Sam Bankman-Fried stole at least $10 billion, prosecutors say in fraud trial

Sam Bankman-Fried on Wednesday faced jurors for the first time as opening arguments in his trial on federal fraud and money-laundering charges got underway in Manhattan.

Bankman-Fried committed “a massive fraud,” swiping at least $10 billion from customers and investors to finance outside ventures such as political donations and purchases of luxury real estate, Assistant U.S. Attorney Nathan Rehn declared in his opening statement. 

The co-founder of failed cryptocurrency exchange FTX, Bankman-Fried has maintained his innocence since his arrest late last year. The 31-year-old faces a potential prison term of more than a century if convicted of the charges against him.

Defense attorneys contend their client had nothing criminal in mind while building his crypto empire. Bankman-Fried has “a very different story” to relay than the one told by prosecutors, his attorney, Mark Cohen, said in his opening statement.

Describing Bankman-Fried as a “math nerd who didn’t drink or party,” Cohen also told the courtroom that “Sam didn’t defraud anyone, didn’t intend to defraud anyone.” 

FTX Bankman Fried
Barbara Fried and Joseph Bankman, the parents of FTX co-founder Sam Bankman-Fried, arrive at a Manhattan federal courthouse as opening arguments begin in the fraud trial of their son Wednesday, Oct. 4, 2023, in New York.

Craig Ruttle/AP

On the second day of proceedings expected to last six weeks, attorneys and Judge Lewis A. Kaplan winnowed a pool of 45 to a jury of 12, with six alternates, before opening statements began midday. 

Bankman-Fried could be facing an uphill fight, as four of his closest associates have pleaded guilty to fraud and other criminal charges, and three are expected to testify against him in exchange for lighter sentences. That includes Caroline Ellison, a former business associate and Bankman-Fried’s former girlfriend, along with FTX co-founder Gary Wang. 

FTX collapsed in November, and Bankman-Fried was arrested the following month.

Before FTX failed and filed for bankruptcy, Bankman-Fried had a net worth on paper of $32 billion. Known for socializing with politicians, when smaller crypto firms began blowing up in early 2022, Bankman-Friedman publicly said he would help rescue the market. 

Judge Kaplan on Tuesday said prospective jurors who knew about FTX’s demise or who had lost money investing in cryptocurrency would not be disqualified from serving provided they could consider the merits of case in an impartial manner.

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Prosecutors are expected to focus on Bankman-Fried’s use of customer money without their consent, rather delving too deeply into the complex world of cryptocurrencies, according to one former federal prosecutor.

“Prosecutors are going to say, ‘Look at where the money went and how it was spent,'” said Michael Zweiback, co-founder of the law firm Zweiback, Fiset & Zalduendo. “This case is less about complicated investments and all about garden-variety fraud.”

A son of Stanford University law school professors, Bankman-Fried studied at the Massachusetts Institute of Technology in the 2010s before landing at a Wall Street investment firm in 2014. He quit in 2017 to move to San Francisco, where he helped start FTX in 2019.

—The Associated Press contributed to this report.

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