The jury has been sworn in and opening statements are underway in the fraud trial of embattled FTX founder Sam Bankman-Fried.
Bankman-Fried, 31, was in court at a bench between his two lawyers on Wednesday wearing a suit with his hair cut short at the sides. He tapped away on a laptop in front of him, which is not connected to the Internet, and stared into space, at one point putting his hand on his chin.
He sat as Assistant US Attorney Thane Rehn told the court, ‘One year ago it looked like Sam Bankman-Fried was on top of the world. He ran a huge company called FTX. He lived in a $30million apartment in the Bahamas.
‘He jetted around the world in private planes, hung out with celebs like Tom Brady and politicians like Bill Clinton. His face was on magazine covers. He had wealth, he had power, he had influence.
‘But all of that was built on lies.’
The jury has been sworn in and opening statements are underway in the fraud trial of embattled FTX founder Sam Bankman-Fried
Bankman-Fried, 31, was in court at a bench between his two lawyers wearing a suit with his hair cut short at the sides
Rehn said, ‘Behind the curtain Sam Bankman-Fried was not who he appeared to be.
‘He was using his company FTX to commit fraud on a massive scale and the money he was spending to build his empire was money he was stealing from FTX customers.
‘Sam Bankman-Fried was committing a massive fraud and taking billions of dollars from thousands of victims,’ prosecutors said
‘Sam Bankman-Fried was committing a massive fraud and taking billions of dollars from thousands of victims.’
The jury includes a physician’s assistant, a pediatric nurse, an unemployed social worker, a high school librarian, a retired corrections officer, a US Postal Service vehicle maintenance worker, an advertising executive and a special education teacher.
Before opening statements, Judge Lewis Kaplan read the jury through the charges including securities fraud and conspiracy.
An alternate who works night shifts at a hotel tried to get out of serving because he would be ‘tired and not able to pay attention in the case’.
But Judge Kaplan refused to let him step down, telling the juror, ‘I don’t mean to be mean,’ but said the juror should have made his working hours clear before they were chosen.
Bankman-Fried was arrested in his penthouse in the Bahamas as prosecutors accused him of fraud for using the company as his ‘personal piggy bank’.
They claimed that he illegally used investors’ money to buy multi-million pound properties and to fund large political donations.
Up to one million people were left out of pocket after FTX went bankrupt last November as crypto prices tumbled amid fears of a recession.
Bankruptcy lawyers have been trying to claw back some of the more than $8billion of customers’ money that vanished.
In court were Bankman-Fried’s parents, Stanford law professors Barbara Fried and Joseph Bankman, who were gifted $10million by their son before FTX collapsed
The 30-year-old’s penthouse is at the Albany marina. He set up the company’s headquarters there in The Bahamas
The collapse of FTX was a moment of reckoning for the unregulated crypto industry and caused a crisis that has been likened to the 2008 financial crash.
FTX was backed by numerous celebrities including Gisele Bundchen, Shaquille O’Neal and Naomi Osaka, and Bankman-Fried was hailed as its Steve Jobs-like savant.
Among those who have already pleaded guilty and are expected to testify against Bankman-Fried are his former girlfriend Caroline Ellison, who ran Alameda Research
He became famous for his mop-like hair and for wearing shorts and t-shirts as he appeared at conferences with the likes of Bill Clinton and Tony Blair and graced the cover of Fortune magazine.
FTX spent millions in political donations including $5 million to Joe Biden’s reelection campaign, vowed to give his fortune away and paid for high profile sponsorship deals including the stadium for the Miami Heat basketball team.
But now prosecutors claim the image was a tool to lure in investors and con them out of $1.8billion (£1.4billion) and pump up the value of FTX, which was $32billion (£26.2billion) at its peak.
Bankman-Fried has denied 13 counts between 2019 and 2011 including wire fraud, money laundering and violations of campaign finance laws which could see him jailed for 115 years.
Seven of them are being dealt with at this trial with the rest next year.
The indictments describe how Bankman-Fried and other executives ‘misappropriated customer funds for their own use and benefit’.
FTX declared bankruptcy last November at which point Bankman-Fried resigned and said his wealth had dropped from $20billion (£18.5billion) to about $100,000 (£80,000)
The company was taken over by bankruptcy expert John Ray, who previously oversaw the winding up of scandal-plagued energy company Enron.
Ray has said that he had never seen ‘such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here’.
According to Ray, Bankman-Fried and his henchmen were ‘grossly inexperienced and unsophisticated individuals’.
In court were Bankman-Fried’s parents, Stanford law professors Barbara Fried and Joseph Bankman, who were gifted $10million (£7.6million) by their son before FTX collapsed.
Bundchen is pictured on stage with FTX founder Sam Bankman-Fried in 2022 at a cryptocurrency conference in the Bahamas. She was an ambassador for the company
Brady and Bankman-Fried are pictured together in a clip they shared on social media
The couple have been sued by Ray for allegedly enriching themselves off the company, which paid Bankman a $200,000 a year salary.
After being arrested, Bankman-Fried had been given bail and was living at his childhood home in California with his parents but it was revoked after repeated breaches including allegedly giving documents to journalists.
He is being detained at the grim Metropolitan Detention Centre, which has counted R Kelly and Ghislaine Maxwell as its previous inmates.
The story of FTX has spawned multiple documentaries, podcasts and a book by Michael Lewis, whose previous works include Liar’s Poker about Wall St excess, came out on the day jury selection took place.
Among the claims in the book is that Bankman-Fried considered paying Donald Trump $5 billion not to run for President in 2024.
Among those who have already pleaded guilty and are expected to testify against Bankman-Fried are his former girlfriend Caroline Ellison, who ran Alameda Research.
She may be quizzed on her and Bankman-Fried’s drug-fueled polyamorous lifestyle where employees of FTX routinely switched partners with each other.
The SEC, the US financial regulator, filed separate civil securities fraud charges against Bankman-Fried.
Gary Gensler, chair of the SEC, has said: ‘Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto’.
Source: | This article originally belongs to Dailymail.co.uk
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