Crypto Tycoon Sam Bankman-Fried Faces Fraud Accusations in High-Profile Trial
Summary:
This article presents the details from the ongoing high-profile cryptocurrency trial against Sam Bankman-Fried, co-founder of Alameda Research and FTX. Prosecution led by Assistant U.S. Attorney Thane Rehn accuse Bankman-Fried of building his wealth and influence on lies. The testimonies from a variety of witnesses, including victims of the FTX debacle, former friends of Bankman-Fried, and co-founder of venture capital firm Paradigm reveal the inner workings of FTX and Alameda and the alleged misconduct by the defendant. The trial continues with testimonies from other key witnesses.
Extravagance, politics, investments, and media recognition characterized the life of Sam Bankman-Fried a year ago, according to Assistant U.S. Attorney Thane Rehn during opening statements of a high-profile cryptocurrency trial. The prosecution asserts Bankman-Fried, the co-founder of Alameda Research and FTX, manipulated the truth to acquire wealth and political power. Not even his defense team seemed unaffected by these allegations, responding tepidly. Defense attorney Mark Cohen painted Bankman-Fried as an enterprising individual who made some errors in his pursuit of rapid growth, stating to the jury, "There was no theft."
His parents, Joseph Bankman and Barbara Fried, were among the observers during the proceedings, reacting differently to the developments. While his father displayed occasional smiles, his mother continually observed her son in the courtroom.
This week, the Manhattan-based U.S. District Court attended testimonies from four trial witnesses, including an FTX investor and a French trader, as well as the defendant's old friends Adam Yedidia and Gary Wang.
Marc Julliard, a cocoa trader and among the victims of the FTX fiasco in November 2022, testified first. He recounted having lost four Bitcoins on FTX, which at the time held a value close to $100,000, and his anxiety stemming from his inability to withdraw funds. Although he hadn't engaged in future trading on FTX, the significant loss impacted his savings. Julliard's testimony underscores the harm experienced by patrons who trusted FTX with their investments.
Adam Yedidia befriended Bankman-Fried at MIT and later joined FTX as a developer after briefly interning at Alameda. He testified that all FTX customer deposits were processed through an Alameda subsidiary, North Dimension, and added to Alameda's debt to FTX. He only discovered this arrangement, and the $8 billion debt, shortly before the exchange's bankruptcy filing.
Matthew Huang, co-founder of venture capital firm Paradigm, testified about losing his entire $278 million FTX investment. He pointed out the lack of awareness about the mixing of funds between FTX and Alameda, and about Alameda's trading privileges. These privileges let Alameda maintain negative balances with FTX and escape position liquidations, granting it substantial leverage. Although Huang acknowledged a lack of robust due diligence into FTX, he contended he relied on information forwarded by Bankman-Fried.
Gary Wang, the former co-founder of two major companies alongside Bankman-Fried, played a key role in the trial. Wang confessed to operating a conspiracy with Bankman-Fried and others, involving wire fraud, securities fraud, and commodities fraud. He provided deeper insight into how the defendant directed Alameda and FTX operations, highlighting the scheme to hide losses from FTX investors and the deceit involving FTX's insurance fund.
Wang's testimony continues on October 10, together with that from Caroline Ellison.
Published At
10/7/2023 12:08:50 AM
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