The trial of former FTX CEO Sam Bankman

The trial of former FTX CEO Sam Bankman

Former FTX CEO Sam Bankman-Fried's trial has been ongoing in Manhattan. He faces up to two decades in prison after being accused of stealing billions of dollars from FTX customer funds to plug losses at his hedge fund, Alameda Research.

In 2019, FTX was established by Sam Bankman-Fried, who built a reputation as a mop-topped millennial genius leading one of the world's top digital currency exchange platforms.

Bankman-Fried claimed to be following the 'effective altruism' philosophy, which encourages people to get lucrative jobs so they can amass wealth and donate it to charity. He promised clients that FTX was the cleanest crypto brand, guaranteeing 'high returns, no risk'.

As his personal wealth skyrocketed, Bankman-Fried donated large sums to Republican and Democrat politicians and vowed to give away 99 percent of his money.

But then, in November 2022, FTX collapsed, when a run on deposits and falling crypto prices left the company with a $US8 billion shortfall.

Bankman-Fried was extradited to the Bahamas, where he is currently facing charges including wire fraud, money laundering, and conspiracy to commit fraud on the United States. He has pleaded not guilty to a pleading guilty motion in the United States District Court.

The trial is expected to last up to six weeks.

Some of the points raised in opening statements were unfavorable.

Jurors in the Bankman-Fried trial heard for the first time on Wednesday.

Bankman-Fried used more than $US10 billion in FTX customer funds to amass his wealth, power and influence, said Prosecutor Thane Rehn. Rehn said he bought the property in the Bahamas and donated to a nonprofit he founded.

Bankman-Fried's hedge fund Alameda Research was also mentioned in the opening statements.

Rehn told jurors that Bankman-Fried stole customer funds 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 prosecutors had misconstrued cases of Alameda performing functions for FTX that the fledgling exchange was not yet set up to perform itself.

He added that the software allowed FTX torely on Alameda as a market maker, which allowed Alameda to buy and sell crypto as the exchange sought to attract more customers.

Caroline Ellison, who was the former chief executive of Alameda, has pleaded guilty to fraud and agreed to cooperate with Bankman-Fried.

Bankman-Fried allegedly installed Ellison, a romantic partner, as a front to lead Alameda in 2021.

Rehn said he would not comment on the recent decision of the court to rule that the government did not condone discrimination.

Bankman-Fried's lawyer, James P. Bankman, 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 said Bankman-Fried asked Ellison to hedge Alameda's investments after crypto's successful year in 2021, but she failed to do so.

Here's what else is expected during the trial.

Prosecutors are expected to call on two former members of Bankman-Fried's inner circle, including Ms Ellison and former FTX executives Nishad Singh and Gary Wang, to testify against him. The three have pleaded guilty to a variety of charges and agreed to cooperate with prosecutors.

He said in a statement that his view of how the crimes occurred, without naming the witnesses.

Cohen proposed that they could'spin' Bankman-Fried's good-faith decisions that they agreed to at the time as deceitful in hindsight.

Cohen said he was working hard to understand his client's case.

The judge, Danielle Sassoon, said jurors are expected to hear from Wang by the end of the week.