- Billions of {dollars} of buyer funds had been misplaced after the value of crypto dipped and FTX collapsed.
- Prosecutors now say that Sam Bankman-Fried dedicated fraud and conspiracy when he oversaw FTX.
- SBF by no means supposed to defraud anybody and there was no theft, protection attorneys argued on Wednesday.
The collapse of FTX in 2022 wasn’t the results of fraud or a deliberate scheme to steal from prospects; it was simply the character of a unstable cryptocurrency market, Sam Bankman-Fried’s legal professional argued on Wednesday.
Bankman-Fried, the 31-year-old founding father of crypto change FTX and Alameda Research buying and selling agency, sat in for the second day of his trial in a Manhattan court docket on Wednesday the place he faces seven criminal charges. Federal prosecutors accuse Bankman-Fried of defrauding prospects and siphoning their funds to make outside investments reminiscent of in actual property and political donations.
Bankman-Fried has pled not responsible.
His legal professional, Mark Cohen, argued throughout opening statements on Wednesday that Bankman-Fried by no means supposed to defraud anybody or mislead prospects to get them to put money into FTX.
And in relation to the crypto change’s collapse — inflicting greater than $8 billion in buyer funds to fade — that was merely an unfortunate consequence of investing in an unpredictable market with “many components that nobody can management,” Cohen argued.
Within the lead-up to FTX’s downfall final November, the cryptocurrency change’s valuation peaked at $32 billion whereas the value of a number of the world’s largest tokens reminiscent of Bitcoin and Ether had been in freefall. For the primary time since 2021, the crypto market general was value lower than $1 trillion by June 2022.
At present, crypto’s complete market cap stands at round $1.08 trillion, based on Statista.
That type of turbulence is exactly what can overwhelm burgeoning firms like FTX, Cohen tried to argue.
In overseeing FTX and Alamadea, “Sam believed they had been each good firms coping with a liquidity disaster and that they may get by way of it,” he stated. He later added, “It isn’t a criminal offense to run a enterprise.”
Prosecutors, on the opposite hand, argued that each one of Bankman-Fried’s crypto empire was “constructed on lies” and that the founder used his buyer funds to funnel it to different investments with out letting them know.
An legal professional on FTX’s chapter crew final 12 months stated that Bankman-Fried ran his firm like his “private fiefdom” and that FTX spent virtually $300 million on actual property within the Bahamas.
Whereas Cohen tried to play up the problem of the crypto market, a number of crypto executives and leaders consider that the issue lies in what they may characterize as fraudulent gamers like Bankman-Fried, not the digital foreign money itself.
“Sam ought to get convicted as a result of he is a felony,” Sheila Warren, CEO of the Crypto Council for Innovation lobbying group advised The New York Times. “The business helps that as a result of lots of people felt burned by him.”
Qiao Wang, founding father of Alliance, an accelerator for crypto start-ups, advised the publication that individuals like Bankman-Fried have precipitated others to sour on the crypto world.
“It hurts the business,” he advised the newspaper. “I am unable to wait to see Sam get punished.”