Investigating the initial stage of the Sam Bankman-Fried legal proceedings

In a significant turn of events, the multi-count fraud trial of Sam Bankman-Fried, the former CEO of the collapsed cryptocurrency exchange FTX, commenced on Tuesday in Manhattan district court. Bankman-Fried is charged with seven counts, including wire and securities fraud.

The exchange, which was valued at $32 billion in January 2022, was not long after Bankman-Fried and other crypto industry leaders testified before Congress on appropriate crypto regulation. However, the downfall of FTX has since cast a shadow over the industry.

The first witness to testify against Bankman-Fried was London-based cocoa trader Marc-Antoine Julliard, who lost $100,000 with the fall of FTX. Other witnesses expected to take the stand include bankrupt crypto lender BlockFi founder and CEO Zac Prince or Elan Dekel, vice president of product at AI firm Pinecone.

Former high-level executives from FTX and its sister companies have pleaded guilty to crimes in the scheme. Among them is Gary Wang, co-founder of FTX, who pleaded guilty in December to four counts of wire fraud and wire fraud conspiracy, as well as conspiracy to commit commodities and securities fraud.

Wang admitted to writing the code that granted Alameda Research, a sister company of FTX, unchecked access to borrow up to $65 billion from FTX customers. He testified that Alameda's $65 billion line of credit was far greater than any other customer's line of credit, with only a dozen FTX customers having lines of credit from FTX over $1 million, and no one else having lines of credit over $1 billion.

Matt Huang, co-founder and managing partner of crypto firm Paradigm, testified that the $278 million his firm invested in FTX in 2021 and 2022 has been "marked ... to zero." Huang also recalled Bankman-Fried's resistance to typical corporate governance and investors' calls for board seats during Paradigm's first investment into FTX in 2021.

Former FTX employee Adam Yedidia, who received immunity for his testimony, expressed concern about potentially writing code that contributed to a crime.

Besides Sam Bankman-Fried, other people connected to the FTX case who have been charged but have not pleaded guilty include some former executives such as Ryan Salame, a former FTX executive seeking sentencing, who has not admitted guilt as of 2024.

Accommodations for a juror will lead to an early wrap-up on Friday at 2 p.m. The trial is expected to provide insights into the inner workings of FTX and the alleged fraud that led to its downfall. Stay tuned for more updates in the Technology section.