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The trial of the 31-year-old former billionaire began on Tuesday, almost a year after the firm he founded, FTX, collapsed in a crisis that shocked financial markets and tarnished the budding tycoon’s reputation. Here, his story.
Today he is 31 years old, but he was 27 when, a few years after graduating from university, Sam Bankman-Fried launched his cryptocurrency hedge fund FTX in 2019. It quickly became one of the largest exchange platforms in the world. .
Once called the “wunderkind” of Wall Street, he gained influence in Washington by donating millions of dollars to political campaigns and went on to amass a fortune of $26 billion. But its boom was short-lived: three years after its launch, FTX filed for bankruptcy after a massive withdrawal of funds by its clients.
His fame in the stock market triggered a sequence of events that culminated on Tuesday in the beginning of a trial against him for what federal prosecutors have called “one of the largest financial frauds in the history of the United States.”
The story of an ‘express’ bankruptcy
A graduate of the Massachusetts Institute of Technology and the son of two Stanford Law School professors, Bankman-Fried quit his job on Wall Street to start his venture.
In a cryptocurrency sector plagued by hacks and money laundering, Bankman-Fried hired celebrities such as NFL quarterback Tom Brady and comedian Larry David to appear in ads presenting FTX as a safe investment. Additionally, he publicly supported efforts to regulate cryptocurrencies.
But his reputation as a philanthropist and honest actor in an industry marked by scams came into question when federal prosecutors in Manhattan accused him of using money from FTX clients to prop up his hedge fund, Alameda Research, buy luxury real estate and donate to political campaigns of different parties.
Just three years had passed since the launch of FTX in 2019 until its bankruptcy in November 2022.
“I was wrong. I bit off more than I could chew.”
The probable final selection this Wednesday of a panel of 12 jurors and six alternates paves the way for the start of opening statements, in which prosecutors and the defense will present their arguments.
Mark Cohen and Christian Everdell of the law firm Cohen & Gresser are leading Bankman-Fried’s defense. Both previously represented Ghislaine Maxwell, the British woman convicted in 2021 of recruiting and grooming teenage girls to be abused by the late financier Jeffrey Epstein.
The crypto fraud trial against FTX founder Sam Bankman-Fried will feature testimony from some of his closest friends. Meet the key witnesses, from Caroline Ellison to Ryan Salame https://t.co/e8UDnwrUBa
—Bloomberg (@business) October 4, 2023
In addition to his brother Gabriel Bankman-Fried, former Donald Trump employee Anthony Scaramucci appears on the tentative list of witnesses, although that does not necessarily mean that they will be called to testify.
Although three former members of his inner circle have pleaded guilty to fraud, Bankman-Fried has pleaded not guilty to all seven charges against him and will likely argue that while he failed to adequately manage risk, he never stole money.
“I thought I could keep FTX together despite the expansion,” Bankman-Fried wrote in a testimonial published by Forbes and confirmed by himself as authentic. “I was wrong. I bit off more than I could chew,” he said.
“You can commit fraud with shorts and T-shirts”
Following the collapse of FTX, Bankman-Fried lived comfortably in her parents’ home in Palo Alto, California, on $250 million bail.
Since August 1, he has been detained at the Brooklyn Metropolitan Detention Center by decision of a judge who revoked his freedom on bail considering that he tampered with witnesses at least twice from his mansion.
Once known for his casual attire and curly hair, Bankman-Fried sported a stylish haircut and wore a suit and tie in court on both Tuesday and Wednesday. Asked at the time whether the young millionaire’s appearance had helped him deceive people, Manhattan Attorney General Damian Williams responded: “You can commit fraud with shorts and T-shirts.”
With Reuters and AP
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