Sam Bankman-Fried built empire on ‘lies’, prosecutor says in fraud trial

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Opening arguments began in Sam Bankman-Fried’s fraud trial on Wednesday, with prosecutors accusing the former cryptocurrency star of building his empire “on lies” and living a lavish lifestyle while defrauding his customers. Defense attorneys countered by presenting Bankman-Fried as a “math nerd” with good intentions who got in over his head. A jury of 12 was selected to hear the case before attorneys for each side began presenting their opening arguments. Bankman-Fried, founder of the now-fallen cryptocurrency exchange FTX and its sister hedge fund, Alameda Research, is charged with a host of financial crimes surrounding the shocking implosion of his companies late last year. FTX went from being valued at $32bn to bankruptcy within weeks, while once-lauded crypto mogul Bankman-Fried became a pariah. Federal prosecutors accuse Bankman-Fried of diverting billions of dollars in FTX customers’ money into risky trades at Alameda and unlawful purchases, charging him on seven counts that include wire fraud and conspiracy to commit money laundering. In his opening argument, the prosecutor Thane Rehn alleged that Bankman-Fried lived a glamorous life of wealth and power while duping the people who invested in his companies. Rehn said: “One year ago, it looked like Sam Bankman-Fried was on top of the world. He ran a huge company called FTX. He lived in a $30m apartment in the Bahamas. He jetted around the world on private planes. He hung out with celebrities like Tom Brady and politicians like Bill Clinton.” Rehn added: “But all of that, all of it, was built on lies. Behind the curtain, Sam Bankman-Fried was not who he appeared to be. He was using his company, FTX, to commit fraud on a massive scale.” Rehn alleged that money from customer deposits was effectively going directly into Bankman-Fried’s pocket, claiming that their funds never made it into the FTX exchange and instead were funneled elsewhere without notice. Bankman-Fried has maintained his innocence. During opening arguments, his defense attorney Mark Cohen portrayed his 31-year-old client as a well-intentioned but inexperienced founder who had no criminal intent. Cohen described Bankman-Fried as a “math nerd who didn’t drink or party” rather than the “cartoon villain” that he claimed prosecutors wanted to paint him as being.“Sam didn’t defraud anyone. Sam didn’t intend to defraud anyone. Sam acted in good faith,” Cohen said. “There was no theft.”Cohen argued that any mismanagement at FTX was the result of the company’s rapid growth which overwhelmed Bankman-Fried’s ability to make decisions. “Things were happening quickly, very quickly. Sam and others were making hundreds of decisions a day,” Cohen said. “And as a result, some things got overlooked … things an older company would have built out over time.” The trial is set to last six weeks, as prosecutors lay out their case that Bankman-Fried was using customer money to bankroll expenses at Alameda, snap up pricy real estate and curry favor with lawmakers through millions in donations to political campaigns. If convicted, Bankman-Fried could face life in prison. Many of Bankman-Fried’s former close associates at FTX are expected to testify after they previously pleaded guilty to criminal charges and became witnesses for the prosecution. The star witness is expected to be Caroline Ellison – his on-again, off-again girlfriend and the one-time head of Alameda. The prosecution’s opening argument teased blockbuster testimony from Ellison, who they claimed could describe how she and Bankman-Fried siphoned money to Alameda.“She will tell you about how she and the defendant stole the money that customers had entrusted to FTX,” Rehn said. “She will testify that she and the defendant took customer money again and again.” Meanwhile, Cohen also appeared to cast Ellison as the reason behind FTX’s downfall, alleging that she ignored Bankman-Fried’s financial advice and left the companies exposed to market shocks. Bankman-Fried’s appearance in court has been unusually kempt; his characteristically unruly hair tamed by a recent haircut. He arrived on Wednesday sporting a gray suit, and stood with his hands clasped in front of him, his gaze alternating between the phalanx of jurors and the jury box. His parents, Joseph Bankman and Barbara Fried, were spotted arriving at the Manhattan courthouse for the second day of their son’s trial. Bankman and Fried, who are both professors at Stanford Law School, are facing legal trouble of their own after FTX filed a civil lawsuit against them claiming that they accepted millions of dollars in gifts and real estate from the company while their son was in charge. Attorneys for the couple have denied the allegations. The opening arguments in the case began after a final group of 12 jurors, along with six alternates, was finalized earlier on Wednesday morning. The first day of jury selection got off to a slow start. Bankman-Fried was not at the courthouse in advance of the proceedings and Judge Lewis Kaplan revealed shortly afterwards that Donald Trump’s civil trial across the alley had derailed his arrival. “We can thank the delay to what’s going on in the other courtroom nearby,” Kaplan said. After Bankman-Fried arrived, and prospective jurors filed into the courtroom at 10.37am, and so began the elimination process. Several possible panelists said that they had read about the case. One man said that he had heard analysis of the case on Joe Rogan’s podcast, prompting strained groans in the press room. During jury selection one woman disclosed that her employer had invested money in FTX and Alameda. Did they make or lose money? Kaplan asked. She replied: “Lose money.” FTX and Alameda. Did they make or lose money? Kaplan asked. She replied: “Lose money.” Bankman-Fried will remain jailed throughout trial, after Judge Kaplan revoked his bail in August on the grounds that he was tampering with witnesses through his many statements to media outlets.

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