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Trial of Crypto Exec, Sam Bankman-Fried, Begins in NYC

The 31-year-old who co-founded the cryptocurrency exchange FTX is facing a reckoning over what’s been called one of the biggest financial frauds in U.S. history by federal prosecutors.

(TNS) — The criminal trial of former crypotocurrency golden boy Sam Bankman-Fried is set to begin in a Manhattan court on Tuesday.

The 31-year-old is facing a reckoning over what’s been called one of the biggest financial frauds in U.S. history by federal prosecutors. Bankman-Fried faces a maximum of over a century in prison for seven charges including wire fraud and money laundering in connection with the collapse of FTX, his cryptocurrency trading platform.

Manhattan federal court Judge Lewis Kaplan will consider arguments from the feds that the young billionaire stole billions of dollars from FTX customers to bankroll a lavish lifestyle in the Bahamas, party with celebrities and fund donations to U.S. lawmakers to influence cryptocurrency regulation, plus pay off debts of his failed crypto hedge fund Alameda Research.

He’s charged with defrauding investors to cover up the scheme and has pleaded not guilty to all charges.

Bankman-Fried has been in custody at the Metropolitan Detention Center in Brooklyn since Kaplan revoked his $250 million bail bond in response to witness tampering allegations. Previously, he had been under house arrest at his parents’ home in Palo Alto, California.

His trial, beginning with jury selection Tuesday, is expected to last six weeks.

Federal prosecutors will reveal mountains of evidence, including encrypted chat logs, emails and diary pages on the jury, to show Bankman-Fried misused customer funds and made illegal political donations.

The Massachusetts Institute of Technology grad known for his bushy hair and slovenly appearance has had a meteoric rise and dramatic fall.

He co-founded Alameda Research in 2017 and FTX in 2019. FTX quickly became one of the hottest crypto exchanges, hitting its peak in 2022 as millions of people across the globe bought and sold the digital currency.

As the company grew Bankman-Fried hobnobbed with such celebrities as Larry David, Gisele Bündchen and Tom Brady, and FTX even purchased the naming rights for the Miami Heat’s home arena.

The exchange fell even quicker than it ascended, imploding over the course of just a few days last year as jittery clients withdrew their funds when the cryptocurrency market faltered — and FTX was revealed to have an $8 billion shortfall as Bankman-Fried allegedly used investor money to cover Alameda losses.

FTX filed for bankruptcy in November 2022, and Bankman-Fried was arrested in the Bahamas in December before being extradited to the U.S.

Kaplan ordered him to the Brooklyn jail in August after feds accused him of attempting to intimidate lead witness Caroline Ellison — his ex-girlfriend and former Alameda executive— by leaking her personal writings to The New York Times.

The trial is one of two he will face. A second criminal trial is set to start in 2024 on five counts filed after his arrest.

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