Bankman-Fried to stand trial on fraud charges

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Bankman-Fried to stand trial on fraud charges

Sam Bankman-Fried will go on trial Tuesday on charges of stealing billions of dollars from customers of his FTX cryptocurrency exchange starting on Tuesday, nearly a year after the company's collapse shocked markets and tattered his reputation.

Federal prosecutors said the 31-year-old billionaire embezzled from FTX customers since its founding in 2019 through his November 2022 bankruptcy in order to prop up his hedge fund Alameda Research, buy luxury properties and donate more than $100 million to U.S. political candidates.

Bankman-Fried has pleaded not guilty to seven counts of conspiracy and fraud. He acknowledges that risk management is insufficient, but denied stealing funds. In court papers, his lawyers have signaled they plan to argue that FTX's handling of customer funds was proper, and that others at FTX and Alameda bore the bulk of the blame for their failure.

The first step in the trial will be selection of the 12-member jury that will ultimately weigh those competing narratives in deciding whether to convict Bankman-Fried.

Starting at about 9:30 a.m. EDT in Manhattan federal court, U.S. District Judge Lewis Kaplan will ask a pool of New York residents questions about their backgrounds and experiences in an effort to weed out any prospective jurors who may be biased.

The trial is expected to last up to six weeks. The film will feature testimony from three former members of Bankman-Fried's inner circle who have pleaded guilty to fraud charges themselves and agreed to cooperate with the Manhattan U.S. Attorney's office.

Bankman-Fried's lawyers have signaled they plan to challenge the credibility of those witnesses, who include former Alameda chief Caroline Ellison and former FTX executives Gary Wang and Nishad Singh, by saying they are motivated to implicate their client to get a lower sentence, a common strategy in white collar fraud cases.

Bankman-Fried has also laid the groundwork to argue that his exchange was allowed to invest customers' deposits as long as they were ultimately able to take out their money, and that a series of business failures - not deliberate fraud - left the exchange without enough money to meet withdrawal requests.

Bankman-Fried's case is the highest-profile one in U.S. prosecutors have so far brought against a former cryptocurrency executive.

His indictment in December marked a stunning decline from grace for Bankman-Fried, who had earned a reputation as a legitimate operator in an industry whose image was pockmarked by scams and purported get-rich-quick schemes.

Bankman-Fried built that reputation on lies and bolstered it with endorsements from celebrities and star athletes.

Bankman-Fried has been detained since August 11 at the Metropolitan Detention Center in Brooklyn, which the judge said he had likely engaged in witness tampering, including by sharing Ellison's personal writings with a reporter. Ellison and Bankman-Fried are former romantic partners.

He is scheduled to appear in court early Friday to allow him to prepare with his lawyers.