The customer claims portal for failed crypto exchange FTX closes this Friday (Sept. 29).
Next Tuesday (Oct. 3), Sam Bankman-Fried, the company’s co-founder and former CEO, heads to trial where he is facing seven criminal counts of fraud and money laundering related to his alleged role in the misappropriation of an estimated $8.7 billion of his company’s customer assets.
Around $7 billion of that amount has been recovered by the FTX Debtors group responsible for the exchange’s bankruptcy proceedings.
By now, the bankrupt crypto exchange — which was at one point valued as high as $32 billion and trusted by millions of customers around the globe — has been defunct for nearly a quarter of the time it was in operation.
Bankman-Fried, who was arrested in the Bahamas and extradited to the U.S. last fall, is currently imprisoned in the Metropolitan Detention Center in Brooklyn, N.Y.
In advance of his upcoming trial, the fallen crypto entrepreneur’s lawyers filed a renewal request Monday evening (Sept. 25) requesting, for the second time, his temporary release from jail.
“We submit that we are finding it exceedingly difficult as a practical matter to adequately prepare for trial with the restrictions on access currently in place … This case is highly technical and complex, and we need our client to help us understand the facts and explain many of the issues. He alone knows the facts which are also critical in preparing his defense,” wrote Bankman-Fried’s lawyer, Mark Cohen of Cohen & Gresser LLP.
In their renewed attempt to get bail for their client, the 31-year-old former paper billionaire’s lawyers ask that he be released the day before his trial starts with five conditions he is willing to adhere to, including a gag order and a promise to remain in the continual presence of either his legal team or a security guard.
And as the criminal trial fast approaches, here is what to know about the fraud case that evaporated billions of hard-earned dollars from millions of customers.
Read also: Chronology of a Crypto Crash: FTX’s Prince to Pauper Meltdown
Before his downfall, Sam Bankman-Fried’s face and name were splashed across the covers of magazines like Fortune and Forbes, while his crypto exchange advertised at the Super Bowl and was the name sponsor of the Miami Heat’s home stadium.
At its peak, Bankman-Fried’s net worth was $26 billion, and he drew comparisons to some of the most reputationally burnished titans of finance like J.P. Morgan and Warren Buffett.
These days, the most frequent comparison is to Bernard Madoff.
“This is one of the biggest financial frauds in American history,” Damian Williams, the U.S. Attorney in Manhattan, said in December 2022 announcing Bankman-Fried’s arrest.
As U.S. prosecutors see it, Bankman-Fried continually embezzled money from customer accounts on the FTX crypto exchange since launching it in 2019. The resulting shortfall due to allegedly criminal misappropriation was directly responsible for the exchange’s collapse as the crypto industry entered a bear market last year.
Bankman-Fried has maintained his innocence, pleading not guilty to each criminal count he is charged with.
In his version of the events that led to his and FTX’s downfall, his closest colleagues jeopardized the exchange’s solvency and his only failing was that he did not keep a close enough eye on what was going on beneath his nose.
His legal team did not immediately reply to PYMNTS’ request for comment.
Read more: A Crypto Crime Chronicled: Prosecutors Lay Out Case Against Bankman-Fried
Those close colleagues — among them FTX Co-founder Gary Wang; the exchange’s former head of engineering Nishad Singh; one-time Alameda Research CEO Caroline Ellison; and Ryan Salame, former co-CEO of FTX’s Bahamas subsidiary — have all pleaded guilty to criminal charges for their part in misappropriating FTX’s customer funds.
They are cooperating with federal prosecutors, and all except for Salame will provide testimony at Bankman-Fried’s trial.
This time last year, all four were living together in a $30 million penthouse in the Bahamas.
Bankman-Fried’s original $250 million bail was revoked after he was accused of witness tampering for leaking personal documents of Caroline Ellison, as well as pushing other boundaries of his bail requirements around internet access.
The federal judge overseeing Bankman-Fried’s criminal case has separately precluded testimony from all seven of Bankman-Fried’s expert witnesses, allowing only for four of them to testify only in rebuttal to expert witnesses the Justice Department plans to bring to trial.
Next week’s hearing will kick off one of the highest-profile white collar criminal cases in recent memory. Set to unfold over six weeks, it remains to be seen how the dueling narratives between federal prosecutors and the former face of crypto will play out — as well as what information about FTX’s ascension and reign will be unearthed during the trial.
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