What to Know About Sam Bankman-Fried’s Fraud Trial

Sam Bankman-Fried, the founding father of the collapsed FTX cryptocurrency change, is about to face trial, after a yearlong company saga that has made headlines world wide and devastated the digital asset business.

Right here’s what to find out about his case.

Federal prosecutors have charged Mr. Bankman-Fried with orchestrating an unlimited scheme to siphon billions of {dollars} of FTX buyer cash into political contributions, actual property purchases, charitable donations and enterprise investments. He’s additionally accused of mendacity to his enterprise capital backers and to the businesses that lent FTX cash.

The scheme was uncovered in November when a run on deposits pressured FTX to close down withdrawals, with greater than $8 billion in buyer funds lacking. 5 weeks later, prosecutors in Manhattan charged Mr. Bankman-Fried with eight counts, together with wire fraud, securities fraud, commodities fraud, cash laundering and marketing campaign finance violations.

Prosecutors later dropped the marketing campaign finance cost, so Mr. Bankman-Fried faces solely seven counts. After his arrest, the prosecutors additionally accused him of further crimes, together with financial institution fraud and bribery of a international authorities, however these new expenses have been punted to a attainable second trial, scheduled for March.

Mr. Bankman-Fried oversaw two core companies: FTX and a hedge fund referred to as Alameda Analysis.

FTX served as a market for folks to purchase and promote digital currencies; they might deposit {dollars} after which spend them on Bitcoin, Ether or lots of of different newfangled cash, storing their financial savings on the platform. In some nations, prospects may additionally borrow funds from FTX to amplify bets on crypto costs, a dangerous sort of buying and selling that was banned in the US.

Alameda was, not less than in concept, merely a big buyer of FTX that used the platform to commerce digital currencies. However in response to prosecutors, Mr. Bankman-Fried allowed Alameda to borrow a just about limitless quantity from FTX after which funneled a lot of that cash into different tasks. For instance, regulators say, Alameda used buyer funds to make giant loans to FTX executives, who spent the cash on political donations.

It’s not completely clear. However after FTX filed for chapter, Mr. Bankman-Fried blamed an accounting error that he mentioned had precipitated billions of {dollars} of consumer funds to fade with out his data. He has additionally blamed his Alameda colleagues for failing to institute correct danger administration protocols. And in authorized filings, his legal professionals have mentioned they plan to argue that two giant regulation companies approved most of his actions at FTX.

Mr. Bankman-Fried faces an uphill battle in courtroom. His three closest colleagues — Alameda’s chief government, Caroline Ellison, and two FTX co-founders, Nishad Singh and Gary Wang — all pleaded responsible to fraud expenses and agreed to cooperate in opposition to him. (A fourth government, Ryan Salame, pleaded responsible with out signing a cooperation settlement.)

The choose overseeing the case, Lewis A. Kaplan, has repeatedly sided with the prosecution in procedural disputes main as much as the trial, rejecting a slate of skilled witnesses the protection had hoped to name. Since August, Mr. Bankman-Fried has needed to put together his case from a jail cell in Brooklyn after Decide Kaplan revoked his bail, ruling that he had repeatedly tried to intrude with witnesses.

It’s slated to final six weeks, in response to courtroom filings.


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