Sam Bankman-Fried, the former CEO of the bankrupt cryptocurrency exchange FTX, is set to face a 21-day criminal trial from October 4th to November 9th. Bankman-Fried has been in pre-trial detention since August 11th and has filed multiple unsuccessful motions seeking his release to prepare for the trial. However, Judge Lewis Kaplan denied his latest motion, citing concerns that Bankman-Fried is a flight risk given the severity of the charges and potential sentence if convicted.
The trial will begin with jury selection on October 3rd, followed by the trial itself on October 4th. This trial is expected to be one of the most significant cryptocurrency-related trials in history. Bankman-Fried is facing seven counts of conspiracy and fraud related to the collapse of FTX.
FTX was once hailed as a leading cryptocurrency exchange and became well-known in the United States due to its high-profile sponsorships and campaigns. The company raised significant funds through several fundraising rounds and signed sponsorship deals with major brands such as Mercedes’ Formula 1 team and the Miami Heat’s NBA arena. However, things started to unravel in November 2022 when Binance, another cryptocurrency exchange, announced that it would sell its FTT token holdings. This triggered a liquidity crisis at FTX, leading to its collapse and bankruptcy.
Bankman-Fried is accused of wire fraud conspiracy, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to defraud the United States, and commit campaign finance violations. The U.S. Justice Department announced an eight-count indictment in December 2022 but dropped one of the charges in July 2023 due to an extradition agreement with The Bahamas, where Bankman-Fried had been deported.
During the trial, the Justice Department plans to call various witnesses, including former FTX clients, investors, and staff. These witnesses will testify about their interactions with Bankman-Fried and their understanding of FTX’s deposit policy and custodianship of user funds.
If convicted, Bankman-Fried could face significant prison time. The charges he is facing carry maximum sentences of up to 20 years for wire fraud conspiracy, wire fraud, and money laundering, and up to five years for the conspiracy charges.
Legal experts are already suggesting that Bankman-Fried’s trial could be one of the most significant fraud cases in U.S. history. The collapse of FTX resulted in the loss of $8.9 billion of customer deposits and investor funds. However, $7.3 billion of liquid assets have been recovered through bankruptcy proceedings.
Bankman-Fried’s trial has also gained attention due to his involvement in the U.S. political landscape. In 2022, he donated over $40 million to democratic committees and candidates. According to an upcoming biography, Bankman-Fried even considered paying Donald Trump $5 billion to not run for president.
Bankman-Fried maintains his innocence and has pleaded not guilty to all charges. The trial will shed light on the alleged wrongdoing and determine Bankman-Fried’s culpability in the collapse of FTX, marking a significant moment in cryptocurrency history.