Follow live updates on the Sam Bankman-Fried fraud trial.
Sam Bankman-Fried, the founder of collapsed cryptocurrency exchange FTX, will stand trial after a year-long corporate saga that has made headlines around the world and devastated the digital asset industry.
Here’s what you should know about your case.
What is Mr Bankman-Fried accused of?
Federal prosecutors have accused Bankman-Fried of orchestrating a vast scheme to divert billions of dollars of FTX customers’ money into political contributions, real estate purchases, charitable donations and venture investments. He is also accused of lying to his venture capital backers and the companies that lent money to FTX.
The scheme was exposed in November when a run on deposits forced FTX to shut down withdrawals, leaving more than $8 billion in customer funds missing. Five weeks later, Manhattan prosecutors charged Bankman-Fried with eight counts, including wire fraud, securities fraud, commodities fraud, money laundering and campaign finance violations.
Prosecutors later dropped the campaign finance charge, so Bankman-Fried faces only seven charges. After his arrest, prosecutors also charged him with additional crimes, including bank fraud and bribery of a foreign government, but those new charges have been referred to a possible second trial, scheduled for March.
How did the supposed plan work?
Bankman-Fried oversaw two main businesses: FTX and a hedge fund called Alameda Research.
FTX served as a marketplace for people to buy and sell digital currencies; They could deposit dollars and then spend them in Bitcoin, Ether or hundreds of other novel currencies, storing their savings on the platform. In some countries, customers can also borrow funds from FTX to place larger bets on cryptocurrency prices, a type of risky trading that was prohibited in the United States.
Alameda was, at least in theory, simply a large FTX customer that used the platform to trade digital currencies. But according to prosecutors, Bankman-Fried allowed Alameda to borrow a virtually unlimited amount from FTX and then funneled much of that money into other projects. For example, regulators say, Alameda used client funds to make large loans to FTX executives, who spent the money on political donations.
What is your defense?
It is not entirely clear. But after FTX filed for bankruptcy, Bankman-Fried blamed an accounting error that he said had caused billions of dollars in user funds to disappear without his knowledge. He also blamed his Alameda colleagues for not implementing proper risk management protocols. And in legal filings, his lawyers have said they plan to argue that two large law firms authorized the majority of his shares in FTX.
What do legal experts expect to happen at trial?
Bankman-Fried faces an uphill battle in court. His three closest colleagues — Alameda CEO Caroline Ellison and two FTX co-founders, Nishad Singh and Gary Wang — pleaded guilty to fraud charges and agreed to cooperate against him. (A fourth executive, Ryan Salame, pleaded guilty without signing a cooperation agreement.)
The judge overseeing the case, Lewis A. Kaplan, has repeatedly sided with the prosecution in pretrial procedural disputes, rejecting a list of experts the defense had hoped to call. Since August, Bankman-Fried has had to prepare his case from a jail cell in Brooklyn after Judge Kaplan revoked his bail, ruling that he had repeatedly attempted to interfere with witnesses.
How long will the trial last?
It is scheduled to last six weeks, according to court documents.
