Sam Bankman-Fried's criminal trial kicks off with jury selection in New York on Tuesday morning.
In the first trial, Bankman-Fried faces seven criminal counts related to the collapse of the crypto empire he built, including wire fraud, securities fraud and money laundering.that Bankman-Fried misused billions of dollars worth of customer money for personal purchases, including buying more than $200 million of upscale real estate properties in the Bahamas, as well as to cover bad bets made at his crypto hedge fund, Alameda Research.
Since August, Bankman-Fried has been held in a jail in Brooklyn, New York, after having his multimillion-dollar bail revoked for witness tampering, after allegedly leaking to The New York Times the private diary entries of Ellison, who is expected to be a star witness for the prosecution.indicate that lawyers for Bankman-Fried could present an"advice of counsel" defense.
And from FTX's inception, there was a lot of customer money. The CFTC cited 2019 reports from FTX which pegged the futures volume alone as often exceeding $100 million every day. This was because any attempt by Alameda to sell off their FTT tokens would crater FTT's price, given how much of the available supply Alameda controlled.
The CFTC alleges that between May and June 2022, Alameda was subjected to"a large number of margin calls and loan recalls." Bankman-Fried allegedly ordered Alameda to increase its use of customer assets, drawing down massively on its"unlimited" credit line at FTX. Alameda still had billions of collateralized loans outstanding — but if the value of their collateral, FTT, fell too far, their lenders would execute further margin calls, demanding full repayment of loans.
Publicly, Bankman-Fried continued to operate as if all was well."FTX is fine. Assets are fine," he wrote in a tweetBut at the same time Bankman-Fried was tweeting reassurances, internally, executives were growing more and more alarmed at the increasing shortfall, according to prosecutors. Bankman-Fried and other executives admitted to each other that"FTX customer funds were irrevocably lost because Alameda had appropriated them.
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