Sam Bankman-Fried's trial: 4 key factors raised in opening statements

By Jody Godoy and Luc Cohen

(Reuters) – Jurors within the trial of FTX founder Sam Bankman-Fried heard from either side for the primary time on Wednesday, receiving dueling portrayals of key occasions and gamers concerned in what prosecutors have referred to as a multibillion-dollar fraud that affected hundreds of the cryptocurrency change’s clients.

Bankman-Fried pleaded not responsible. Opening statements by prosecutor Thane Rehn and protection lawyer Mark Cohen made it clear that 4 factors of competition, described under, will likely be essential to the trial, which is anticipated to last as long as six weeks.

Was Bankman-Fried a power-hungry thief or a “math nerd” startup CEO?

In his opening assertion, Rehn stated Bankman-Fried used greater than $10 billion in FTX buyer funds to amass his personal wealth, energy and affect. Rehn stated he purchased beachfront property within the Bahamas and donated to a nonprofit his brother based.

Cohen, Bankman-Fried’s lawyer, referred to as that depiction a “cartoon of a villain,” and stated proof would present that his shopper was really a “math nerd who did not drink or get together.” Bankman-Fried, he stated, was in actuality a CEO of a startup firm that collapsed after it was confronted with an unanticipated “excellent storm.”

“It isn’t against the law to be a CEO of an organization that later information for chapter,” he stated.

Did FTX collapse due to a smear job or fraud?

From Cohen’s standpoint, FTX and Alameda Analysis – a crypto-focused hedge fund additionally managed by Bankman-Fried – had been casualties of a downturn throughout the cryptocurrency sector, which was topic to fluctuations based mostly on “many elements that no person managed.”

As Bankman-Fried’s corporations sought to climate the storm, public “assaults” by the crypto press and Changpeng Zhao, the CEO of rival change Binance, led to a run on FTX, Cohen stated.

However Rehn stated FTX collapsed due to Bankman-Fried’s plundering of FTX buyer money. Blaming FTX’s implosion on the broader downturn in crypto quantities to “excuses,” Rehn stated.

FTX’s relationship with Alameda: nefarious or regular?

Rehn advised jurors that Bankman-Fried stole buyer funds in two methods: by duping FTX clients into sending cash supposed for his or her buying and selling accounts to Alameda, and thru a “secret particular privilege” embedded in FTX software program that permit Alameda make limitless withdrawals.

Cohen stated prosecutors had misconstrued cases of Alameda performing capabilities for FTX that the fledgling change was not but set as much as carry out itself.

He stated the software program allowed FTX to depend on Alameda as a “market maker,” which let Alameda purchase and promote crypto because the change sought to draw extra clients.

Caroline Ellison: failed deputy or “entrance”?

All sides introduced completely different tales about former Alameda chief govt Caroline Ellison, who has pleaded responsible to fraud and agreed to cooperate in opposition to Bankman-Fried.

In accordance with prosecutors, Bankman-Fried put in Ellison, his someday romantic associate, as a “entrance” to steer Alameda in 2021.

“In actuality he was nonetheless calling the photographs at Alameda,” Rehn stated.

However Bankman-Fried’s lawyer stated that handing over the reins was regular as FTX grew and took up his time. It was simply as pure for Bankman-Fried, nonetheless Alameda’s majority proprietor, to remain concerned, he stated.

“He relied on her and he trusted her to behave because the CEO and handle the day-to-day,” he stated.

Cohen additionally stated Bankman-Fried had requested Ellison to hedge Alameda’s investments after crypto’s profitable 12 months in 2021, however that she failed to take action.