In opening arguments Wednesday in the criminal fraud trial of former FTX CEO Sam Bankman-Fried, prosecutors said he used billions of dollars of customer money for personal enrichment, amassing power and influence that put him on top of the world, but that it was all “built on lies.”
Defense lawyers told a very different story. In their opening arguments, the defense described the 31-year-old as a “math nerd” who set out to launch a business in good faith and “didn’t intend to defraud anyone.”
Bankman-Fried is accused of defrauding customers of his defunct crypto exchange FTX and lenders of a related company, Alameda Research. He has been indicted on seven counts, including wire fraud and conspiracy to commit money laundering. Five of the charges carry a maximum prison term of 20 years. Bankman-Fried has pleaded not guilty.
Four top executives of the companies have pleaded guilty to various charges, and former Alameda Research CEO Caroline Ellison, FTX co-founder Gary Wang, and former head of engineering Nishad Singh have agreed to testify during the trial. Ryan Salame, another former FTX executive, has pleaded guilty but isn’t expected to testify.
Assistant U.S. Attorney Thane Rehn on Wednesday accused Bankman-Fried of committing fraud, and using the money to buy luxuries for his friends and family.
Rehn told jurors that Bankman-Fried “promised” customers that their deposits to FTX to trade crypto could be withdrawn whenever they wanted, and showed them his past social media posts saying “FTX has a long history of safeguarding assets and that remains true today.”
But instead, the money customers deposited went to a bank account controlled by Alameda, prosecutors said. Although Bankman-Fried and others repeatedly said FTX and Alameda were separate entities, prosecutors said the two companies operated out of the same corporate campus in the Bahamas.
By the summer of 2022, Rein said, Bankman-Fried had used Alameda to take more than $10 billion from FTX.
Bankman-Fried and other FTX executives lived in a $30 million penthouse at an exclusive resort, flew on a private jet, and had racked up an unpaid bill of nearly $600,000 at a Jimmy Buffett’s Margaritaville Restaurant, Bloomberg reported.
At one point, the prosecutor pointed to Bankman-Fried and said: “This man stole billions of dollars from thousands of people,” Bloomberg reported.
Bankman-Fried spent millions of dollars getting celebrities to promote FTX as the “safest and easiest way to buy and sell crypto” during the 2022 Super Bowl. Bankman-Fried also donated millions of dollars to political candidates and was among the largest individual donors to Democrats in the 2020 and 2022 elections.
Bankman-Fried’s attorney, Mark Cohen, told jurors that “Sam didn’t defraud anyone,” saying “There was no theft.” He said his client attended the Massachusetts Institute of Technology, worked hard, and didn’t drink or party.
“Sam started and built two billion-dollar companies in the span of a few years,” Cohen said, adding he took what he thought were reasonable actions when lenders recalled loans to Alameda and when the crypto prices dropped last year.
Amid the hundreds of decisions Bankman-Fried and others made every day, “some things were overlooked,” Cohen said.
Write to Janet H. Cho at [email protected]
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