Former FTX CEO Sam Bankman-Fried's trial set to begin Tuesday

Jury selection is expected to take place. The trial could last up to six weeks.

October 3, 2023, 5:03 AM

The trial of Sam Bankman-Fried, FTX founder and former crypto billionaire, is set to begin Tuesday with jury selection after federal prosecutors accused him of orchestrating one of the largest financial frauds in U.S. history.

Jury selection is expected to take place Tuesday, and the trial could last as long as six weeks.

Bankman-Fried faces seven counts of fraud, conspiracy and money laundering centered on his alleged use of customer deposits on the crypto trading platform FTX to cover losses at his hedge fund, Alameda Research, and to buy lavish real estate, among other personal expenses.

He has pleaded not guilty to all counts. If convicted, he could face a sentence of up to 110 years in prison.

Bankman-Fried stepped down from his role at FTX in November 2022 amid a rapid collapse that ended with the company declaring bankruptcy. Prosecutors charged Bankman-Fried the following month with an array of alleged crimes focused on a scheme to defraud investors.

In an interview with ABC News' George Stephanopoulos that November, Bankman-Fried denied knowing "there was any improper use of customer funds."

"I really deeply wish that I had taken like a lot more responsibility for understanding what the details were of what was going on there," Bankman-Fried told Stephanopoulos at the time. "A lot of people got hurt, and that's on me."

Bankman-Fried is being held in the Metropolitan Detention Center in Brooklyn, a federal prison, where he will remain throughout the proceedings.

After months spent under house arrest at his parents' home in Palo Alto, California, Bankman-Fried was sent to jail in August after a federal judge revoked his $250 million bail.

A federal judge in New York on Thursday denied Bankman-Fried temporary release from custody during his trial, deciding he is too great a flight risk to let free.

Prosecutors had balked at Bankman-Fried's sharing with The New York Times excerpts from the personal documents of Caroline Ellison, Bankman-Fried's former girlfriend, who led his Alameda Research hedge fund and who has pleaded guilty and agreed to cooperate.

Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, speaks during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, Aug 17, 2022.
Jeenah Moon/Bloomberg via Getty Images, FILE

The judge ultimately lent credence to concern over Bankman-Fried's alleged attempt to improperly influence Ellison, who is potentially set to testify at his trial.

Before his sudden downfall, Bankman-Fried had ascended to the top of the cryptocurrency sector, garnering goodwill as a philanthropist and leading proponent of industry regulation. The cover of Fortune Magazine in August 2022 asked readers whether Bankman-Fried, known by some as "SBF," was "the next Warren Buffett."

As a pandemic-era crypto boom faded in the fall of last year, concerns of financial instability at FTX -- a top platform where users buy and sell crypto -- triggered a wave of customer withdrawals totaling billions of dollars.

Within days, FTX filed for Chapter 11 bankruptcy protections as it assessed the value of its remaining assets, a company announcement said.

Bankman-Fried resigned as CEO in November 2022 and was replaced with John J. Ray III, who steered disgraced energy company Enron through bankruptcy proceedings in the 2000s.

Meanwhile, Bankman-Fried's net worth plummeted from $16 billion to $0 in less than a week, according to an estimate from Bloomberg.

Days after FTX declared bankruptcy, the company's collapse became the subject of an investigation by federal prosecutors in New York, sources familiar with the matter had told ABC News.

Roughly a month later, in December 2022, Bankman-Fried was arrested in the Bahamas after federal prosecutors in New York filed criminal charges, according to the Royal Bahamas Police Force.