Founder of Binance's FTX on trial for wire fraud

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Founder of Binance's FTX on trial for wire fraud

Sam Bankman-Fried, the founder of FTX, is on trial for seven counts of wire fraud and conspiracy to commit wire fraud.

Bankman-Fried founded FTX because he was frustrated with other exchanges used by his crypto trading firm, Alameda Research, according to a profile of FTX investors Sequoia Capital. FTX was a fraud 'from the start', the SEC alleges.

Bankman-Fried used the customer's money to make billions of dollars of investment, buy $200 million of real estate, and repay Alameda's lenders, according to the indictment.

The entire deal came to light after CoinDesk published a big picture about Alameda's balance sheet. It showed that the balance sheet of FTX and Alameda was very closely linked, with a lot of the balance sheet consisting of the FTT token issued by FTX. In that article, Binance CEO Changpeng 'CZ' Zhao - a former investor in FTX - said he would sell his holdings of FTT.

A series of events resulted, which ended in FTX's bankruptcy and Bankman-Fried's resignation from the company. The SEC charged Ellison with manipulating the price of FTT, which inflated Alameda's balance sheet. People were misled by the FTX's risk exposure from Alameda.

Besides 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 upheld the court's ruling that questions about recreational drug use and political donations are fair game.