FTX Founder Bankman-Fried’s Trial Begins

Sam Bankman-Fried, the founder of the crypto exchange FTX and one of the Democratic Party’s largest donors during the 2021-2022 election cycle, stood before a federal Manhattan court on Tuesday. He entered a not-guilty plea in response to charges of orchestrating a multibillion-dollar fraud scheme.

Prosecutors have alleged that the 31-year-old “embezzled customer money to plug losses at Alameda Research, a crypto hedge fund he owned, as well as to make investments, buy real estate in the Bahamas, and donate to U.S. political campaigns — sometimes through ‘straw’ donors used to mask the true source of the funds,” according to Reuters.

Bankman-Fried faces a total of seven charges and a maximum sentence of 110 years in prison if convicted.

Representing him in this high-stakes legal battle is the law firm Cohen & Gresser, led by Mark Cohen, a prominent defense attorney and former federal prosecutor who notably defended Ghislaine Maxwell in her trial related to Jeffrey Epstein’s sex trafficking case, Tech Crunch reports.

Speculating on his defense strategy, Reuters says, the crypto exchange founder is “expected to argue that FTX’s Terms of Service did not prohibit the exchange from using customer funds for its own purposes, as long as it allowed users to withdraw their money. He has acknowledged inadequate risk management, but denied stealing funds.”

U.S. District Judge Lewis Kaplan will select 12 jurors for the case. He has indicated that he expects the trial to conclude before Thanksgiving.

As potential jurors were questioned by Judge Kaplan, it became evident that many were already familiar with the case due to extensive media coverage over the past 11 months. During the voir dire process, the formal juror examination process, Kaplan inquired whether any jurors had personal knowledge of Sam Bankman-Fried, FTX, or any other aspects of the case, according to CNN.

Unsurprisingly, at least five of the potential jurors admitted to such knowledge. One juror cited a Joe Rogan podcast episode as a primary information source, while another disclosed that her company had incurred losses on its investments in FTX and Alameda. And yet another juror, employed in executive recruitment for investment banking firms, revealed that the case had been a frequent topic of discussion in their office.

Notably, several FTX executives, including co-founders Nishad Singh and Gary Wang, have already pleaded guilty to fraud charges and have agreed to cooperate with authorities in their case against Bankman-Fried, as reported by The Street.

One bizarre facet of the story as revealed by the ensuing legal drama indicated plans for escaping to an island in the event of an apocalypse.

Gabe Bankman-Fried, Sam’s younger brother and a top lobbyist for FTX, allegedly attempted to purchase the Pacific island of Nauru. A memo exchanged between Gabe and an unnamed company executive outlined their intention to “purchase the sovereign nation of Nauru in order to construct a ‘bunker/shelter’ that would be used for ‘some event where 50%-99.99% of people die [to] ensure that most EAs [effective altruists] survive.'”

Throughout this high-profile trial, Bankman-Fried will remain incarcerated in the Metropolitan Detention Center in Brooklyn. His bail was revoked on August 11 by Judge Kaplan due to allegations of witness intimidation.