Greedy fraudster or ‘math nerd’? Sam Bankman-Fried fraud trial hears opening arguments

Sam Bankman-Fried siphoned billions of dollars from unsuspecting customers to fund a lavish lifestyle and buy himself “power and influence” on Capitol Hill and then lied to cover his tracks, federal prosecutors alleged Wednesday in a New York courtroom.

The defense painted a very different picture of the crypto king who is on trial for fraud, claiming in their opening arguments he is simply a “math nerd” who made mistakes but acted “in good faith” and shouldn’t be held accountable for what the government claims is one of the biggest fraud cases in U.S. history. They added that it wasn’t a crime “to be the CEO of a company that needs to fold for bankruptcy.”

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Bankman-Fried is facing seven criminal charges, including money laundering and securities fraud. If he is convicted on all of the charges against him, he could be sentenced to 110 years in prison.

Wednesday’s opening statements gave a glimpse into the game plan for each side in the high-profile trial, with prosecutors arguing the 31-year-old knowingly lied to defraud customers, investors, and lenders and the defense claiming Bankman-Fried was an inexperienced CEO who got caught up in the volatile landscape of cryptocurrency.

Elizabeth Williams/AP

The prosecutor told 12 jurors and six alternates that they would hear from customers who had lost their life savings as well as people in Bankman-Fried’s inner circle who they claimed helped him orchestrate the massive fraud. Four of the former mogul’s friends have already pleaded guilty to similar charges, three of whom are expected to testify against Bankman-Fried. Bankman-Fried’s ex-girlfriend, Caroline Ellison, is a key witness in the case.

The defense has already indicated that they may try to shift the blame onto Ellison, a risky move since she may be viewed more sympathetically by jurors than Bankman-Fried.

The first witness called by prosecutors Wednesday afternoon was commodities broker Marc-Antoine Julliard, who testified he traded in cryptocurrency on Bankman-Fried’s FTX exchange because of the big-name venture capital firms who had enough confidence in it to pour millions of dollars in seed money into it.

It has been an extraordinary rise and fall for Bankman-Fried, a Massachusetts Institute of Technology graduate who quit his day job as a quantitative trader at Jane Street Capital to launch Alameda Research, a cryptocurrency trading firm, in 2017.

Elizabeth Williams/AP

Less than two years later, he and former Google employee Gary Wang launched FTX as a platform to trade crypto tokens and derivatives. By October 2021, FTX was soaring and managed to raise $420 million in venture trading. It was around the same time Bankman-Fried made his debut on the Forbes billionaires list, which put his net worth at $26 billion by year’s end.

Riding this wave of popularity and wealth, Bankman-Fried hobnobbed with celebrities like pop superstar Katy Perry and her husband, actor Orlando Bloom. FTX struck marketing deals with Formula 1 teams as well as with sports stars like Tom Brady.

In January 2022, FTX launched a $2 billion venture fund named FTX Ventures that raised $400 million in funding and had a valuation of $32 billion. A month later, FTX went mainstream, buying a Super Bowl ad that featured comedian Larry David and likened his skepticism of FTX to early humans being wary of the invention of the wheel. The ads also promoted FTX as the “safest and easiest way to buy and sell crypto.”

In April of that year, former President Bill Clinton was paid upward of $250,000 to speak at FTX’s Crypto Bahamas conference. Former British Prime Minister Tony Blair, Brady, supermodel Gisele Bundchen, and English singer Liam Payne were among a lengthy list of speakers and panelists at the April 2022 Caribbean conference.

In November, a report published by CoinDesk, an online publication that covers cryptocurrencies, sounded the alarm that FTX’s sister company, Alameda Research, was on shaky ground. The report prompted Binance CEO Changpeng Zhao to announce he would be selling $580 million worth of FTX tokens.

Following his announcement, other customers also wanted out, requesting a combined $6 billion in withdrawals, which the company could not accommodate.

The Securities and Exchange Commission and the Justice Department opened an investigation into FTX on Nov. 10. One day later, Bankman-Fried resigned as CEO, and the exchange filed for bankruptcy. Reports started to surface that $10 billion in FTX customer assets were missing.

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Bankman-Fried, one of the youngest billionaires, was arrested on Dec. 12, 2022, in the Bahamas.

He was eventually extradited to the United States and in January pleaded not guilty to fraud and conspiracy charges brought against him. In August, he had his bail revoked after prosecutors claimed he tried to harass a key witness in his fraud case when he showed a New York Times reporter her private writings.