Crypto founder Bankman-Fried's fraud trial begins

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Crypto founder Bankman-Fried's fraud trial begins

The trial of Sam Bankman-Fried, the former CEO of one of the biggest exchanges in the cryptocurrency industry, will begin on Tuesday to determine whether he committed massive fraud against more than a million clients.

The 31-year-old, once one of the most respected figures in crypto, has faced decades in prison and could see his name alongside Bernie Madoff and Elizabeth Holmes as one of the era's most prominent fraudsters.

The first day of the trial will be dedicated to jury selection for a case that is expected to last about six weeks.

In just a few years, the curly-haired Massachusetts Institute of Technology graduate turned FTX into the world's second biggest crypto exchange, making him the world's latest billionaire wunderkind feted from Wall Street to Silicon Valley.

FTX had become a household name through a frenzied marketing campaign that included celebrity collaborations with stars like supermodel Gisele Bundchen and NBA star Stephen Curry, and buying the naming rights for the Miami Heat's home arena.

When other crypto companies faced difficulties, Bankman-Fried took on a leadership role, as FTX swooped in to offer them a financial lifeline.

Bankman-Fried was thought to be worth $26 billion at the peak of his career.

His steep rise was matched only by his ignominious downfall, which saw him escorted from his luxury apartment in the Bahamas last year and extradited to face charges in the United States.

His empire collapsed last November when a news report pointed to unethical links between the FTX platform and Alameda Research, the company's crypto-focused investment arm.

The revelations kept growing as major investors pulled their money out of FTX, sinking it quickly into bankruptcy and casting Bankman-Fried as a financial pariah.

Although the dust had settled, some $8.7 billion was still unaccounted for, according to the receiver appointed to manage the liquidation.

Bankman-Fried and his associates have been charged by federal prosecutor Damian Williams with systematically diverting funds from FTX clients to prop up Alameda Research, but also wire fraud, securities and commodities fraud, and money laundering.

SBF, as Bankman-Fried, was extradited from the Bahamas at the end of December and released on a $250 million bail upon his arrival in New York.

Bankman-Fried, 31, was placed under house arrest at the home of his parents, both Stanford University professors, in Silicon Valley.

But U.S District Judge Lewis Kaplan rescinded that decision, allowing Bankman-Fried to remain behind bars over alleged attempts at witness intimidation.

Bankman-Fried was holed up at his parents' home and frequently spoke to journalists and passed documents to the New York Times in an effort to alter the testimony of Caroline Ellison, his ex-girlfriend and a former Alameda executive.

In a statement, Ellison and three other former executives have pleaded guilty and agreed to cooperate with U.S. authorities, which could prove Bankman-Fried's undoing in front of the jury.

Bankman-Fried's former colleagues are expected to take the stand in the courtroom, where Bankman-Fried will likely admit egregious management mistakes but no wrongdoing, and point the finger at Ellison.

Have never tried to commit fraud on anyone. I was shocked by what happened this month, Mr Bankman-Fried said in a phone interview with an interviewer days after his company collapsed.