Sam Bankman-Fried's trial to test dueling explanations for FTX's collapse

NEW YORK, Sept 26 - In U.S. prosecutors' telling, Sam Bankman-Fried embezzled money from depositors in his FTX cryptocurrency exchange ever since he launched it in 2019, and the resulting shortfall led directly to its collapse as crypto prices swooned last year.

A conviction would seal his spectacular fall from grace. During his meteoric rise as the values of bitcoin and other digital assets soared during 2020 and 2021, he became something of a poster child for responsibility in the often rough-and-tumble cryptocurrency sector. Prosecutors say it was a facade all along. Bankman-Fried is charged with stealing billions of dollars in FTX deposits to plug losses at Alameda as well as to buy luxury real estate and donate to U.S. political campaigns to promote crypto-friendly legislation.

"It's always been Bankman-Fried's best strategy to show that he's not a criminal mastermind - he was just out of his depth," said Mark Kasten, a defense lawyer at Buchanan Ingersoll & Rooney who is not involved in the case.

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Sam Bankman-Fried's trial to test dueling explanations for collapse of crypto exchangeIn U.S. prosecutors' telling, Sam Bankman-Fried embezzled money from depositors in his FTX cryptocurrency exchange ever since he launched it in 2019, and the resulting shortfall led directly to its collapse as crypto prices swooned last year. But in his own version and in explanations put forth by his lawyers, Bankman-Fried thought FTX, like a bank, could make investments with customers' money as long as they were able to withdraw it - and he did not know that actions taken by his closest colleagues had jeopardized the availability of funds. Over the course of six weeks starting on Oct. 3, a federal jury in Manhattan is due to weigh these dueling narratives during Bankman-Fried's criminal trial on fraud charges, before determining whether the 31-year-old former billionaire is guilty on seven counts of fraud and conspiracy.
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