The criminal trial of FTX founder and ex-CEO Sam Bankman-Fried is slated to begin Tuesday, in a case that will determine his fate as he faces seven federal charges of fraud and conspiracy in connection with the collapse of his crypto empire.
Here’s what to know as the trial gets underway:
FTX went from being the second-largest crypto exchange in the world, valued at an estimated $32 billion, to entering Chapter 11 bankruptcy in November of last year along with sister hedge fund Alameda Research and other related entities after it was hit with a flood of withdrawals following reports that the exchange had merged assets with Alameda.
Customers lost billions as a result of the collapse, and Bankman-Fried resigned as CEO. He was replaced by John Ray III, who is best known for handling the bankruptcy of Enron and is now tasked with clawing back as many assets as possible for FTX’s creditors.
Bankman-Fried was first arrested in the Bahamas, where FTX International was based, before being extradited to the U.S. in December. Federal prosecutors in Manhattan have accused Bankman-Fried of misleading investors and lenders, and stealing billions of dollars in customer funds to buy real estate, make political contributions and make up for losses at Alameda.
Bankman-Fried was released on $250 million bail and remained on house arrest for several months at California home of his parents, Joseph Bankman and Barbara Fried, before U.S. District Judge Lewis Kaplan revoked his bond in August over prosecutors’ claims the former CEO attempted to tamper with at least one witness.
Bankman-Fried has pleaded not guilty to all the charges against him, but members of his inner circle — four former FTX and Alameda executives — have all pleaded guilty to crimes connected to the companies’ downfalls and are expected to testify against him in the trial after agreeing to cooperate with the government.
The likely key witness against Bankman-Fried is former Alameda CEO Caroline Ellison, who is his ex-girlfriend and served as his top deputy. She pleaded guilty to wire fraud and conspiracy in December, and prosecutors claim Bankman-Fried tried to intimidate her by releasing some of her writings to a journalist.
Prosecutors revealed in August they plan to rely on testimony from Ellison, FTX co-founder Gary Wang and former FTX engineering chief Nishad Singh to show jurors “the unlawful conduct directed and undertaken by the defendant.”
Another potential witness that could be called to testify is Ryan Salame, who was co-CEO of FTX International. Authorities in the Bahamas said Salame alerted them to possible wrongdoing at the exchange. Salame pleaded guilty to conspiring to make unlawful political donations and admitted to making political donations to Republicans at the behest of Bankman-Fried.
Bankman-Fried has acknowledged that FTX had inadequate risk management but maintains that it did not steal funds.
In January, the former CEO published what he called a “Pre-Mortem Overview” of what happened with his companies, blaming the implosion of FTX International on a combination of market crashes, mismanagement at Alameda and sabotage by Changpeng “CZ” Zhao, the head of FTX rival Binance.
Bankman-Fried has repeatedly claimed that FTX U.S. was solvent at the time Chapter 11 bankruptcy was filed, and wrote that it is “ridiculous that FTX U.S. users haven’t been made whole and gotten their funds back yet.”
Jury selection for the trial is set to begin at 9:30 a.m. ET on Tuesday, and depending on how long the process takes, the court may proceed to opening arguments the same day.
FOX Business’ Chris Pandolfo and Danielle Wallace contributed to this report.