Prosecutors Accuse Sam Bankman-Fried of Lying
- Prosecutors claimed Bankman-Fried misled investors about the true state of affairs at FTX.
- The defense attorney Mark Cohen blamed Binance CEO Changpeng Zhao for inciting a run on FTX with his tweet.
- Bankman-Fried’s trial could last for six weeks and will feature testimonies from several top FTX executives.
The widely publicized trial of former FTX CEO Sam Bankman-Fried witnessed opening statements from both parties, and prosecutors did not hold back their guns. Prosecutors said the former cryptocurrency mogul stole billions of dollars in cash and cryptocurrency from thousands of users and made several misleading comments to investors.
Assistant U.S. Attorney Thane Rehn stated during the opening statements on Wednesday that SBF “knew his company didn’t keep customer money safe.” Rehn argued that SBF took funds from FTX customers to live a luxurious life and made heavy campaign donations to convince US lawmakers.
Rehn claimed Bankman-Fried built FTX “on lies” and that some of his close partners knew of his fraudulent practices. According to reports, Rehn claimed that Bankman-Fried frequently misled customers, staff members, legislators, and members of the public about “the hole” FTX was in when the company’s financial records were released in November 2022.
Rehn told the jury:
The hole was too big. So the defendant blamed a downturn in the crypto market. But he had committed fraud. That is what the evidence in this trial will show. You will hear from his inner circle. His girlfriend will tell you how they stole money together.
FTX was one of the biggest cryptocurrency exchanges prior to its downfall. The exchange filed for bankruptcy in November 2022, and prosecutors claim that Bankman-Fried comingled FTX users’ funds to make risky wagers on Alameda Research. However, Bankman-Fried’s lawyer, Mark Cohen, told the court that his client “acted in good faith and took reasonable business measures.”
Cohen allegedly shifted some of the blame to Binance CEO Changpeng “CZ” Zhao and Caroline Ellison, the former CEO of Alameda Research. The defense attorney’s remarks suggested that both parties were responsible for some of the problems that led to FTX’s demise. Cohen claimed that Ellison had disregarded Bankman-Fried’s advice to hedge some of Alameda’s investments and that Zhao’s social media remarks were directly responsible for the run on FTX.
Cohen also claimed that Bankman-Fried did not steal FTX customers’ funds but “loaned” them to Alameda Research. Cohen said “Alameda took big margin loans from FTX,” adding that “nothing wrong with that. Alameda was a marketer.” Cohen added that “FTX at first didn’t have a bank account to accept dollars, which in the crypto world are called fiat. So, they used an Alameda account.”
Bankman-Fried’s trial will last six weeks and could see former FTX and Alameda Research executives testify.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
