Crypto itself may be in the dock in US trial

Crypto itself may be in the dock in US trial

Today, US marshals will transport Sam Bankman-Fried from a Brooklyn jail to Daniel Patrick Moynihan U.S. Courthouse in Lower Manhattan.

The immediate agenda includes selecting jurors to sit in judgement of onetime crypto billionaire, charged with numerous counts of fraud, money laundering, and campaign finance offences in connection with the collapse of the exchange FTX last November.

Crypto itself may be in the dock along with Bankman-Fried, who haspleaded not guilty.

FTX, worth $32 billion at its peak, is a symbol of the lawlessness associated with the digital assets market. And with his slob chic vibe and commitment to 'effective altruism, the 31-year-old entrepreneur has come to epitomise crypto for many in the mainstream.

By shifting billions of dollars worth of FTX deposits to fund losses in his hedge fund, prosecutors say Bankman-Fried violated one of the bedrock laws in finance - never tap customer deposits to juice your own trading book.

Prosecutors are expected to try and prove that Bankman-Fried was exactly what he did, bolstered by testimony from several of his former associates, including his ex-girlfriend Caroline Ellison.

The case has confirmed the fears of crypto critics that the sector is rife with Ponzi schemes and thievery, and emboldened watchdogs such as Gary Gensler, the chairman of the US SEC, to crack down with a flurry of civil actions.

While Bitcoin has rallied 60% since FTX filed for bankruptcy on November 11, its trading volume has nosedived - in August, it dropped to a five-year low. The days of BTC attracted mainstream investors seem to be over, at least for now.

The market of decentralized finance hasn't been spared from the damage caused by the unintentional polarisation of the sector. DefiLlama data shows that the deposits, or total value locked, of the sector is still about a quarter less than before FTX's downfall, at $38.7 billion.

If Bankman-Fried did nothing else, he appears to have proven yet again that if something appears to be too good to be true, it probably is. What is unfortunate given the amount of doing good that Bankman-Fried vowed to do.

Bankman-Fried was running his FTX-Alameda empire from a $30 million penthouse in the Bahamas in 2022. He surrounded himself with colleagues who shared a lavish work-life space in the tropics.

Bankman-Fried charmed celebrities like superstar quarterback Tom Brady and his former wife, supermodel Gisele Bundchen, who were energetic - and well compensated - spokespersons for FTX. The best-selling writer of The Big Short and Moneyball, Michael Lewis, has landed him as his biographer.

Lewis, who is releasing his book on Bankman-Fried and FTX this week, told the BBC on Monday that he watched in amazement as the'most famous people in the world' would gather around the rumpled entrepreneur. The young tycoon was known simply by his initials - SBF.

Bankman-Fried, a mathems whiz who graduated from MIT, thought cryptocurrencies were just a way to amass enough wealth to tackle epochal challenges like pandemics and artificial intelligence. His chosen vehicle is EA, a philosophy and social movement designed to maximize impact for the common good.

Academics and intellectuals froze in the Bahamas to collaborate with Bankman-Fried and his fellow peers at FTX's zenith. DL News spoke to several individuals who were privy to these discussions.

The interest in genetics, he said, boiled down to a willingness to use gene editing to increase would-be parents' odds of having kids who are happy, healthy, and smart.

'' You can have guilt-free meat, so you can have guilt-free meat,' said the person, who asked for anonymity as a condition of talking about dealings with Bankman-Fried.

However, the interest did not translate into action. ''T have thought it was worth their time or money to actually do much on it,'' said Bankman-Fried, one of the people who met with Bankman-Fried.

The Future Fund, a philanthropic arm of FTX, dedicated $100 million to endeavours in pandemic prevention, addressing the risks of AI, and other futuristic projects.

Bankman-Fried also said he would build a vaccine factory in the Bahamas to address what he deemed an overly slow approval process by the US Food and Drug Administration.

These projects were designed to safeguard the long-term future of humanity and were in keeping with the EA's thinking.

Another familiar with Bankman-Fried's work lamented that his alleged misdeeds tarnished EA.

Prosecutors say the money wasn't his. The Justice Department accused him of using FTX customers' funds to make $100 million in political campaign contributions in the run-up to the midterm elections in November.

prosecutors said in an updated indictment that month that prosecutors said they did not plan to curry favour with candidates.

Taking his place at the defendant's table Tuesday, Bankman-Fried will be the latest in a long line of bold-faced names who've faced justice in the federal court on Foley Square in downtown Manhattan.

Bernie Madoff, Ghislaine Maxwell, and Martha Stewart each passed through here on their way to guilty pleas or jury verdicts. Will the media spotlight be as hot as Bankman-Fried's performance in the first half.

Bankman-Fried, who has been incarcerated for the past two months after violating the terms of his bail, faces the possibility that he may not live outside the walls of criminal institutions for decades.

He faces a maximum 20-year prison sentence for each of the main counts he faces in his indictment.