Marked, and gray, day for the world of cryptocurrencies. Sam Bankman-Fried, founder of FTX, which was one of the largest virtual currency exchange platforms, sits in the dock at the start of the trial in which he is accused of fraud and embezzlement.
The manager allegedly diverted funds and savings from thousands of clients to Alameda Research, the group's investment arm, to finance all types of personal expenses, from homes to million-dollar contributions to politicians, and high-risk investments. Also to cover holes from failed bets. When the scandal was uncovered, a stampede of clients began that drained FTX's liquidity and led it to collapse, with a hole of about 8.7 billion dollars - about 8.3 billion euros - according to the bankruptcy manager. He now faces seven charges for which he could carry a sentence of more than 100 years in prison.
During the management of FTX by Bankman-Fried and his team, funds were extracted from users, bonuses were distributed without control and money was diverted to relatives. Hundreds of millions of dollars were also raised from investors with a fraudulent image of the company.
In various interviews and publications on social networks, he acknowledged having made big mistakes at the command of FTX, but insisted that there was no criminal intent or theft. "I did not steal funds and I did not hide billions," he said on one occasion. He assured that the collapse of the platform, back in November amid a leak of deposits, was the fault of his competitors and inadequate risk control on his part and that of other managers. Thus, at the first hearing of his case, Bankman-Fried pleaded not guilty to the charges.
The 31-year-old presented himself as a guru in the sector and sold FTX as a safe way for individuals to invest in cryptocurrencies. Prosecutors contend he built that reputation on lies and bolstered it with endorsements from celebrities and star athletes. His fortune reached around 30,000 million dollars -about 28,600 million euros-.
When his practices were uncovered, he was arrested in the Bahamas in December and extradited to the United States, where he has been under house arrest on bail of 250 million dollars until August, when he entered prison when the judge considered that he was trying to influence witnesses. Among them, his ex-partner and former CEO of Alameda, Caroline Ellison, who has pleaded guilty in the process, as has Gary Wang, co-founder of FTX. The trial is expected to last about six weeks at most.
The crypto industry has not yet recovered from the FTX crash. The price of bitcoin and ethereum, the two most used cryptocurrencies, is still 50% below their highs and cryptocurrency trading volume has fallen by half, AP notes.
