Former FTX CEO Bankman-Fried's trial to begin on Oct 3

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Former FTX CEO Bankman-Fried's trial to begin on Oct 3

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

The jury selection in Bankman-Fried's trial is scheduled to begin Oct. 3, while the trial itself is expected to last about six weeks.

Bankman-Fried, who was once considered a pioneer in digital currencies and a rare tech CEO who was attuned to ethics, faces federal charges of wire fraud, securities fraud and money laundering that defrauded clients of his digital currency exchange, FTX, and lenders to his cryptocurrency hedge fund, Alameda Research.

He has pleaded not guilty to all of those charges. If convicted, the charges would be sentenced to up to 20 years in prison.

FTX's valuation surged, and Bankman-Fried's personal wealth surged to $26 billion. He was a significant political contributor, giving publicly to Democrats and privately to Republicans and breaking with other tech and crypto figures by calling for some regulation of the industry.

He continued to tell interviewers that he wasn't pursuing fabulous wealth for its own sake. He framed it as an ethical imperative: making billions in crypto was just a means to an end, he said. He was a son of two Stanford legal experts, one of whom was an expert on taxes and the other on ethics.

He also began to cross-over into popular culture, cultivating an image of a 30 year-old who dressed like a college kid, with messy, curly hair and a near-uniform 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 composed of a token, called FTT, issued by FTX itself, not by a separate asset with a known and established value. Alameda was unusual and a significant financial liability.

Days after that report, Binance's CEO, Changpeng 'CZ' Zhao, said his company would sell off all of its FTT tokens. That huge sale tanked the value of FTT and badly damaged Alameda's balance sheet.

FTX began pulling their money from digital currencies, and the platform soon blocked customers from further withdrawals. Binance agreed to buy FTX in a bailout, but backed out of the deal.

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

Bankman-Fried gave interviews and Twitter 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, seeming open and contemptuous, suggesting he hadn't meant most of what he had said about trying to do good.

He was scheduled to testify before the House of Representatives when he was arrested in the Bahamas in December. He was extradited to the United States and initially remained on house arrest, but was indicted in August after prosecutors said he had leaked diary entries by Caroline Ellison, his ex-girlfriend and the former CEO of Alameda.

Ellison, like other FTX insiders, is expected to testify against Bankman-Fried at the trial.

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