Former crypto billionaire Sam Bankman-Fried faces trial in New York

Former crypto billionaire Sam Bankman-Fried faces trial in New York

The next chapter in the fall of one-time crypto billionaire Sam Bankman-Fried is set to begin Tuesday as the former FTX head goes on trial in New York City.

The trial of Bankman-Fried's trial is scheduled to begin Oct. 3 and the trial itself is expected to last about six weeks.

Bankman-Fried, a rare tech CEO who was obsessed with ethics, faces federal charges of wire fraud, securities fraud and money laundering that defrauded customers of his digital currency exchange, FTX, and lenders to his cryptocurrency hedge fund, Alameda Research.

He has pleaded not guilty to all of the charges. As a result, if convicted, several of the counts would be sentenced to 20 years in prison.

FTX's valuation skyrocketed and Bankman-Fried's personal wealth soared to $26 billion. He became a significant political donor, giving public and private to Democrats and Republicans, and breaking with other tech and crypto figures by calling for some regulation of the industry.

He continued to tell investigators that he wasn't pursuing fantastic wealth for its own benefit. He framed it as an ethical imperative, saying that making billions in crypto was just a means to an end. He was also known as the son of two Stanford legal experts, one expert on taxes and the other on ethics.

He also started to cross over into popular culture, cultivating an image of a 30-year-old who was dressed like a college kid, with messy, curly hair, and a near-uniform pair of T-shirts and cargo shorts, even if he was speaking to world leaders.

And then it all fell apart.

On Nov. 2, 2022, coindesk reported that much of Bankman-Fried's trading firm, Alameda Research, was made up of a token, called FTT, issued by FTX itself, not by a separate asset with a known and established value. That was unusual and a major financial liability for Alameda.

days after the report, Changpeng 'CZ' Zhao, the CEO of Binance, said his company would sell off all of its FTT tokens. The sale tanked FTT's value and had a significant impact on Alameda's balance sheet.

When digital currency traders started withdrawing their money from FTX, the platform soon blocked customers from further withdrawals. Binance agreed to buy FTX in a rescue, then backed out of the deal.

While FTX was supposed to be a separate company, it soon became clear that they were deeply intertwined - and FTX had given customers money to Alameda so it could invest the funds. Bankman-Fried continued to try to raise money to save the business, but both firms, as well as FTX US, filed for bankruptcy on Nov.11.

Bankman-Fried granted interviews and tweetd about his situation for a short time after the collapse, maintaining an unusually public and prominent image for a person facing a criminal investigation as reporters and lawyers dug through the wreckage of his businesses. At different times he was apologetic, appearing open and contemptuous, suggesting that he hadn't meant most of what he had said about trying to do good.

He was scheduled to testify before Congress on December 27, when he was arrested in the Bahamas. He was extradited to the U.S. and initially held on house arrest but was jailed in August because prosecutors said he had leaked diary entries by Caroline Ellison, his ex-girlfriend and the former CEO of Alameda.

Ellison will testify in court against Bankman-Fried, as well as other FTX insiders.

Bankman-Fried is expected to be tried in March 2024 on five additional charges, including bribery of a foreign official. He also pleaded not guilty to those charges.