Sam Bankman-Fried’s trial on charges of embezzling billions of dollars from customers of his now-defunct FTX cryptocurrency exchange is set to resume on Wednesday. The trial, which began on Tuesday, comes almost a year after FTX’s collapse, which sent shockwaves through financial markets and damaged Bankman-Fried’s reputation as an honest player in the crypto industry.
US District Judge Lewis Kaplan has selected a pool of nearly 50 qualified jurors, dismissing those who could not serve for personal or professional reasons or were unable to reach an impartial verdict. On Wednesday, the parties are expected to choose the final panel of 12 jurors and six alternates, allowing the trial to proceed to opening statements.
Prosecutors from the US Attorney’s Office in Manhattan allege that Bankman-Fried used FTX customer funds to support his hedge fund, Alameda Research, purchase luxury real estate, and make political campaign donations. They plan to call three former members of Bankman-Fried’s inner circle, including former Alameda CEO Caroline Ellison and former FTX executives Nishad Singh and Gary Wang, as witnesses. All three have already pleaded guilty and agreed to cooperate with the prosecution.
Bankman-Fried, who has pleaded not guilty, is expected to argue that he mismanaged risk but did not steal money. His defense team is likely to attempt to shift the blame for FTX’s collapse onto the cooperating witnesses, suggesting that they are implicating Bankman-Fried in order to receive lighter sentences.
Since his arrest on August 11, Bankman-Fried has been detained at the Metropolitan Detention Center in Brooklyn. Judge Kaplan ordered his detention after suspecting him of tampering with witnesses, including sharing private writings of Ellison with a reporter. It is worth noting that Bankman-Fried and Ellison were romantically involved at times.
The trial is being closely watched by the crypto industry and financial markets, as it could have significant implications for the regulation of cryptocurrencies and the accountability of exchange operators. Bankman-Fried, once known for his casual attire and unkempt hair, appeared in court on the first day of the trial with a more polished look, sporting a suit and tie.
Regardless of the outcome, this trial serves as a reminder of the challenges and risks associated with the rapidly evolving world of cryptocurrencies. As the industry continues to grow, it is crucial for regulators and market participants to ensure transparency, accountability, and investor protection.