The basics: Sam Bankman-Fried, the 31-year-old founder of crypto exchange FTX, will go on trial before a federal jury in Manhattan. It begins on Oct. 3 and is expected to last six weeks. (Want to know more about the man known as “SBF”? Full profile here.)
The charges: Bankman-Fried faces seven counts of fraud and conspiracy, to which he has pleaded not guilty. (More on that here.)
The background: The charges relate to the collapse of U.S. crypto exchange FTX in November last year. The exchange froze withdrawals and filed for bankruptcy, leaving investors facing billions of dollars of losses. FTX was just one in a series of big crypto firm bankruptcies in 2022, but it caught the world’s attention because Bankman-Fried had become a poster child for the crypto industry. His net worth had surged to $26 billion and FTX was backed by top investors.
The arguments: Bankman-Fried is charged with stealing billions of dollars in FTX deposits, which he spent on luxury real estate, U.S. political campaign donations and on plugging losses at his hedge fund. U.S. prosecutors will argue that SBF embezzled money from people who had deposited in FTX. But SBF’s lawyers will argue that FTX, like a bank, was allowed to invest his customers’ deposits if there was enough for them still to be able to withdraw it. They’ll also argue that he didn’t know that actions taken by his closest colleagues had jeopardised the funds.
The witnesses: Prosecutors plan to call three members of Bankman-Fried’s inner circle: former Alameda chief executive Caroline Ellison, former FTX technology chief Gary Wang and former engineering chief Nishad Singh. Last Thursday a judge restricted Bankman-Fried’s ability to call witnesses to testify. He’d wanted to call on seven experts on topics ranging from cryptocurrency markets to English contracts to convince the jurors to acquit him, but the judge said three of the proposed witnesses could not take the stand because their testimony was irrelevant or could confuse the jury. Bankman-Fried is currently in jail after a judge found he had likely attempted to tamper with two witnesses.
The U.S. Attorney in Manhattan has called it “one of the biggest financial frauds in American history.” You can read a full preview here.
