In the ongoing bankruptcy trial of crypto exchange FTX and Alameda Research, Sam Bankman-Fried, founder of both companies, is facing criminal charges. This development follows the collapse of FTX in November, when it was unable to return customer funds on demand, leading to bankruptcy filings for both FTX and Alameda.
Bankman-Fried's co-defendants, Gary Wang, Caroline Ellison, and Nishad Singh, have already pleaded guilty to fraud and are now testifying against him. They argue that Bankman-Fried was aware of Alameda's $10 billion debt to FTX but allowed further borrowing.
The prosecution has presented private notes written by Bankman-Fried and customer testimonies as evidence. Two customers testified that they kept money in their FTX accounts based on reassuring tweets from Bankman-Fried.
Assistant US Attorney Danielle Sassoon questioned Bankman-Fried's comprehension of Alameda's precarious financial situation given his academic background from MIT and professional experience at Jane Street Capital. The prosecution also suggested that Bankman-Fried set his encrypted chats to auto-delete, implying a deliberate destruction of potentially incriminating messages.
Bankman-Fried admitted to some mistakes but assigned the responsibility for most critical decisions to others. He claimed he believed Alameda’s debts to FTX were manageable at an estimated $2 billion. However, he expressed surprise in October when he discovered more than $8 billion accounted for in a different part of the FTX systems. The spending included billions on venture investments, real estate, and high-profile marketing.
The case hinges largely on the "he said, they said" nature of the testimonies — and which side the jury will believe. The events leading up to this trial began with a key meeting at FTX's Bahamas office in June last year, where concerns over Alameda's possible bankruptcy were raised. Despite unsuccessful attempts at raising more equity for FTX, Bankman-Fried assured investors of both companies' financial stability.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.