FTX founder's fraud trial takes place

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FTX founder's fraud trial takes place

Judiciary judges in the case of the FTX founder, Sam Bankman-Fried, heard from both sides for the first time on Wednesday, receiving dueling depictions of key events and players involved in what prosecutors have called a multibillion-dollar fraud that affected thousands of the cryptocurrency exchange's customers.

Bankman-Fried pleaded not guilty to a charge of conspiracy to commit a larceny. Opening statements by prosecutor Thane Rehn and defense lawyer Mark Cohen made it clear that four points of contention, described below, will be crucial to the trial, which is expected to last up to six weeks.

Bankman-Fried used more than $10 billion in FTX customers to amass his own wealth, power and influence, Rehn said in a statement. Rehn said he bought the property in the Bahamas and donated it to a nonprofit he founded.

Is it a crime to be the CEO of a company that later files for bankruptcy.

Is FTX collapsed because of fraud?

As Bankman-Fried's companies sought to weather the storm, public 'attacks' from the crypto press and Changpeng Zhao, the CEO of rival exchange Binance, led to a run on FTX, Cohen said.

Rehn said FTX collapsed because of Bankman-Fried's plundering of FTX customer cash. Rehn said FTX's implosion on the broader decline in crypto amounts to 'excuses'.

Rehn told jurors that Bankman-Fried stole customer money in two ways: by duping FTX customers into sending money intended for their trading accounts to Alameda and through a secret special privilege embedded in FTX software that allowed Alameda to make unlimited withdrawals.

Cohen said that prosecutors misconstrued instances of Alameda performing functions for FTX that the fledgling exchange was not yet set up to perform itself.

FTX could rely on Alameda as a'market maker,' which allowed Alameda to buy and sell crypto as the exchange sought to attract more customers.

The sides presented different stories about former Alameda chief executive Caroline Ellison, who has pleaded guilty to fraud and agreed to cooperate with Bankman-Fried.

Bankman-Fried installed Ellison, his sometime romantic partner, as a 'front' to lead Alameda in 2021, according to prosecutors.

Rehn said the president did not speak about the government's criticism of India's handling of the crisis.

Bankman-Fried's lawyer, John Bankman-Fried, said that handing over the reins was normal as FTX grew and took up his time. It was just as natural for Bankman-Fried, still Alameda's majority owner, to stay involved.

Cohen also said that Bankman-Fried had asked Ellison to hedge Alameda's investments after crypto's successful year in 2021, but that she failed to do so.