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Sam Bankman-Fried has been portrayed as a “cartoon villain” by prosecutors whose case relies largely on hindsight, lawyers for the former cryptocurrency mogul told a Manhattan jury on Wednesday as they presented their defense at the start of a highly anticipated criminal trial.
In opening arguments earlier Wednesday, US prosecutors accused Bankman Fried of committing “fraud on a massive scale,” and lying to investors, lenders and customers on his FTX cryptocurrency exchanges.
“This man has stolen billions of dollars from thousands of people,” Assistant U.S. Attorney Thein Wren told the jury, pointing forcefully at Bankman-Fried, who sat nonchalantly at the defense table.
Rehn said Bankman-Fried used the proceeds from his cryptocurrency empire “built on lies” to purchase luxury homes and courthouses for celebrities such as Tom Brady, as well as politicians including former Democratic President Bill Clinton.
But Mark Cohen, Bankman-Fried’s lawyer, responded in a calm editorial that his client – whom he addressed as “Sam” – was the victim of an “overdue case” and that he had acted in good faith.
“He was a math geek and he didn’t drink or party,” Cohen told the jury. “Taking something out of context and with hindsight and calling it inappropriate is not proof beyond a reasonable doubt.”
The conflicting statements launched what is expected to be a six-week trial to determine the fate of the 31-year-old former billionaire, who until last year was one of the leading figures in the world of free cryptocurrency trading.
Bankman-Fried, who sat in court wearing a gray suit, formally denied the accusations and maintained his innocence in numerous media interviews he gave before his imprisonment in August for allegedly trying to intimidate witnesses. Prosecutors confirmed Tuesday that at no time did they offer Bankman-Fried a plea deal.
His parents, law professors Joe Bankman and Barbara Freed, stared at the floor in the crowded courtroom as the government presented the case against their son.
The plaintiffs’ case relies heavily on the testimony of three central witnesses, former aides to Bankman-Fried who have agreed to cooperate with the government and are expected to take the stand in the coming days.
The witnesses “will give you an inside idea of how the defendant’s crimes occurred,” Wren told the jury. He said Bankman-Fried used his former “girlfriend” Carolyn Ellison — the CEO of FTX’s sister company, the Alameda crypto hedge fund — as a “front” to help hide his control of the company.
The trial will depend on the credibility of these witnesses. “Be careful when you hear from them,” Cohen told jurors, saying their hopes for lighter sentences gave them an incentive to confirm the government’s story.
Cohen said Bankman Fried urged Ellison to hedge Alameda’s risky crypto investments in early 2022, but she did not do so, exacerbating the financial crisis when cryptocurrency prices collapsed later in the year.
“He relied on her and he trusted her,” Cohen said. As a busy CEO, Bankman-Fried “can do it.” [not] “Be everywhere and do everything.”
Ellison is expected to take his position in the coming days. Prosecutors said they will also call FTX investors to testify, as well as customers who suffered through the company’s bankruptcy.
A major investor in Silicon Valley and Wall Street backed FTX with about $1.8 billion before its collapse. The government’s opening included screenshots of tweets in which Bankman-Fried reassured FTX clients that their funds were safe, and pointed to congressional testimony that would be presented as evidence.
The case is being heard by a jury of 12 members and six alternates, trimmed from a pool of approximately 50 people. The judge questioned potential jurors about their experiences with cryptocurrencies and prior knowledge of the case. The selected jury consists of three men and nine women, including a social worker, a high school librarian and a retired corrections employee.
Judge Lewis Kaplan asked jurors whether they had watched an interview Sunday with author Michael Lewis, who had dogged Bankman-Fried for months before and during his fall from grace for his latest book, which was published Tuesday. Lewis, who said FTX has “great real work,” told CBS News that the book was intended to be “a kind of message to the jury.”
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