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Prosecutor Grills FTX Founder on Credibility in Fraud Trial

Prosecutor questions FTX founder Sam Bankman-Fried in New York trial, highlighting his public statements regarding customer asset safety and fraud allegations.

Key Takeaways

  • Prosecutor questions Sam Bankman-Fried’s credibility in a New York trial.
  • Bankman-Fried is accused of defrauding customers and investors of billions.
  • Assistant U.S. Attorney highlights public statements about asset safety.
  • Bankman-Fried built a cryptocurrency empire worth tens of billions.

In a New York City trial on Monday, Sam Bankman-Fried, the founder of the FTX cryptocurrency exchange, faced tough cross-examination by Assistant U.S. Attorney Danielle Sassoon. The prosecutor aimed to challenge Bankman-Fried’s credibility by pointing to his public statements made both before and after FTX filed for bankruptcy protection late last year.

Fake Promises With Customer

Sassoon confronted Bankman-Fried with instances where he had assured customers that their assets were secure and could be withdrawn at any time. Bankman-Fried responded affirmatively to these questions, acknowledging his previous statements.

The 31-year-old entrepreneur has been on trial for the past month, facing charges of defrauding customers and investors of billions of dollars. Bankman-Fried has pleaded not guilty to these charges, which carry the potential of decades in prison.

Bankman-Fried gained prominence from 2017 to 2022 when he established the Alameda Research hedge fund and FTX, amassing a cryptocurrency empire valued at tens of billions of dollars. He had positioned himself as a champion of regulation and safety in the cryptocurrency industry.

Sassoon’s line of questioning aimed to demonstrate that Bankman-Fried’s public statements were deceptive. She suggested that he had promised the safety of customer accounts while allegedly diverting funds for personal expenses, including real estate, promotions involving celebrities, investments, and political contributions.

Sassoon Opened Everything?

During the cross-examination, Sassoon also inquired about Bankman-Fried’s comments regarding regulators and his motives behind advocating for cryptocurrency regulation. Bankman-Fried admitted to using profanity about regulators on one occasion and acknowledged that his pursuit of regulations may have been partly driven by public relations concerns.

Before the cross-examination, Bankman-Fried testified that he believed his companies could handle daily withdrawals of billions of dollars in assets until shortly before they faced financial difficulties.

Bankman-Fried was arrested on fraud charges in December, initially released on a $250 million personal recognizance bond. However, he was later jailed in August due to concerns of witness tampering.

The trial, presided over by Judge Lewis A. Kaplan, may conclude as early as this week.

To Conclude

The ongoing trial of Sam Bankman-Fried, a once-prominent figure in the cryptocurrency industry, has brought to light allegations of deception and fraud that have shocked many in the crypto community. If found guilty, the implications for both the individual and the broader industry could be significant, potentially leading to increased regulatory scrutiny and a renewed focus on investor protection. As the trial unfolds, it will undoubtedly shape the future of cryptocurrency exchanges and their responsibility to safeguard customer assets.