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Sam Bankman-Fried has been portrayed by prosecutors as a “cartoon villain” whose case hinges largely on hindsight, as lawyers for the former cryptocurrency magnate presented their case to a Manhattan jury Wednesday at the start of their hotly anticipated criminal trial.
In opening arguments Wednesday, U.S. prosecutors accused Bankman-Fried of “massive fraud,” lying to investors, lenders and customers of his FTX crypto exchanges.
“This man stole billions of dollars from thousands of people,” Assistant U.S. Attorney Thane Rehn told jurors as Bankman-Fried sat motionless at the defense table.
Bankman-Fried used the proceeds of a crypto empire “built on lies” to buy lavish homes and court celebrities like Tom Brady and politicians including former Democratic Party leader Bill Clinton, Rehn said.
But Mark Cohen, a lawyer for Bankman-Fried, responded in soft-spoken terms, saying his client – known only as “Sam” – was the victim of a “retrospective case” and had acted in good faith.
“He was a math nerd and he didn’t drink or party,” Cohen told the jury. “Taking something out of context and in retrospect and calling it improper is not proof beyond a reasonable doubt.”
Reports of the fight are expected to be a six-week trial to decide the fate of the 31-year-old former billionaire, who until last year was one of the leading figures in the freewheeling world of cryptocurrency trading.
Bankman-Fried, who sat in court wearing a gray suit, has steadfastly denied the charges and maintained his innocence in several media interviews before being jailed in August on charges of attempting to intimidate witnesses. Prosecutors confirmed Tuesday that they had not offered Bankman-Fried a plea deal at any time.
His parents, law professors Joe Bankman and Barbara Fried, stared at the floor in the packed courtroom.
Prosecutors’ case rested heavily on the testimony of former lieutenants of the bank who have agreed to cooperate with the government and three federal witnesses who are expected to take the stand in the coming days.
The witnesses “will give you an inside look at how the defendant’s crimes occurred,” Rehn told the jury. He said Bankman-Fried used his former “girlfriend” Caroline Ellison — the chief executive of FTX’s sister firm crypto hedge fund Alameda — as a “front” to hide his control over the company.
The trial will depend on the credibility of these witnesses. “Be careful what you hear from them,” Cohen told jurors, adding that the prospect of lighter sentences gave them an incentive to corroborate the government’s story.
Bankman-Fried urged Ellison to block Alameda’s risky cryptocurrency investments in early 2022, but he did not, Cohen said, exacerbating the financial crisis when crypto prices collapsed later that year.
“He trusted her, he trusted her,” Cohen said. As a busy CEO, Bankman-Fried “could [not] Be everywhere and do everything.”
Ellison is expected to take the stand in the coming days. Prosecutors said they will call FTX investors and customers affected by the company’s bankruptcy to testify.
Leading Silicon Valley and Wall Street investors backed FTX with about $1.8bn before the collapse. The government’s opening includes screenshots of tweets in which Bankman-Fried assures FTX customers their money is safe and references congressional testimony to be introduced into evidence.
The case is being heard by a jury of 12 members and six alternates, whittled down from a panel of nearly 50. Judges were questioned about their experiences and prior knowledge of cryptocurrencies and litigation. The selected jury consisted of three men and nine women, including a social worker, a high school librarian and a retired corrections officer.
Judge Louis Kaplan asked jurors if they had seen an interview Sunday with author Michael Lewis, who shadowed Bankman-Fried during her downfall months ago and for her latest book, published Tuesday. Lewis, who said FTX is “a big real business,” told CBS News that the book is “kind of a letter to the jury.”
