Bankman-Fried faces his reckoning
Federal trial begins Tuesday
NEW YORK — A year ago, Sam Bankman-Fried was a fixture on magazine covers and in the halls of Congress, a touslehaired crypto billionaire who hobnobbed with movie stars and bankrolled political campaigns.
On Tuesday, the founder of the failed FTX digital currency exchange is set to leave the jail where he has been confined for more than seven weeks and stand trial in a Manhattan courtroom on federal charges of fraud and money laundering, capping one of the largest and swiftest corporate collapses in decades.
The charges against Bankman-Fried, 31, have put the rest of the crypto industry on trial with him. He has emerged as a symbol of the unrestrained hubris and shady deal-making that turned cryptocurrencies into a multitrillion-dollar industry during the pandemic. The demise of FTX in November helped burst that bubble, sending other high-profile companies into bankruptcy and provoking a government crackdown.
The trial will offer a window into the Wild West-style financial engineering that fueled crypto’s growth and lured millions of inexperienced investors, many of whom lost their savings when the market crashed. Lawyers on both sides of the case are expected to lay bare the culture of scams and risk-taking that surrounded FTX and to dissect the often-misleading publicity campaigns that helped drive years of crypto hype.
“It’s a fraud that was enabled and supercharged by crypto, and by crypto’s unique aspects,” said Lee Reiners, a crypto expert who teaches at Duke University Law School. “It wouldn’t have been possible in any other context.”
Jury selection begins Tuesday in US District Court, with the trial expected to last six weeks. Camera crews and reporters are expected to swarm the courthouse, and author Michael Lewis has a widely anticipated book about the case coming out that day, featuring behind-the-scenes details of Bankman-Fried’s rise and fall.
Bankman-Fried, who faces seven criminal counts, is accused of orchestrating a yearslong fraud that siphoned billions of dollars from customers to finance political contributions, venture capital investments, and luxury real estate purchases. He has pleaded not guilty. If convicted, he could receive what would amount to a life sentence.