Sam Bankman Fried’s fraud trial is about to start. Right here’s what you should know

New York
CNN
—

Eleven months in the past, Sam Bankman Fried was residing within the Bahamas as a significant cryptocurrency star, working a celebrity-backed startup, surrounded by followers and buddies who thought he was the true deal: an MIT mathematician. A visionary who deserted Wall Avenue to chart his personal. A philanthropist constructing a fortune has repeatedly mentioned he intends to present all of it away.

He’ll stand trial this week in what federal prosecutors described as one of many largest frauds in US historical past.

31-year-old Bankman Fried, often known as SBF, has defended the case Not responsible to seven counts of fraud and conspiracy in reference to the collapse of FTX, his cryptocurrency buying and selling platform. If convicted and given the utmost sentence, he might spend the remainder of his life in jail.

Listed below are the important thing issues to learn about this case, and what we may even see over the following few weeks at trial.

SBF faces seven costs, together with wire fraud and securities fraud.

Prosecutors alleged that SBF stole billions of {dollars} in FTX consumer funds for his private use and to cowl large losses incurred by Alameda Analysis, a cryptocurrency hedge fund he additionally managed.

In addition they say that SBF defrauded traders in FTX by overlaying up the scheme.

Prosecutors He selected in June to dismiss 5 extra costs Which was introduced in after the supply of Bankman Fried from the Bahamas, the place FTX was primarily based. A separate trial on these costs is scheduled to start in March.

FTX has marketed itself as a straightforward and safe gateway to buying and selling cryptocurrencies. It made cash by gathering charges on purchasers’ trades, identical to a typical brokerage.

As digital asset valuations rise in 2021, FTX’s profile has additionally risen. At its peak, the corporate had a personal valuation of greater than $30 billion. She has plastered her title throughout the Miami basketball scene and garnered celeb endorsements from Tom Brady and Larry DavidAnd they each starred in Tremendous Bowl advertisements for FTX.

However encryption Market turmoil took maintain Within the spring of 2022, which is able to scale back the worth of all the trade to $1 trillion from $3 trillion.

By November, cracks in FTX’s basis started to point out, and it took simply over per week for every little thing to return crashing down.

Traders and prospects started to panic in response Report from cryptocurrency information web site Coindesk Which raised severe questions in regards to the monetary ties between FTX and Alameda, two ostensibly separate corporations based by Freed Bankman. Based mostly on a doc obtained by Coindesk, it seems that a lot of Alameda’s belongings encompass FTT, a digital token created by FTX that has been quickly dropping worth, placing Alameda on shaky monetary footing.

Clients rushed to withdraw their funds from FTX, exposing a shortfall of $8 billion.

FTX filed for chapter on November 11, and Freed Bankman resigned as CEO.

He was arrested in December within the Bahamas on costs together with fraud and conspiracy and extradited to the USA in January.

Since his arrest, SBF Repeatedly He spoke and wrote about his view of the case: He was an inexperienced businessman who was out on his skates, and had not knowingly dedicated any fraud.

His attorneys have hinted in court docket paperwork that they’ll invoke the “recommendation of counsel” protection. In different phrases, SBF didn’t know that his actions have been unlawful and was following the instructions of FTX’s attorneys.

In a private writing by Bankman-Fried printed in The New York Occasions, he positioned the blame for Alameda’s losses on its CEO, Caroline Ellisonwho can be his ex-girlfriend.

Ellison together with three different exes Excessive-ranking colleaguesHe pleaded responsible in cooperation with prosecutors.

“The largest problem SBF faces is that his former colleagues will testify towards him,” mentioned Howard Fisher, a companion with Moses Singer and a former prime lawyer on the SEC. Furthermore, FTX’s new administration, led by the restructuring knowledgeable who oversaw the liquidation of Enron, was brazenly hostile towards Bankman-Fried.

“This sort of cooperation is a godsend for the prosecution,” Fisher mentioned.

One other downside, Fisher mentioned, is that the SBF, in its prolonged weblog posts, tweets, tv media appearances, and alleged doc leaks, has “persistently did not exhibit consciousness of the seriousness of its state of affairs.”

“Juries have a tendency to not like know-it-alls who lack respect for the method… Whereas a defendant in a case like this is able to be properly suggested to not take a stand, it’s doable that SBF’s unwavering confidence in himself would possibly lead him to take that threat’s stand.”

Jury choice begins Tuesday, October 3, in Manhattan federal court docket. The trial is predicted to last as long as six weeks.

Throughout that point SBF will stay On the Metropolitan Detention Heart in Brooklyn, the place he has been since Decide Lewis Kaplan revoked his bail on August 11 as a result of SBF’s efforts to intimidate witnesses.

If convicted of all seven felony counts and given the utmost sentence, SBF faces a doable 110 years in jail.