Jury selection begins Tuesday in New York in the case against Sam Bankman-Fried, marking the start of a criminal trial that could put the 31-year-old disgraced crypto mogul behind bars for an extended period of time.
The founder and former CEO of the massive cryptocurrency trading platform FTX is facing a host of charges including wire fraud, securities, fraud, money laundering, and defrauding investors. Prosecutors have compared him to the likes of Bernie Madoff, with U.S. Attorney Damian Williams calling it one of the biggest fraud cases in the country's history.
In the world of cryptocurrency, trading firm FTX and its wunderkind CEO Bankman-Fried quickly rose to success and legitimacy in a highly volatile market — inking deals with athletes like Tom Brady and Steph Curry, securing naming rights for the Miami Heat's stadium, and even airing a Super Bowl commercial. Yet the FTX empire, once valued at $32 billion, toppled in just a matter of weeks last November, sending shockwaves throughout the crypto industry.
The trouble started after reports showed FTX used its own cryptocurrency, called FTT, to prop up a hedge fund owned by FTX called Alameda Research. That drew questions about FTX's liquidity and pushed major holders of the cryptocurrency to sell off their tokens — including Binance, a rival exchange which held roughly $530 million worth of FTT.
Customers then went on the equivalent of a bank run, leading to $6 billion in withdrawals over the course of three days. Binance had announced plans to bail out the company but scrapped those plans shortly after, ultimately pushing FTX to declare bankruptcy and Bankman-Fried to step down.
After fleeing to the Bahamas, he was eventually charged with a host of financial crimes and campaign finance violations. He was then arrested by Bahamian authorities and extradited back to the U.S.
John Ray III took over as CEO and was promptly ordered to testify in front of the House Financial Services Committee.
"This isn't sophisticated whatsoever; this is just plain old embezzlement," Ray said. "There's a lot of titles in the company, but no experience to back it up."
While acknowledging his mistakes, Bankman-Fried has maintained his innocence and insists there was never criminal intent. He pleaded not guilty in Manhattan federal court earlier this year on charges that he cheated customers out of billions of dollars to make lavish real estate purchases, bribe politicians with donations to influence crypto policy, and make risky trades at Alameda Research.
Originally freed on a $250 million bond, Bankman-Fried remained under house arrest at his parents' home following his December 2022 arrest. But his bail was revoked in August after a judge concluded there was probable cause to believe Bankman-Fried attempted to "tamper with witnesses at least twice" since his December arrest. He has remained in federal custody since.
Bankman-Fried's trial is expected to last up to six weeks and conclude by Thanksgiving. If found guilty of all seven criminal counts, he could face up to 110 years behind bars.
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