 "FTX Founder Sam Bankman's fraud trial gets under way with jury selection")
Sam Bankman-Fried's fraud trial got under way with jury selection on Tuesday, nearly a year after his now-bankrupt cryptocurrency exchange's collapse shocked markets and tattered his reputation.
U.S. District Judge Lewis Kaplan told a group of 50 prospective jurors gathered in a courtroom on the top floor of a federal courthouse in lower Manhattan that he would ask them questions to try to seat a 12-member panel that could be fair to both prosecutors and Bankman-Fried's defense.
"The object is to select a jury of individuals who no matter what they may know or not know about these parties or about this case are willing and able to decide this case in a manner that's fair and impartial to both sides based solely on the evidence," Kaplan said.
Federal prosecutors say the 31-year-old former billionaire embezzled from FTX customers since its founding in 2019 through its November 2022 bankruptcy in order to prop up his hedge fund Alameda Research, buy luxury properties and donate more than $100 million to U.S. political candidates.
At the outset of proceedings, Kaplan told Bankman-Fried in open court that it would ultimately be his decision whether or not to ultimately testify in his own defense, and asked Bankman-Fried whether he understood.
"Yes," Bankman-Fried replied. He was dressed in a suit and tie, with his once signature curly, unkempt hair cut into a neater trim.
Prosecutor Nicolas Roos said the two sides never engaged in talks about a potential plea deal and no such offer was made to Bankman-Fried. Mark Cohen, a lawyer for Bankman-Fried, confirmed that was correct.
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Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has acknowledged inadequate risk management, but denied stealing funds. His lawyers have signaled in court papers they plan to argue that FTX's treatment of customer funds were proper, and that others at FTX and Alameda bore the bulk of the blame for their failure.
The trial is expected to last up to six weeks. It will feature testimony from three former members of Bankman-Fried's inner circle who have pleaded guilty to fraud charges themselves and agreed to cooperate with the Manhattan U.S. Attorney's office.
Bankman-Fried's lawyers have signaled they plan to challenge the credibility of those witnesses - who include former Alameda chief Caroline Ellison and former FTX executives Gary Wang and Nishad Singh - by arguing they are motivated to implicate their client to get a lower sentence, a common strategy in white collar fraud cases.
They have also laid the groundwork to argue that Bankman-Fried believed his exchange was allowed to invest customers' deposits as long as they were ultimately able to take out their funds, and that a series of business failures - not deliberate fraud - left the exchange without enough money to meet withdrawal requests.
Bankman-Fried's is the highest profile case U.S. prosecutors have so far brought against a former cryptocurrency executive.
His indictment last December marked a spectacular fall from grace for Bankman-Fried, who had garnered a reputation as a legitimate operator in an industry whose image was pockmarked by scams and purported get-rich-quick schemes.
Prosecutors say Bankman-Fried built that reputation on lies and bolstered it with endorsements from celebrities and star athletes.
Bankman-Fried has been detained since Aug. 11, after the judge found he had likely engaged in witness tampering - including by sharing Ellison's personal writings with a reporter. Ellison and Bankman-Fried are former romantic partners.
He will be brought to court early on most days to allow him to prepare with his lawyers.