimes in US historical past.

The central allegation is that he used buyer funds to prop up his personal dangerous investments in his buying and selling agency, Alameda Research, and to fund an extravagant way of life.

He faces many years in jail if discovered responsible.

The trial opened on Wednesday after 12 jurors and 6 alternates had been chosen from a pool of 45 folks.

Prosecutors say Mr Bankman-Fried took greater than $10bn (£8.2) from unsuspecting FTX clients.

“He was committing a massive fraud and taking billions of dollars from thousands of victims,” Mr Rehn mentioned.

“He poured money – other people’s money – into his own investments to try to make himself even richer,” he added.

Mr Bankman-Fried has admitted in media interviews there was mismanagement on the agency however has denied he appropriated any funds.

“There was no theft,” his lawyer Mark Cohen retorted throughout the defence staff’s opening arguments.

“Sam didn’t defraud anyone. Sam didn’t intend to defraud anyone. Sam acted in good faith.”

Image caption,

US lawyer Damian Williams leads the workplace that’s arguing the case towards Mr Bankman-Fried

The US Department of Justice alleges that Mr Bankman-Fried used buyer funds positioned at FTX to spend extravagantly, shopping for property and making greater than $100m in political donations.

He additionally allegedly used the cash to cowl losses at Alameda Research, mendacity to buyers and banks in regards to the ties between the 2 corporations.

Mr Bankman-Fried’s attorneys instructed the courtroom that he was following authorized recommendation at key factors and that his enterprise practices had been “reasonable”.

“It’s not a crime to be the CEO of a company that later filed for bankruptcy,” mentioned his lawyer, Mr Cohen.

Because of the frantic tempo of his firm’s development, some essential particulars like threat administration had been “overlooked”, he mentioned, calling claims made by prosecutors about FTX and Alameda’s downfall “out of context”.

Mr Bankman-Fried was “willing to give up everything he owned personally to make things work”, he mentioned.

While recognized for his informal costume, he wore a gray swimsuit to courtroom and was seen conferring along with his attorneys all through the day.

His dad and mom, who’re Stanford legislation professors, sat within the viewers watching the trial, however he appeared to by no means look again of their path.

Four of his closest enterprise colleagues and allies – together with ex-girlfriend and former Alameda govt Caroline Ellison – have already pleaded responsible.

Three are anticipated to testify towards him.

Image supply, Getty Images

The first witness to testify for the prosecution was former FTX buyer, Marc-Antoine Julliard, a French citizen who mentioned he misplaced $133,000.

A commodities dealer, he mentioned he knew the dangers of investing in crypto and was ready to take duty for losses.

“If I trade, I’m responsible for my own decisions,” he instructed the courtroom.

But he mentioned he had by no means thought of the chance that another person could be utilizing his cash to commerce.

“That’s not what I signed up for,” he mentioned.

(with further reporting by Kayla Epstein)

Find out extra

Panorama explores the breakneck rise and sensational fall of Sam Bankman-Fried, the maths genius who got down to rework the world of crypto however ended up being its greatest loser.

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