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Former cryptocurrency boss Sam Bankman-Fried has appeared before the court in New York to answer to fraud charges.
Prosecutors claim the former FTX boss stole billions from clients and investors. They say he “committed fraud on a massive scale”.
Bankman-Fried’s lawyers deny all charges, they say the man known as the “crypto king” is a “math nerd” who acted in “good faith”. The trial is set to last around six weeks.
The former financial boss rose to fame in 2019 after founding FTX. It soon became one of the world’s largest cryptocurrency exchanges.
Lead prosecutor Thane Rehn told the Manhattan courtroom Bankman-Fried was “on top of the world”. However, he claimed “all of it was built on lies,” reports the BBC.
Bankman-Fried became almost the spokesman for crypto in Washington DC with his trademark curly hair, sports sponsorships and time spent with celebrities. And when the markets for digital currencies started to sour in 2022, he is said to have helped smaller firms, gaining the “King of Crypto” moniker.
Merely months later however, he was arrested and charged with fraud as FTX collapsed into brankruptcy. Billions of dollars were reported as missing.
Prosecutors allege the 31-year-old stole money through wire fraud and money laundering. It would amount to one of the largest financial crimes in US history.
The central allegation suggests Bankman-Fried used customer funds to prop-up his own investments in trading company Alameda Research as well as funding his lifestyle. He could spend decades in jail if he is found guilty.
The trial began on Wednesday after 12 jurors and six alternates were selected. Prosecutors claim the defendant took more than $10billion (£8.2 billion) from customers of FTX.
Mr Rehn said: “He was committing a massive fraud and taking billions of dollars from thousands of victims. He poured money – other people’s money – into his own investments to try to make himself even richer.
In media interviews, Bankman-Fried admitted there was “mismanagement” as FTX but has denied appropriating any funds. According to the BBC, his lawyer Mark Cohen told the court there “was no theft”.
Mr Cohen added: “Sam didn’t defraud anyone. Sam didn’t intend to defraud anyone. Sam acted in good faith.”
The US Department of Justice claims Bankman-Friend used customer’s money to spend lavishly, buying property and making over $100 million in political donations.
As well as allegedly using money to cover losses at Alameda Research, prosecutors say he lied to investors and banks about the ties between the two firms. His lawyers told the court he was following legal advice at key points and said his business practices were considered “reasonable”.
“It’s not a crime to be the CEO of a company that later filed for bankruptcy,” said his lawyer, Mr Cohen.
Lawyers for Bankman-Fried said the company’s rapid growth meant some details such as risk management were “overlooked”. They said the claims made by prosecutors about the downfall of FTX and Alameda was “out of context”.
Cohen claimed his client was “willing to give up everything he owned personally” to make the businesses work. Four of his business colleagues – including ex-girlfriend and former Alameda executive Caroline Ellison – have already pleaded guilty to charges.
Three are expected to testify against Bankman-Fried. The first witness, former FTX customer Marc-Antoine Julliard, a French citizen who said he lost $133,000, told the court he knew the risks of investing in crypto.
He however said he never considered there could be a risk of someone taking his money to trade.
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