The trial of Sam Bankman-Fried begins Tuesday in Manhattan with the selection of a jury who will finally decide the fate of the disgraced former CEO of failed cryptocurrency trading platform FTX.
Bankman-Fried, 31, faces seven separate charges including money laundering conspiracy, wire fraud and securities fraud related to the collapse of FTX, once valued at $32 billion, late last year.
The trial, to be held in the United States District Court for the Southern District of New York in Manhattan, will be presided over by Judge Lewis A. Kaplan.
Convictions on all charges could carry a prison sentence of more than 100 years.
Federal Prosecutor Damian Williams, the government’s lead prosecutor, will argue that Bankman-Fried knowingly used his clients’ funds, placed on the FTX trading platform, to place risky bets through the group’s wholly owned hedge fund, Alameda. Research, while enriching himself, his parents, and his co-workers.
Bankman-Fried is also accused of using his clients’ funds to make million-dollar donations to American politicians, some of whom were involved in regulating the cryptocurrency industry.
The charges echo similar civil lawsuits filed by both the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.
Bankman-Fried, while acknowledging a series of mistakes under her leadership of the platform, has always denied any criminal wrongdoing.
Bankman-Fried, once the face of the booming crypto industry, with personal wealth valued at around $26 billion, was arrested in the Bahamas in December last year, just hours before appearing via a video link to the House Financial Services Committee for the purpose of investigation. the collapse of FTX
FTX, which at one point was the world’s second-largest crypto platform with a market value of around $32 billion, filed for Chapter 11 bankruptcy protection in early November amid a liquidity crisis that several Media reports have suggested it was related to the use of client deposits to support risky trades carried out by the group’s wholly owned hedge fund known as Alameda Research.
John Ray, a corporate restructuring expert hired to manage FTX’s bankruptcy proceedings, said a small group of inexperienced, unsophisticated and potentially compromised people “was key to the group’s ultimate failure.” Ray said FTX did not maintain complete books and records, had cash governance and did not institute basic security controls.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as occurred here,” Ray wrote in a petition to Delaware Bankruptcy Court on Nov. 17.
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