Business & Economy

Bankman-Fried, founder of FTX, pleads not guilty as trial begins

New York, Oct 3 (EFE). – The trial for fraud and money laundering against the founder of the FTX cryptocurrency platform, Sam Bankman-Fried (SBF), began on Tuesday in federal court in Manhattan, with the defendant pleading not guilty.

For the trial, Bankman-Fried will be released from jail, where he has been held for more than seven weeks, after spending several months on provisional release at his parents’ California mansion following the posting of a $250 million bail (about 238 million euros).

Bankman-Fried, 31, a so-called premature financial genius, could spend the rest of his life in prison if convicted.

He faces federal charges of wire fraud, securities fraud and money laundering, allegedly committed against FTX customers and lenders to his cryptocurrency hedge fund, Alameda Research.

Upon SBF’s arrival, Judge Lewis Kaplan asked if he would exercise his right not to testify and reminded the defense that there was still time to enter a plea, which they forfeited.

In the hours before Tuesday’s session, SBF’s attorneys filed a motion with the judge opposing the prosecution’s request to call FTX clients to testify “to explain whether they fully understood how FTX used their assets” and whether they understood FTX’s role “as custodian of their assets.”

The defense argues that the jury must evaluate the facts from the objective perspective of a reasonable person, implying that the clients affected by FTX’s bankruptcy are not.

In essence, the issue points to the fact that the jury will be asked to rule on the complex world of cryptocurrencies, which they may not understand very well, according to several media outlets.

According to the media, both the prosecution and the defense will try to use this alleged ignorance in their favor.

The prosecution will try to limit the trial to the concepts of lying and stealing, without getting into technicalities; on the contrary, the defense may try to insist on the most complex aspects to prove that the jury cannot convict for crimes it does not understand.

Almost Warren Buffett, but not

In the summer of 2022, the business magazine Fortune dedicated its cover to Bankman-Fried, asking: The next Warren Buffet?

“Sam Bankman-Fried does not look like the most powerful man in crypto. Friendly and rumpled, with an unruly halo of curly hair, the 30-year-old widely known as SBF has an affinity for League of Legends, fidget spinners, and other trappings of nerd culture. But underneath the goofy facade is a trading wunderkind whose ambition knows no limits,” said the magazine.

A physics graduate of the Massachusetts Institute of Technology (MIT), SBF was 27 when he founded his digital currency exchange, FTX, which at its peak was valued at $32 billion and “hailed by some as the best derivatives platform ever built,” according to the article.

FTX, now bankrupt, was based in the Bahamas and allowed customers to exchange money and cryptocurrencies, and also had its own, known as FTT.

But Bankman-Fried didn’t just make the covers because of his business success, his nonchalance was also praised, along with his careless way of dressing – T-shirts and shorts – and napping in the middle of his office, even in front of high-profile visitors.

In 2022, he went to Congress and participated in Senate hearings on the regulation of cryptocurrency markets, and he was also a prolific political donor, contributing more than $5 million to Democrat Joe Biden’s 2020 presidential bid.

From Fortune to prison

His fall began when Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, sold his stake in FTX to Bankman-Fried and expressed concern about FTX’s financial stability.

Zhao’s announcement caused other investors to rush out of FTX, leaving the company with an $8 billion deficit and forcing it to file for bankruptcy on November 11, 2022.

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