Sam Bankman-Fried, the founder of a failed cryptocurrency exchange FTX, is on trial for seven counts of wire fraud and conspiracy to commit wire fraud.
The founder of FTX was frustrated with other exchanges employed by his crypto trading firm Alameda Research, according to a profile from FTX investors Sequoia Capital. The SEC alleges that FTX was a fraud from the start.
Bankman-Fried used the customer money to make billions of dollars in investments, buy $200 million of real estate, and repay Alameda's lenders, according to the indictment.
The entire scheme came to light after coindesk published a huge piece on Alameda's balance sheet. It showed that FTX and Alameda were very closely linked and that a lot of the balance sheet consisted of the FTT token, which was issued by FTX. That article led to Binance CEO Changpeng 'CZ' Zhao - a former investor in FTX - saying he would sell his holdings of FTT.
FTX's bankruptcy led to Bankman-Fried's resignation from the company. The SEC has charged Ellison with manipulating the price of FTT, which inflated Alameda's balance sheet. That misled people about FTX's risk exposure from Alameda.
Aside from the financial shenanigans, there is also the salacious aspect of the case. Bankman-Fried's ex-girlfriend and childhood friend are testifying against him. The court has ruled that questions about drug use and political donations are fair game.