Sam Bankman-Fried’s trial is expected to begin next week in a Manhattan courtroom.
The billionaire has been hiding out in a $30 million Bahamas mansion, crafting a speech to justify his conduct to US legislators.
Bankman-Fried was arrested by Bahamian police just hours before he was scheduled to testify. He has had time since then to hone his defense, both at home and in a prison cell after his bail was withdrawn due to charges of witness tampering.
The 31-year-old former billionaire will face the cryptocurrency world’s trial of the century in a Manhattan courtroom next Wednesday, 11 months after his digital currency empire imploded.
The US government has charged Bankman-Fried with seven counts of conspiracy, fraud, and money laundering at FTX, which was once the world’s second largest digital coin exchange.
Prosecutors claim he misused billions of dollars in FTX client cash to support dangerous wagers at Alameda, a crypto hedge fund, leaving a $8 billion black hole and forcing the company into bankruptcy.
He denies any wrongdoing and the trial is likely to take six weeks.
Former coworkers, housemates, and Caroline Ellison’s ex-girlfriend are all expected to testify or present evidence. Four former FTX executives have previously pled guilty to separate fraud charges, including Ellison, who led Alameda.
Bankman-Fried has said that he committed mistakes but never intended to do wrong.
The one million creditors of FTX will be watching the trial intently. “Creditors want to see justice done,” says Louise Abbott, a lawyer at Keystone Law, which is representing claimants in separate bankruptcy processes.
Beginning on Tuesday, Bankman-Fried’s defense will be assessed against the US government’s collection of millions of pages of evidence, private messages, and audio recordings.
According to legal documents filed before the trial, Bankman-Fried’s lawyers will argue that he was simply doing what he was taught was legal – a so-called “advice of counsel” defense – or that he will blame the lawyers.
According to US prosecutors, this was all the result of Bankman-Fried’s failed money-making scam. FTX fraudulently inflated the value of the majority of its assets, a cryptocurrency token called FTT, while using user deposits to help Alameda borrow billions of dollars to finance transactions – in violation of its own terms and conditions.
The scheme came crashing down after a massive sale of FTT.
Prosecutors claim Bankman-Fried orchestrated these schemes and utilized “billions of dollars in stolen funds” to purchase luxurious real estate and give to political campaigns.
Following the revelation, Bankman-Fried was remanded to prison and his $250 million bail was canceled. Since then, the erstwhile crypto prodigy has been imprisoned awaiting his trial.
According to a court document, material relating to Ellison could be critical in showing “criminal conspiracy” for the prosecution. Ellison addressed the staff a few days before FTX crashed.
When asked who authorized the use of funds from FTX customers to fund its high-risk hedge fund, Ellison said, “Um… Sam I guess.”
If found guilty, Bankman-Fried may face a sentence of 115 years in jail.
