What to know as FTX head Sam Bankman-Fried’s trial begins Tuesday for alleged fraud and money-laundering
The fall from grace of one-time crypto billionaire Sam Bankman-Fried is about to enter a new chapter as he goes on trial in New York City. Bankman-Fried, who was once seen as a leader in digital currencies and a tech CEO with ethical principles, is facing federal charges of wire fraud, securities fraud, and money laundering. These charges allege that he defrauded customers of his digital currency exchange, FTX, and lenders to his cryptocurrency hedge fund, Alameda Research.
Bankman-Fried’s trial is set to begin on October 3, and is expected to last about six weeks. He has pleaded not guilty to all charges. If convicted, he could face maximum sentences of 20 years in prison for several of the counts.
Bankman-Fried made a name for himself in the crypto world with his rapid rise to success. He co-founded Alameda Research in 2017 and FTX in 2019. FTX quickly became one of the largest players in the field, offering low trading fees and aggressively marketing itself. Bankman-Fried’s personal wealth was estimated to peak at $26 billion, and he became a significant political donor, supporting both Democrats and Republicans.
However, the downfall began in November 2022 when it was revealed that Alameda Research’s balance sheet was heavily reliant on a token issued by FTX itself, which caused significant financial liabilities. This led to digital currency traders withdrawing their money from FTX, and the platform blocking further withdrawals. Bankman-Fried attempted to raise money to save the business, but both FTX and Alameda filed for bankruptcy.
Following the collapse, Bankman-Fried maintained a public presence and spoke about his situation, sometimes appearing apologetic, other times seemingly dismissive of his previous aspirations to do good. He was scheduled to testify before Congress but was arrested in December 2022 in the Bahamas. He was extradited to the U.S. and initially placed under house arrest, but was jailed in August 2023 after prosecutors accused him of leaking diary entries by his ex-girlfriend and former Alameda CEO, Caroline Ellison, to The New York Times.
Bankman-Fried’s trial in March 2024 will also include five additional counts, including bribery of a foreign official, to which he has pleaded not guilty. It is expected that several FTX insiders, including Ellison, will testify against him.
The trial will bring to light the alleged fraudulent activities that led to the downfall of Bankman-Fried’s once successful crypto empire. The outcome of the trial will have significant implications for the future of digital currencies and the regulation of the industry.
Marley Jay is a business news reporter for NBC News Digital.
