UNITED STATES: A federal court in Manhattan is set to hear the case against former crypto star Sam Bankman-Fried, who is being tried for financial offences. Bankman-Fried, who led the collapse of FTX and Alameda Research, is charged with seven counts of conspiracy and fraud for allegedly using investor funds for hazardous trading.
Additionally, according to the US attorney’s office in Manhattan, which is prosecuting the matter, Sam Bankman-Fried utilised funds from FTX customers to pay for rising loan costs at Alameda. Authorities have claimed that he used their funds to buy expensive real estate and make significant political donations.
Following a CoinDesk report that Alameda had billions in FTX’s own cryptocurrency, FTT, Sam Bankman-Fried’s high-flying world began to come crashing down in November 2022. Allegedly, Alameda utilised FTT as collateral for huge loans.
Binance CEO Changpeng Zhao announced that his company would sell its $50 million in FTT, leading FTX clients to withdraw their money in a high-tech bank run-like event.
FTX experienced a massive withdrawal surge, causing users to withdraw around $6 billion in cryptocurrency tokens in just three days. Observers feared a collapse similar to the 2008 real estate crisis. Bankman-Fried resigned, and FTX declared bankruptcy.
Manhattan US attorney Damian Williams argued that the collapse was a result of willful deception, not inadequate management or oversight.
Federal prosecutors claim that Bankman-Fried transferred billions for his own benefit, along with co-conspirators, including Alameda CEO Caroline Ellison.
Ellison, who admitted to participating in the conspiracy, is expected to testify in Bankman-Fried’s made-for-tabloid trial, which will reveal information about cryptocurrency trading and FTX’s crash. Ellison’s testimony could be disastrous for Bankman-Fried if her statements are any indication.
Sam Bankman-Fried, who is in custody for trial, maintained his innocence, and his representative made no comments about the situation before the hearing.
Also Read: Interplay of Electoral Politics and Ukraine’s Support Framework
