Sam Bankman-Fried’s cryptocurrency empire was a “house of cards” that crumbled as he stole $10 billion of customer funds to fund lavish vacations, donate to politicians and pay off lenders, the feds charged as the fallen ex-billionaire’s trial kicked off in New York City Wednesday.
“This man stole billions of dollars from thousands of people,” said federal prosecutor Thane Rehn as he pointed at the 31-year-old accused fraudster during opening statements inside a packed courtroom in lower Manhattan.
Rehn accused Bankman-Fried, who sat at the defense table in a gray suit, purple tie and new, neatly coiffed hairdo, of using his since-collapsed crypto exchange FTX as his personal piggy bank – installing “secret” methods to transfer customer funds from FTX to his hedge fund Alameda Research to use as he wished.
“When customers thought their money was going to the exchange, they were actually sending their money straight to the defendant’s pocket,” said Rehn as Bankman-Fried sat looking straight ahead, occasionally typing away on an internet-free laptop.
The prosecutors’ claims came at the start of a blockbuster trial that could cap Bankman-Fried’s stunning fall from grace.
The disgraced tycoon went from running a crypto platform worth nearly $40 billion – with advertisements featuring celebrities like Tom Brady and Gisele Bündchen – to facing fraud and conspiracy charges that could send him to prison for the rest of his life.
“One year ago, it looked like Sam Bankman-Fried was on top of the world,” Rehn told jurors in his opening remarks.
“He jetted around the world on a private plane, he hung out with celebrities, his face was on magazine covers,” added Rehn, as the fallen crypto magnate’s parents, Stanford Law School professors Joseph Bankman and Barbara Fried, looked on from the gallery.
“He had wealth, he had power, he had influence — but it was all was built on lies,” Rehn added. “The money he was spending to build his empire, it was money he was stealing from his clients.”
Bankman-Fried’s defense attorney, Mark Cohen, meanwhile, tried to depict his client as a harmless “math nerd” who acted in “good faith” and “did not intend to steal from anyone.”
“It’s not a crime to be the CEO of a company that later files for bankruptcy,” Cohen told jurors — while attempting to paint Bankman-Fried as a well-meaning startup founder who was simply in over his head.
“Sam and his colleagues were building the plane while they were flying,” Cohen said.
“No one person, no CEO could be everywhere and do everything,” the lawyer added. “Things were happening quickly. Sam and others made hundreds of decisions a day, as a result some things got overlooked.”
The feds’ first witness called to the stand Wednesday was French cocoa trader Marc-Antoine Julliard, who testified that he invested crypto funds worth around $140,000 on FTX after seeing ads and media appearances depicting Bankman-Fried as the “future face of the crypto industry.”
The prosecution asked him whether he was ever able to withdraw his funds after FTX’s November 2022 implosion.
“Never,” Julliard replied.
Next up was Adam Yedidia, who testified that he became fast friends with Bankman-Fried while they studied together at MIT before joining him as a developer at his crypto exchange.
Yedidia, who received immunity from prosecutors as a condition of his testimony, said he resigned from FTX last year after a colleague told him that the company had used customer funds to pay back its lenders.
“I was concerned that…I may have unwittingly written a code that contributed to a crime,” Yedidia said.
Prosecutors also introduced infamous advertisements Wednesday into evidence featuring football star Tom Brady and comedian Larry David – including a 2022 Super Bowl ad where David expresses an apparently prescient skepticism about Bankman-Fried’s company.
“Like I was saying, it’s FTX. It’s a safe and easy way to get into crypto,” an actor portraying an FTX executive tells David in the ad.
“Ehhhh, I don’t think so,” David replies with a smirk. “And I’m never wrong about this stuff – never!”
The commercial ends with a message saying, “Don’t be like Larry. Don’t miss out on the next big thing,” imploring viewers to sign up for FTX.
Prosecutors expect to call several former members of Bankman-Fried’s inner circle to the stand during the six-week trial, with FTX co-founder Gary Wang expected to testify by the end of the week.
— Additional reporting by Thomas Barrabi.
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