Sam Bankman-Fried committed ‘fraud on a massive scale’, prosecutors allege

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Sam Bankman-Fried committed “fraud on a massive scale” by stealing “billions of dollars from millions of customers” of his FTX cryptocurrency exchange, prosecutors alleged as opening arguments began in the former crypto tycoon’s hotly anticipated trial.

“One year ago it looked liked ‘SBF’ was on the top of the world,” assistant US attorney Thane Rehn told jurors on Wednesday in Manhattan federal court. “He had wealth, he had power, he had influence, but all of it . . . was built on a lie.”

Bankman-Fried used the proceeds to buy lavish houses and court celebrities such as Tom Brady, as well as politicians including former Democratic president Bill Clinton, Rhen said.

Lawyers for Bankman-Fried are expected to respond with their opening arguments later on Wednesday.

The prosecutors’ statements kicked off what is expected to be a six-week trial to decide the fate of the 31-year-old former billionaire, who was until last year one of the leading figures in the freewheeling world of cryptocurrency trading. 

He is accused of having defrauded investors, lenders and customers as he absconded with billions of dollars in deposits entrusted to his FTX cryptocurrency exchange. 

Bankman-Fried, who sat in court wearing a grey suit, has formally denied the charges and maintained his innocence in numerous media interviews given before he was jailed in August for allegedly attempting to intimidate witnesses. Prosecutors confirmed on Tuesday that they had not at any time offered Bankman-Fried a plea deal.

His defence team, led by lawyer Mark Cohen, is expected to deflect blame on to Bankman-Fried’s lawyers and advisers, and claim he acted in good faith within the complex and fast-changing world of crypto regulation. 

The prosecutors’ case rests heavily on the testimony of three central witnesses, former lieutenants to Bankman-Fried who agreed to co-operate with the government and are expected to take the stand in the coming days.

Several former FTX customers and investors are also expected to testify, potentially including a Ukrainian depositor in the exchange who had believed the funds were in a safe haven during the Russia’s full-scale invasion of the country.

The roster of prospective witnesses or important figures in the trial, read out by the government in court, includes all of FTX’s top in-house lawyers, as well as other central employees involved in lobbying for the exchange in Washington and technology development.

The venture capital investors who invested $1.8bn into FTX before its collapse will also feature in the trial, including Sequoia Capital and partner Alfred Lin. SkyBridge Capital founder Anthony Scaramucci — who was briefly the spokesperson for the administration of Donald Trump before becoming a crypto evangelist — was also mentioned.

Arguments got under way after a jury of 12 members and six alternates was selected from a group of almost 50. The judge quizzed would-be jurors on their experiences with cryptocurrencies and prior knowledge of the case. The selected jury comprises three men and nine women, including a social worker, a high school librarian and a retired corrections officer.

Judge Lewis Kaplan asked the jurors if they had watched a Sunday interview with author Michael Lewis, who had shadowed Bankman-Fried for months before and during his fall from grace for his latest book, which was published on Tuesday. Lewis, who said FTX had “a great real business” told CBS News the book was intended to be a “kind of letter to the jury”.