NEW YORK (AP) — Splashy ads that includes soccer star Tom Brady and comic Larry David have been among the many first proof seen by jurors Wednesday as prosecutors launched a historic fraud case against cryptocurrency maven Sam Bankman-Fried, depicting him as a villain who portrayed himself as the Robin Hood of the crypto world.
Assistant U.S. Legal professional Nathan Rehn mentioned in his opening assertion in Manhattan federal courtroom that it was solely a 12 months in the past that Bankman-Fried gave the impression to be “on high of the world,” working the multibillion greenback firm he based, FTX, a seemingly pioneering cryptocurrency buying and selling platform.
Rehn mentioned the 31-year-old lived in a $30 million residence within the Bahamas, jetted world wide on personal planes, socialized with celebrities and spent billions of {dollars} as he flaunted energy and made large political donations to achieve affect in Washington over cryptocurrency regulation.
The prosecutor, although, mentioned that the son of two Stanford regulation professors was not as he appeared.
“Sam Bankman-Fried was committing a large fraud by taking billions of {dollars} from hundreds of victims,” Rehn mentioned. When his companies have been collapsing, he backdated paperwork and tried to cowl up his crimes by deleting messages and ordering workers to robotically delete all messages each month, the prosecutor mentioned.
Adam Yedidia, one of many trial’s first witnesses, supported the federal government’s claims when he testified that he met Bankman-Fried they usually turned “longtime buddies” after they have been each college students on the Massachusetts Institute of Expertise earlier than they labored and lived collectively within the Bahamas.
Yedidia mentioned he stop FTX and stopped speaking to Bankman-Fried when he realized in early November of final 12 months that Bankman-Fried had used FTX buyer deposits to pay again collectors of Alameda Analysis, Bankman-Fried’s crypto hedge fund.
On the stand, Yedidia confirmed he was testifying beneath an immunity order that can stop him from being prosecuted as lengthy as he testifies honestly. He mentioned the safety appeared obligatory as a result of, as an FTX developer, he may need unwittingly written code that contributed to a criminal offense. His testimony will proceed Thursday.
Bankman-Fried turned a goal of investigators when FTX collapsed final November amid a rush of consumers looking for to get well their deposits, lower than a 12 months after Bankman-Fried spent thousands and thousands of {dollars} on the 2022 Tremendous Bowl with movie star ads selling FTX as the “most secure and easiest method to purchase and promote crypto.”
David, alongside with different celebrities together with Brady and basketball star Stephen Curry, have been named in a lawsuit that argued their movie star standing made them culpable for promoting the agency’s failed enterprise mannequin.
Bankman-Fried was extradited to america from the Bahamas after his arrest final December. He was first ordered to stay at dwelling with his mother and father in Palo Alto, California, as a part of a $250 million bail package deal, however his bond was revoked and he was jailed in August after Choose Lewis A. Kaplan concluded he’d tried to affect trial witnesses.
The casting of Bankman-Fried as the unhealthy boy of crypto was contested by protection lawyer Mark Cohen, who informed jurors in his opening assertion that his consumer had “a really completely different story” to inform than prosecutors about what occurred as he constructed his cryptocurrency empire between 2017 and 2022.
“Sam didn’t defraud anybody, didn’t intend to defraud anybody,” he informed jurors.
He known as Bankman-Fried a “math nerd who didn’t drink or get together,” somebody who launched his companies after being educated at MIT and dealing on Wall Road for a number of years.
Cohen mentioned Bankman-Fried’s actions within the ultimate days as head of his corporations show that he believed he was managing a liquidity disaster attributable to cryptocurrency values that collapsed by over 70 p.c and criticism from one in all his largest opponents that brought on a run on his corporations by clients looking for to get well their deposits.
Cohen mentioned Bankman-Fried’s lieutenants didn’t do their jobs, together with establishing acceptable monetary hedges that might have protected FTX from final 12 months’s crash in crypto costs.
He mentioned the workers additionally failed to shut software program loopholes, amongst a number of the reason why FTX failed that weren’t Bankman-Fried’s fault.
“Sam acted in good religion and made, on the time, what have been thought of sound companies selections,” he mentioned.
“It is not a criminal offense to be a CEO of an organization that filed for chapter,” Cohen mentioned. “It’s not a criminal offense to attempt to get Tom Brady to go on ads to your firm.”
Bankman-Fried faces seven expenses, together with wire fraud and conspiracy. In courtroom Wednesday, he sat with a water bottle and a laptop computer laptop in entrance of him.
Assistant U.S. Legal professional Rehn mentioned three former executives at Bankman-Fried’s corporations will testify throughout the trial, together with Caroline Ellison, his typically girlfriend who has pleaded responsible to expenses within the case alongside with two different former executives who even have pleaded responsible.
Seated within the first row on the trial was U.S. Legal professional Damian Williams, who mentioned months in the past that the fraud surrounding FTX was one of many largest in U.S. historical past. Additionally within the courtroom have been Bankman-Fried’s mother and father, who arrived to courtroom holding fingers.