FTX founder Sam Bankman-Fried goes on trial accused of ‘massive fraud’

A US prosecutor has told jurors that FTX founder Sam Bankman-Fried was on top of the world a year ago before his historic fraud was exposed, leaving customers and investors without at least 10 billion dollars (£8.23bn) they thought was secure.

Assistant US attorney Nathan Rehn repeatedly pointed at Bankman-Fried, sitting with his lawyers in a suit, and accused him of “committing a massive fraud”.

He said Bankman-Fried told lies to his investors while he spent their money on himself, his friends and family, buying lavish homes and beachfront property in the Bahamas, spending millions of dollars on political donations to gain influence in Washington.

Bankman-Fried, 31, maintains he was not to blame for a massive fraud that prosecutors allege in seven charges, including wire fraud and conspiracy, brought against him since his arrest last December in the Bahamas.

FTX Bankman Fried
FTX founder Sam Bankman-Fried is accused of a huge fraud (Bebeto Matthews/AP)

Defence lawyers insist their client had no criminal intent as he became famous in the crypto world while growing FTX and a related business, Alameda Research, into multibillion-dollar heavyweights in the cryptocurrency industry.

Defence attorney Mark Cohen, in his opening statement, insisted that his client had “a very different story” to tell than prosecutors about what happened as Bankman-Fried built his cryptocurrency empire between 2017 and 2022.

“Sam didn’t defraud anyone, didn’t intend to defraud anyone,” he told jurors.

He called Bankman-Fried a “math nerd who didn’t drink or party”, someone who launched his businesses after being educated at the Massachusetts Institute of Technology and working on Wall Street for several years.

Mr Cohen said Bankman-Fried’s actions in the final days as head of his companies prove that he believed he was managing a liquidity crisis caused by cryptocurrency values that collapsed by over 70% and criticism from one of his biggest competitors that caused a run on his companies by customers seeking to recover their deposits.

Seated in the first row at the trial was US attorney Damian Williams, who said months ago that the fraud surrounding FTX was one of the biggest in US history.

Bankman-Fried became a target of investigators when FTX collapsed last November amid a rush of customers seeking to recover their deposits, less than a year after Bankman-Fried spent millions of dollars on the 2022 Super Bowl with celebrity advertisements promoting FTX as the “safest and easiest way to buy and sell crypto”.

Comedian Larry David, along with other celebrities such as football quarterback Tom Brady and basketball star Stephen Curry, have been named in a lawsuit that argued their celebrity status made them culpable for promoting the firm’s failed business model.

Bankman-Fried was extradited to the United States from the Bahamas after his arrest last December.

He was first ordered to remain at home with his parents in Palo Alto, California, as part of a 250 million dollar bail package, but his bond was revoked and he was jailed in August after Judge Lewis A Kaplan concluded he had tried to influence trial witnesses.

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