Sam Bankman-Fried allegedly deceived the public while building his cryptocurrency empire at FTX, confiding only in his close circle about the truth, according to prosecutors on the first day of his historic fraud trial.
Nathan Rehn, an assistant US attorney, portrayed the 31-year-old as a calculated criminal who used investor deposits at FTX for personal use before the company’s eventual bankruptcy a year ago. Rehn claimed that only a select few in Bankman-Fried’s inner circle were aware that he was diverting customer funds to finance his lavish lifestyle.
“He possessed wealth, power, and influence, but all of it was based on lies,” Rehn told the jury in a Manhattan federal court on Wednesday. “He was committing an extensive fraud and siphoning billions of dollars from thousands of victims.”
During the opening statements, prosecutors mentioned Caroline Ellison, the former CEO of Alameda Research, as one of the individuals aware of the behind-the-scenes activities. Ellison, who reached a plea agreement last year, is the star witness for the government. Gary Wang, the former chief technology officer of FTX, and Nishad Singh, the former engineering director of FTX, are also expected to testify as cooperating witnesses.
The trial, which the government has called one of the largest financial crimes in US history, will delve into how an unassuming individual from California came to manage and allegedly ruin one of the world’s largest crypto exchanges. If found guilty, the MIT graduate could face a maximum prison sentence of 20 years for each of the five most serious charges against him.
Bankman-Fried displayed no emotions as Rehn spoke, briefly glancing at the jury when the government lawyer emphasized the “billions of fraud” before returning his gaze to his laptop. Sitting in the gallery behind their son were his parents, who are both law professors at Stanford University.
John Reed Stark, a former SEC enforcement attorney and crypto critic, commented on the social media platform X (formerly known as Twitter) that the prosecution’s “stockpile of cooperating prosecution witnesses is arguably unprecedented for a financial fraud trial.”
“For the past year or so, these three informants, along with numerous others desperate to save their own skin, have been providing the prosecution with information on SBF’s alleged criminal activities,” said Stark, who currently runs his own consulting company.
Rehn cited the company’s terms of service, as well as old tweets by Bankman-Fried assuring customers that their funds were secure, as evidence to indicate FTX’s engagement in fraud.
Rehn alleged that FTX misleadingly informed customers that the money belonged to them, not the company. “FTX’s advertising slogan promoted trust in the company,” he stated.
He referenced one of Bankman-Fried’s tweets, saying, “FTX has a long history of safeguarding assets, and that remains true today.”
“Statements about FTX ensuring the safety of customer funds were lies,” Rehn concluded. – Bloomberg
Credit: The Star : Tech Feed
