Founder of Bankrupt Cryptocurrency Exchange FTX Faces Fraud Trial
Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, appeared in court on August 11, 2023, as lawyers sought to convince the judge overseeing his fraud case not to jail him ahead of trial. Bankman-Fried is facing charges of fraud and conspiracy relating to allegations that he directed colleagues to divert customer funds to his hedge fund and deceive investors and lenders.
After 12 days of prosecution testimony, lawyers for Bankman-Fried began their case on Thursday. His defense attorney, Christian Everdell, stated that Bankman-Fried is expected to testify in his own defense following two brief witnesses. Everdell identified the first witnesses as Krystal Rolle, Bankman-Fried’s lawyer in the Bahamas, and database expert Joseph Pimbley.
Taking the stand is a risky move for Bankman-Fried, as it would allow prosecutors to cross-examine him about the testimony provided by former colleagues who claimed he directed them to commit crimes. If convicted, Bankman-Fried could face a lengthy prison sentence.
Bankman-Fried has pleaded not guilty to the charges and maintains that while he made mistakes running FTX, he never intended to steal funds. His defense team argues that the testimonies from three former colleagues, who have pleaded guilty and cooperated with prosecutors, were tailored to implicate Bankman-Fried in the hopes of receiving lenient sentences.
Prosecutors have alleged that Bankman-Fried used the misappropriated funds to support his crypto-focused hedge fund, Alameda Research, make speculative venture investments, and donate more than $100 million to U.S. political campaigns.
U.S. District Judge Lewis Kaplan denied a defense request to acquit Bankman-Fried before the case goes to the jury, stating that prosecutors had presented viable legal theories of wire fraud.
During Bankman-Fried’s testimony, some portions will take place outside the jury’s presence so that Judge Kaplan can determine whether they are admissible as evidence. This includes any testimony related to the involvement of FTX lawyers in structuring loans from Alameda to FTX executives, a key way in which the defendant and others allegedly misused customer funds.
Bankman-Fried’s direct testimony is anticipated to last close to five hours. The final prosecution witness, FBI agent Marc Troiano, testified about Bankman-Fried’s use of the encrypted messaging application Signal, revealing that group messages were set to delete automatically.
The trial, which resumed after a week-long break, continues in federal court in Manhattan.