Jury selection underway in Sam Bankman-Fried’s trial over FTX’s collapse | Courthouse News Service
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Jury selection underway in Sam Bankman-Fried’s trial over FTX’s collapse

Bankman-Fried is facing a six-week criminal trial on charges that he swindled billions of dollars of customers' deposits from his cryptocurrency exchange platform to pay the debts of his hedge fund.

MANHATTAN (CN) — The criminal fraud trial of disgraced cryptocurrency mogul Sam Bankman-Fried began Tuesday, with prospective jurors gathered in a New York City federal courthouse where Bankman-Fried stands accused of illegally looting billions of dollars of customers’ cryptocurrency deposits.

Twelve jurors and six alternates will be selected from the pool of dozens of New Yorkers to sit for the trial, which is expected to last up to six weeks.

The 31-year-old onetime billionaire faces the possibility of decades in prison if convicted on counts of wire fraud, money laundering and securities fraud conspiracy.

Federal prosecutors say he orchestrated one of the largest financial frauds in history, defrauding thousands of customers who deposited cryptocurrency on the FTX exchange by illegally funneling massive sums of their funds for personal use and to bail out his cryptocurrency hedge fund, Alameda Research, for its massive losses from risky trades.

Following the cryptocurrency equivalent of an old-fashioned bank run on customer deposits in November 2022, the company once valued at $32 billion collapsed abruptly into bankruptcy.

Additionally, Bankman-Fried is accused of misusing FTX customer deposits to make large political campaign contributions to cajole support for the federal regulation of cryptocurrency.

White-collar prosecutors from the Southern District of New York never offered Bankman-Fried a plea deal, Department of Justice lawyers said Tuesday.

Bankman-Fried attended the jury selection hearing on the 26th floor of the Daniel Patrick Moynihan United States Courthouse, sporting a short, cropped haircut, dispensing with his prior signature mop of mussed curls.

He is being detained in a Brooklyn jail. He donned a suit jacket on Tuesday, which U.S. District Judge Lewis Kaplan had ordered U.S. marshals and Brooklyn federal jail officials to provide him for the duration of his trial.

“So what’s this case all about?” the Clinton-appointed senior judge said to the potential jurors. “Very broadly speaking, Mr. Bankman-Fried is accused of having defrauded, first of all, customers of FTX.com … secondly, investors in FTX.com, and thirdly, people who lent money to Alameda Research.”

The pool of prospective jurors included a Miss Universe operations manager who plans to attend an upcoming pageant in El Salvador, and a lawyer who cited his $600 monthly payments on a cello as a financial hardship.

One prospective juror said she works for a Manhattan-based venture capital and private equity firm that lost money it invested in both FTX and Alameda Research.

Another potential juror told the judge he had prior knowledge on the case from learning about it on "The Joe Rogan Experience."

The  start of the jury selection process was slightly delayed because of increased security in the blocks surrounding the courthouse, since former President Donald Trump was attending the second day of his trial in the Manhattan Supreme Court Civil Branch, where he is the lead defendant in a sprawling business fraud suit brought by state prosecutors.

In interviews and social media posts, Bankman-Fried has acknowledged making significant mistakes while he was in charge of the cryptocurrency exchange but maintained he had no criminal intent.

He has blamed FTX’s collapse into bankruptcy last November on vindictive competitors, his own inattentiveness and fellow executives who he said failed to manage risk properly.

“I didn’t steal funds, and I certainly didn’t stash billions away,” he wrote in a post earlier this year on the online newsletter platform Substack.

Prior to the bankruptcy and collapse of FTX, Bankman-Fried had been lauded as one of the best-known proponents of the philanthropic social philosophy known as “effective altruism,” which promotes prioritizing donations to projects that will have the largest impact on the most number of people.

He had once been worth tens of billions of dollars — at least on paper — and was able to woo celebrities like Tom Brady and former politicians like Bill Clinton and Tony Blair to his conferences at luxury resorts in the Bahamas. One prominent Silicon Valley firm, Sequoia Capital, invested hundreds of millions of dollars in FTX.

At the height of cryptocurrency’s pandemic-era boom, the arena home to the Miami Heat was briefly named The FTX Arena, and a 19-year, $135 million sponsorship agreement between FTX and the county was just getting underway when the team and Miami-Dade County decided to terminate their relationship with FTX on the same day the cryptocurrency exchange filed for bankruptcy.

For the first eight months after his extradition from the Bahamas and arrest last year, Bankman-Fried remained free under house arrest on $250 million bond. He was required to remain at his parents’ home near Stanford University in Palo Alto, California, with an electronic ankle monitor, but the bail was revoked in August over allegations of witness intimidation and tampering.

Prosecutors in the Southern District of New York told the judge that Bankman-Fried had handed over to the press private diary-like writings of his on-again, off-again girlfriend Caroline Ellison, a former Alameda Research co-CEO, which they claimed was an attempt to interfere with a fair trial by an impartial jury.

The private documents from a Google Drive account were published without naming Bankman-Fried as the source last month in a New York Times article titled “Inside the Private Writings of Caroline Ellison, Star Witness in the FTX Case.”

Ellison and FTX co-founder Gary Wang both pleaded guilty in January to charges including wire fraud, securities fraud and commodities fraud and are cooperating with federal prosecutors.

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Categories / Financial, Technology, Trials

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