The criminal trial of FTX founder Sam Bankman-Fried commenced in a Manhattan courthouse on Tuesday, as the once-revered figure in cryptocurrency faces charges for orchestrating what prosecutors describe as “one of the largest financial frauds in American history.”
The 31-year-old previously led the cryptocurrency exchange FTX, which had a valuation of $32 billion before its high-profile collapse last November. Bankman-Fried was arrested in the Bahamas in December and is now facing various fraud and conspiracy charges.
Here’s what you need to know about Bankman-Fried and the extensive fraud case against him:
What charges does Bankman-Fried face?
Bankman-Fried is facing charges for wire fraud, conspiracy to commit wire fraud, securities fraud and money laundering, as well as conspiracy to make unlawful political contributions and defraud the Federal Election Commission (FEC) in the trial that commenced on Tuesday.
However, the FTX founder is also confronting several additional charges, including securities fraud, conspiracy to commit bank fraud, and conspiracy to bribe foreign officials, in a second trial scheduled for March 2024.
Prosecutors allege that Bankman-Fried diverted customer funds to support his cryptocurrency firm Alameda Research and to finance tens of millions of dollars in campaign contributions.
During the 2022 midterm elections, Bankman-Fried emerged as one of the most significant political donors. Prosecutors also claim that additional contributions were made using Alameda and FTX funds under the names of two other executives to gain favor with candidates who could aid the passage of favorable legislation.
The prosecution further accuses the FTX founder of deceiving investors with false and misleading statements regarding the company’s financial condition and its relationship with Alameda.
What do we know about the trial?
Bankman-Fried’s first criminal trial commenced on Tuesday with the process of jury selection and is anticipated to last up to six weeks.
Four executives from FTX who previously pleaded guilty to criminal charges connected to the company’s collapse are expected to testify against Bankman-Fried during the trial.
Caroline Ellison, former CEO of Alameda Research and Bankman-Fried’s ex-girlfriend, as well as Gary Wang, co-founder of FTX, both pleaded guilty to fraud charges in December and agreed to cooperate with the investigation.
Nishad Singh, FTX’s former director of engineering, similarly pleaded guilty in February and agreed to cooperate with prosecutors. Fellow FTX executive Ryan Salame did the same in early September.
Why was Bankman-Fried’s bail revoked?
The founder of the once-prominent crypto company was initially released on a $250 million bail and placed under home detention while awaiting trial.
However, U.S. District Judge Lewis Kaplan revoked Bankman-Fried’s bail and sent him back to jail in August after determining that there was probable cause to believe he tampered with witnesses on at least two occasions since his arrest.
Prosecutors allege that Bankman-Fried harassed his ex-girlfriend, Caroline Ellison, by sharing her personal writings with The New York Times and attempted to intimidate witnesses through comments made to the media and an attempt to contact a former FTX employee.
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